Novy Neft Limited - Buy Back Of Shares - August 2005

Hamilton, Bermuda: 23^rd June 2005 - The Directors of Novy Neft Limited (the "Company"), wish to advise that they propose to buy back for cancellation, up to a further 13.20% of the Company's issued share capital as at 19 August 2004 on 24 August 2005.  This is equivalent to 19.88% of the current shares in issue.  If an imbalance between supply and demand stills remains after the above proposed action has been taken, the Directors will seek to buy back up to a further 13.2% of the Company's issued share capital as at 19 August 2004 in December 2005.  In the event that all of the above shares are bought and cancelled then there will be no further buy backs of shares.

So as not to disadvantage the remaining shareholders, the price at which shares will be bought back will be determined by reference to the average price at which the underlying Gazprom structures are sold in the market in order to raise the cash necessary to pay the selling shareholders and will be at a 1% discount to that price.

A copy of this announcement (to include a reply slip for use by those Shareholders who may wish to participate in the buy back in August 2005) is to be distributed to all Shareholders today.  Those Shareholders wishing to participate should complete the reply slip as directed and return as soon as possible, and in any event no later than 5 p.m. on 22 August 2005 to the Administrator and Registrar, HSBC Securities Services (Isle of Man) Limited, PO Box 34, 12/13 Hill Street, Douglas, Isle of Man IM1 1EF, British Isles (Fax: (44) 1624 637778).

If demand is received for more than 13.20% of the shares to be bought back and cancelled, then Shares will be bought back on a pro rata basis.  The record date for the buy back will be 19 August 2005.

The Directors wish to remind shareholders that they will use their discretion to buy-back or redeem Shares in accordance with guidelines which are designed to ensure that the Company is not open-ended for taxation or regulatory purposes and that accordingly shareholders cannot expect with any degree of certainty that any of the Shares they may offer for re-purchase or redemption will be bought back or redeemed at any particular time. 

Further, Shareholders are reminded that the Company's Bye-laws incorporate a discount floor provision. This provision provides that if, after the first anniversary of the launch of the Company, for any consecutive period of four months, the market price of the Shares (determined on a monthly basis in accordance with the Bye-laws) has stood at a discount in excess of 10 per cent. of the Net Asset Value per Share as at each relevant month end, the Directors are required, within 30 days after the end of the fourth month, to propose an ordinary resolution for the Company to continue as an investment company.  If this resolution is not passed, the Directors are required to formulate proposals to be put to Shareholders for the winding-up or other reorganisation or reconstruction of the Company.

The Directors believe that the investment rationale of the Company may cease to exist if the Russian Government lifts the current foreign ownership restrictions pertaining to the local shares of Gazprom.  In these circumstances the Directors currently would intend to call an extraordinary general meeting of the Company to propose to Shareholders that the Company proceed to a voluntary winding-up.

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