Pursuant to the Memorandum of Understanding dated June 7, 2005, Rosneft and the China Petrochemical Corporation (Sinopec Group) signed an agreement on the establishment of a joint venture for exploration and surveying of the Veninsky sector (Sakhalin-3 project) on July 1. The agreement was signed by the companies’ presidents Sergei Bogdanchikov and Chen Tonghai.

According to the agreement, the joint enterprise established in the Russian Federation must be the direct holder of the license for the Veninsky sector, and the project operator.

The parties intend to expedite the preparation, agreement and performance of the new Veninsky sector geological surveying program, to be approved in the near future. The program will comprise the drilling of an exploration well within the sector in 2006.

The Sinopec Group and Rosneft also plan to revise the existing exploration schedule. Stage I will include a survey of an onshore rock structure located far from the coast; Stage II will comprise exploration of an onshore rock structure located closer to the coast.