BTC SIGNS PROJECT FINANCE AGREEMENTS

BTC Press Release, 3 February 2004

The Azerbaijan Government and BTC Co, operated by BP, today hosted an official ceremony during which the final package of project finance documents was signed to finance BTC construction. The signing ceremony, which took place in the Gulustan Palace in Baku, marks the completion of agreements covering the third party financing for the pipeline project.

The BTC financing agreements were signed by representatives of the Governments of the Azerbaijan Republic, the Republic of Georgia and the Republic of Turkey and representatives from the BTC lender group in the presence of the President of the Azerbaijan Republic, H.E. Ilham Aliyev.

The financing package includes 208 finance documents, with over 17,000 signatures from 78 different parties, and it represents a major milestone in the implementation of the financing arrangements for the pipeline which will cost $2.95 billion to construct ($3.6 billion total project cost including linefill and loan interest during construction).

Approximately 30% of BTC costs are being funded by equity contributions, while the remaining 70% of the total is being provided in the form of financing by third parties. The BTC partners have already contributed $1 billion. The total debt committed is $2.6 billion thus completing the funding for the project.

The group that will provide loans, export credits and risk insurance to BTC comprises:

• the multilateral lending agencies: the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC), the private sector arm of the World Bank
• the Export Credit Agencies and Political Risk Insurers of seven countries: the Japan Bank for International Co-operation (JBIC) and Nippon Export and Investment Insurance (NEXI) of Japan, the Export-Import Bank of the United States of America, the Export Credits Guarantee Department (ECGD) of the United Kingdom, the Overseas Private Investment Corporation (OPIC) of the United States, Compagnie Francaise pour le Commerce Exterieur (COFACE) of France, Euler Hermes Kreditversicherungs-AG (HERMES) of Germany and SACE S.p.A. - Servizi Assicurativi del Commercio Estero (SACE) of Italy
• a syndicate of 15 commercial banks led by ABN AMRO, Citibank, Mizuho and Societe Generale with Banca Intesa, BNP Paribas, Credit Agricole Indosuez, Dexia, HypoVereinsbank, ING, KBC, Natexis Banques Populaires, San Paolo IMI, West LB and Royal Bank of Scotland
• loans provided by BP, Statoil, Total and ConocoPhillips, as senior sponsor lenders

Finalisation of the financing agreements comes after more than two years of far-reaching monitoring and scrutiny of the project's environmental and social impact, as well as a thorough public consultation process. The loans are conditional on the project continuing to meet its stringent public commitments - which are subject to formal, quarterly audits by lenders.

The participation of the multilateral, export credit and insurance agencies enhances transparency in the project, and gives them the opportunity to influence project implementation, and to help ensure the development potential from the projects is realised.

To date, construction work has progressed significantly with the overall project now more than 50 per cent complete. Some 760km of the right of way (ROW) has been prepared, 580km of pipe strung, 520km of pipe welded, 270km of the pipeline corridor trenched, 235 km of pipe lowered-in and 215 km already backfilled. Today, there are construction activities at 17 sites in all three countries.

The pipeline employs over 12, 000 people along its entire route from Baku to Ceyhan. The project's community investment programme is up and running in all three countries. Overall BTC together with the South Caucasus Pipeline (SCP) will spend some $30 million (including $5.5 million already awarded in Azerbaijan) on community and environmental investment between now and 2006 in Azerbaijan, Georgia and Turkey.

Notes to Editors:

1. The 1,760km BTC pipeline will allow one million barrels of oil a day to be exported safely and responsibly from the Caspian without increasing tanker traffic through the Turkish Straits. It is buried for its entire length and, once constructed, land will be fully re-instated above a narrow eight-metre right of way. Landowners and land users have been generously compensated for disruption during the construction phase and will be able to use their land after construction, subject to a small number of restrictions imposed for safety reasons.
2. First oil from the pipeline will be exported from the Mediterranean port of Ceyhan in 2005.
3. A parallel loan covering the Phase 1 offshore development of the Azeri-Chirag-Gunashli (ACG) oil field has also been agreed by BP, Unocal, Statoil and Hess. The documentation providing for a series of loans by IFC and EBRD totaling approximately $120 million became effective today also. The BTC export pipeline will carry oil from the ACG field from 2005. It will account for the majority of the throughput of the pipeline during its early years of operation.

The BTC Co. shareholders are:

• BP (30.1%)
• SOCAR (25.00%)
• Unocal (8.90%)
• Statoil (8.71%)
• TPAO (6.53%)
• Eni (5.00%)
• Total (5.00%)
• Itochu (3.40%)
• INPEX (2.50%)
• ConocoPhillips (2.50%)
• Amerada Hess (2.36%).

For further information please contact:

Tamam Bayatly or Gulnar Hall, BP Press Office, Baku
Tel.: (+994 12) 979 000
Fax: (+994 12) 979 736