Lundin Petroleum has interests in 2 production licences and one exploration licence in Russia. Drilling of the first exploration well in the Lagansky Block in the Caspian Sea, Morskaya-1, resulted in a major oil discovery.

Lagansky Block
The Lagansky Block is located offshore in the Russian sector of the Caspian Sea. The Block is 2,000 square kilometres (494,000 acres) in size and is located in the Central Caspian Basin, which contains some of the largest oil and gas accumulations in the world. The block is located on a structural trend that includes the V. Filanovsky, Rakushechnoye and Yuri Korchagin Fields currently being appraised and developed by the Russian major Lukoil.

The Lagansky Block exploration licence was granted in August of 2004. Lundin Petroleum has commenced a multi well exploration programme on the Block. Three drillable prospects were identified, the Morskaya prospect, the Laganskaya prospect and the Petrovskaya prospect with net unrisked resources of over 600 MMboe. The first exploration well, Morskaya-1 was drilled in the second quarter 2008 and resulted in a major discovery. The well encountered a major oil accumulation in the Aptian and Neocomian sandstone reservoirs which tested at a combined flow rate of 2,500 bopd of 32 API oil. The flow rates were severely constrained by facilities and larger flow rates will be possible during development.

The Morskaya structure straddles the licence boundary of the Lagansky block and the adjoining acreage controlled by the Caspian Oil Consortium and is on trend with several major oil and gas discoveries made by Lukoil in the Russian sector of the Caspian Sea. The Morskaya structure has an areal extent of 130 km2 of which approximately one half is within the Lagansky block. Morskaya has estimated recoverable resources of between 110 and 450 MMboe from the part of the structure contained within the Lagansky Block.

In October 2008 the second exploration well Laganskaya-1 was completed. Log results, pressure data and fluid samples indicated the presence of a low hydrocarbon saturation transition zone probably associated with a small updip structure.

The third exploration well was drilled in Q4 of 2009. Despite oil shows at the target horizon the well was P/A as dry hole following extension data gathering. It is considered most likely that there is no four way dip closure at the location. This was a known risk prior to drilling due to the lack of seismic lines and the NE quadrant of the structure because of environmental restrictions. Technical reviews of remaining prospectivity on the block are ongoing.

In September 2009 Lundin Petroleum entered into an agreement with Gunvor Cyprus Holding Ltd (Gunvor) under which Gunvor acquired a 30 percent interest in the Lagansky Block. Lundin Petroleum holds the remaining 70 percent interest in the block.

An extension has been granted until 2014 for the Lagansky Block.

Sotchemyu-Talyu Field
Lundin Petroleum has a 50% interest in CJSC Pechoraneftegas (“PNG”), operating in the Komi Republic. PNG is operated as a joint-venture with Arawak Energy Corporation, which owns the remaining 50% interest in PNG. The primary assets of PNG include the Sotchemyu-Talyu field.

The PNG assets are located in the Timan-Pechora basin in Komi Republic of Russia approximately 1,300 kilometres northeast of Moscow. The Timan-Pechora basin is an extensively developed petroleum producing region that straddles the Arctic Circle and is estimated by the U. S. Geological Survey to contain 20 BBOE of ultimate recoverable reserves (66% oil). The Sotchemyu Field Complex, North Irael Field and adjacent Kadzherom licence lie in the southern Timan-Pechora basin adjacent to infrastructure, including a direct tie to the Transneft pipeline. The Sotchemyu Field Complex began production in 1990 and produces primarily from Devonian reef intervals supported by aquifer influx.

North Irael Field
Lundin Petroleum has a 50% interest in LLC Recher-Komi, which holds the licence for the North Irael field in the Komi Republic. The North Irael Field is located on trend and approximately 10 kilometres from the Sotchemyu-Talyu fields and is operated by PNG. The production licence for the block, which comprises 76 square kilometres, was awarded in 2000 and was acquired by the current partnership in 2006.

The North Irael Field produces from the same Devonian reef horizon that is productive at Sotchemyu-Talyu. Work is continuing to further delineate the field. field.

East Kadzherom Exploration
The East-Kadzherom field has an exploration licence. There is only one exploration well drilled on the structure, which is small and has estimated producible volumes of 124,000 bbls. PNG has applied for a licence for production.