joint venture partner for its Kyrgyz Republic licences following Santos International Operations Limited’s

(Santos’s) decision against entering into Phase III of its farmout agreement with the Company.

Caspian will retain 100 per cent ownership of the Kyrgyz blocks within the oil-rich Fergana Basin following

the withdrawal by Santos.

Caspian Chief Executive Officer Graeme Parsons said the Company was relieved to finally know where it

stood in relation to the Kyrgyz licences.

He said Caspian was preparing a package to use in seeking JV participants and expected considerable

interest in the licences.

”The decision from Santos is positive for us as we can now be a more active participant in exploration within

the licences,” Mr Parsons said.

“Since late 2005, Santos has spent around US$16m on the blocks; during this time they have acquired

approximately 400km of 2D seismic across six of our licenses.

“The work they have done has revealed targets which are attractive to us and we will actively promote the oil

and gas potential to new farminees.

“While Santos’s withdrawal was based on an assessment of prospectivity for targets material to a company

of its size, multiple targets identified from the recent seismic program are significant to Caspian.

“Santos has decided to concentrate on deeper targets on its other Kyrgyz blocks.”

Mr Parsons said Caspian was also currently reviewing several producing fields within the Kyrgyz Republic

with the aim of entering into production sharing agreements for incremental oil extracted from the fields.

He said there was significant potential for early cash flow through remediation works in existing producing

wells along with enhanced oil recovery methods.