Laisan Limited Liability Company .

1. Laisan Limited Liability Company. CMS (Chemicals Management System) Conception, or Complex Chemization of Processes of Oil Extraction, Transportation and Treatment Operational Experience and Results February, 2010

2. About Our Company • Basic Activities: • Implementation of chemical processes into oil-and-gas extraction productions; • Development (synthesis) of new forms of chemicals; • Development and implementation of strategy of corrosion management; • Development and implementation of strategy of complex management of chemization of oil extraction, transportation and treatment; • Selection and delivery of chemicals; • Manufacture, erection and service maintenance of batching equipment; • In-complex service • Monitoring of efficiency of programs (engineering and economic)

3. Fields of Practical Application • SRB oppression • Possibility of synthesis of new substances in view of a definite task

4. Line of Chemical Products of Our Own Production Hydrate development inhibitor LGD-7000

5. List of Permission Documentation of Laisan LLC

6. Experience and Duration of Work in Application of Chemical Technologies

7. CMS – What Does It Mean Chemicals Management System (CMS): In-complex solution of problems arising in oil extraction, transportation, treatment and delivery by use of chemicals, for reducing current and long-term costs with utmost efficiency, in accordance with the principle “from well downhole to oil delivery point”. • Advantages of In-complex Approach: • Works are performed by a single contractor possessing own chemical production, chemical laboratories and resources for delivery and injection of chemicals on deposits, engineering support with maximum efficiency; • contractor may promptly modify the recipe of chemicals and injection process in address manner for definite conditions; • Providing compatibility of multiple chemicals in the common technological system; • Choice of multiple lines of chemicals with “the best”, “good”, and “satisfactory” process efficiency and respective price affording to optimize specific costs; • Contractor’s profit in dependence on the achieved Key Efficiency Indicator preset for all types of complications on a definite deposit/site; • Long-term partnership allows developing the service component in the region of presence and having a competitive environment;

8. Classical Consequence of CMS Programs Realization I. Creation of Customer – Contractor Project Team

9. Typical CMS Performance (Complex Anti-Corrosion Inhibiting) Illustrated by Examples of 2 Fictitious Deposits Prior CMS implementation After CMS implementation 2006 2007 2008 2005 • Comments: • Complex inhibiting allows achieving Customer’s target key efficiency indicators; • “Incubation interval” up to achieving of the acceptable level of fault rate shall be about 7-10 months, due to inertia nature and “saturation” of the flow line system by the inhibitor and optimization of dosage rates and frequency of injections on monitoring basis; • It is important to collect the database of time between failures (TBF) of submersible equipment for monitoring of this indicator in CMS framework and estimation of extra benefits.

10. Typical CMS Performance (De-emulsification at Oil Treatment) Illustrated by the Example of a Fictitious Deposit Regular Stage • Comments: • Properly chosen de-emulsificator allows reducing unit costs up to 40% of the basic level and achieving key efficiency indicators; • Before “the best” result is achieved, it is needed to use dosage rates which are sufficiently high; consequently, current unit costs will rise in this period; • An important task of optimization is ensuring compatibility with chemicals of other functions

11. Specific Quantity of Hydrate Development in 2006-2008 9 8,3 8 7,5 7,5 7 5,7 5,6 6 pcs/well*mnth 5 3,8 4 3,5 2,6 3 2,2 2,2 2,1 2,0 1,8 1,7 1,6 2 1,0 0,6 1 0,3 0,2 0,1 0,1 0,1 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0 March March May March May May June June June July July July Aug Aug Aug April April April Nov Nov Jan Jan Jan Oct Oct Oct Dec Dec Sept Feb Feb Sept Feb Sept 2006 2007 2008 Typical CMS Performance (Gas Hydrates Prevention) Illustrated by the Example of a Fictitious Deposit Methanol Pilot Tests Regular Stage • Comments: • The properly chosen inhibitor allows achieving Customer’s target key efficiency indicators; • Replacement of methanol by another chemical instead of methanol will reduce risks of personnel poisoning; • CMS measures with use of ХХХchemical allowed reducing monthly losses of oil – 130 tons, gas – 260,3 thou. m3; Info: the reserve is 16 wells

12. Theoretical Change of ESP-80 Characteristics Depending on Change of Viscosity (Avtotechnolog Production Association) 1,3% 12,5% 37,5% 11,5 % 44% Вязкость при 200 С, мПа*с Viscosity at 20°C, mPa*s The experience of application of solvents of asphalt, paraffin and resin deposits allows to state reducing of viscosity in 3 times and over. When performing chemical treatments (without impact of factors not related to chemization) it may be expected that flow rate characteristic of ESP-80 will rise in the range of 1,3-37,5 % and efficiency will rise in the range 11 - 44 %. It is rational to apply such calculations to each well individually. Viscosity range of the most usual complicated reserve of wells

13. Salt Scaling Prevention • Provided correct selection of the inhibitor and its correct use, efficiency of protection against mineral scaling will be 90-100 %. • Correctness of selection of the inhibitor will be defined by carefulness of chemical analysis of solid scaling and water, and by finding the actual cause of mineral scaling. • To prepare an inhibitor with predictable properties it is needed to use special active components but not wastes of various productions. It will allow to obtain chemicals with consistent properties. • Chemical composition of the inhibitor will be corrected on basis of results of commercial tests.

14. Typical CMS Performance (Neutralization of Hydrogen Sulfide and Ethyl-methyl Mercaptans) Illustrated by the Example of a Fictitious Deposit • Basic requirements to the chemical: • To be free of chloral compounds • Not to contain free water • Not to precipitate into insolvable scaling after reaction with hydrogen sulfide • Basic requirement to the application process: • The feeding point shall be close as possible to commercial oil (after discharge of water) • Good stirring should be provided (feeding before pumps, via dispersion medium) • In case of long-time storage of the chemical, stirring / agitation should be provided Results of neutralization 5ppm KEI for mercaptans KEI for Hydrogen Sulfide 2 ppm prior after

15. Algorithm of Evaluation of Economic Efficiency (Examples)

16. Key Efficiency Indicators (Example) • KEI is Profit by results • Results are… • Solving a package of tasks for achieving set targets: • Improving process parameters with costs per unit retained; • Improving economic indicators (costs per unit) with the process indicators unchanged; • Improving process parameters with simultaneous improving costs per unit • Contractor’s profit, apart from monthly payment for actually performed works, may be caused by: • Prolongation of Contract • Increase of Customer’s market share • KEI scale unites targets of the extracting Company and Contractor for achieving maximum efficiency of applied technological processes with optimal costs. • Payment is related not to amounts of injected chemicals but to the final results: technological efficiency. Basic terms: Injection availability – percentage of procedural requirements of chemical injection. Percentage of protection efficiency – 100% minus relation of the number of early failures at the protected reserve of wells to the number of protected wells. Number of days with non-conformance of oil and water quality – days with exceeding of average daily results of analyses of chloral salts concentrations in water, % of water in oil and residuality of oil products in recycled water.

17. Benefits from Implementing CMS for Extracting Company Visible costs of chemization (purchasing of chemicals, CMS contracts) Reducing“latent” costs • Cost of CWR repairs • Oil losses due to downtime during CWR • Oil losses due to raising pressure in pipe-lines • Replacement of tubing, submersible pumps and cable • Price of removal of scaling from tubing • Price of lands regeneration • Expenses for liquidation of breakdowns • Replacement of pipe-line lengths being in bad state • Expenses for re-treatment of off-grade oil • Reducing risks of personnel poisoning with methanol All operation costs

18. Benefits from CMS

19. Contact Information • Legal Address: • 170000, Tver City, • Volnogo Novgoroda Street, 5 • Postal Address: • 119002, Moscow, PO Box 32 • Actual Address: • 121019 Moscow, • Bolshoy Afanasyevsky Lane, 15, bldg. 1 • Phone / fax: • (495) 695-04-10, 695-04-12 • E-mail: • laisan@complat.ru • Top managers: • Director: Nikolay V. Korostelev • Deputy Director for Oil Services: Yuri V. Makarov • Anti-Corrosion Team Manager: Andrey A. Lysov • Chemical Service Manager: Dmitry M. Nikitin • Coordinator of Chemical Monitoring Works: Yevgeny V. Frakiysky