Novy Neft -- Directors Announce Conversion To Zao Gazprom Shares

Hamilton, Bermuda, January 18 2006 -The Directors wish to announce that recently the Russian Government repealed and removed Presidential Edict No. 529 dated 28 May 1997 (the "1997 Edict").  In summary, the 1997 Edict provided that resident and non-resident foreign participants would require permission from the Federal Commission on the Securities Market, issued in accordance with decisions of the Government of the Russian Federation, to acquire shares of ZAO Gazprom, as well as securities and other financial instruments whose underlying asset was shares of ZAO Gazprom.  The 1997 Edict is generally referred to as the "Ring Fence".

 The Company has agreed with the providers of the synthetic and structured products and other derivative products which provide exposure to the local shares of ZAO Gazprom to crystallise the Russian capital gains taxes and take physical delivery of ZAO Gazprom shares.

 As of 16 January 2006, the Company has arranged for its entire underlying ZAO Gazprom position to be converted into actual shares at an approximate effective average price of US$7.47 for capital gains tax purposes although it should be noted that this effective rate may be subject to change due to changes in the Russian Rouble / US$ dollar exchange rate.

This series of transactions resulted in the crystallisation of a capital gains tax liability, approximately 50% of which, had been funded as of the 16 January 2006 at an approximate sale price of US$8.17.  It is the intention to fully fund the remaining liability via additional sales of ZAO Gazprom shares as soon as practically possible.  A further announcement will be made by the Directors once this stage has been completed.

The Directors are currently considering the most efficient way of returning capital back to shareholders and will soon communicate formal proposals to shareholders.

For further information on Novy Neft Limited please contact: