The execution of the agreements for the purchase of shares in Mazeikiu Nafta by PKN ORLEN

The Management Board of Polski Koncern Naftowy ORLEN S.A. (“PKN ORLEN”) hereby announces that on 26 May 2006, PKN ORLEN, as the buyer, and Yukos International UK B.V., a private limited liability company with its seat in the Netherlands (“Yukos International”), as the seller, concluded a share purchase and sale agreement (the “Yukos Agreement”) related to the purchase by PKN ORLEN of a 53.7022% stake in AB Mazeikiu Nafta, a public company with its seat in Lithuania (“Mazeikiu”). On 18 May 2006, PKN ORLEN unilaterally executed the Yukos Agreement and delivered it to the other party. Yukos International counter-signed the Yukos Agreement on 26 May 2006 after the New York Bankruptcy Court had lifted the temporary restraining order previously imposed on Yukos International with respect to selling any Mazeikiu shares.

In addition, on 19 May 2006 PKN ORLEN unilaterally executed and delivered the following documents to the Government of the Republic of Lithuania (the “GOL”): (a) a share purchase agreement (the “GOL Agreement”) related to PKN ORLEN’s purchase of an additional 30.6615% Mazeikiu share stake from the GOL; and (b) a put option agreement related to the 10.0006% of shares in Mazeikiu (the “Put Option Agreement”) that will be continue to be owned by the GOL following the sale of the 30.6615% stake to PKN ORLEN. The GOL Agreement and the Put Option Agreement will be counter-signed by the GOL upon obtaining the Lithuanian Parliament’s approval of the PKN ORLEN transaction, which is expected by 10 July 2006 at the latest.

Pursuant to the Yukos Agreement, PKN ORLEN will purchase 379,918,411 ordinary shares in Mazeikiu, with a nominal value of 1 litas each, representing approximately 53.7022% of Mazeikiu’s share capital, for the aggregate price of USD 1,492,000,000 (the equivalent of PLN 4,571,786,400 pursuant to the fixing rates list No. 102/A/NBP/2006 of 26 May 2006), i.e. USD 3.972 per share. The performance of the Yukos Agreement is subject to the fulfillment of certain conditions precedent, i.a. (a) the receipt of all consents, including the European Commission concentration clearance, and (b) the GOL’s failure to exercise its right of first refusal with respect to the shares being purchased by PKN ORLEN from Yukos International. If any of the conditions precedent has not been fulfilled by 30 September 2006, each of the parties will have the right to terminate the Yukos Agreement. However, each party will have the right to extend the termination date to 31 March 2007 if the only condition that is not satisfied by 30 September 2006 is the consent of the European Commission.

During the period between the execution of the Yukos Agreement and the transaction closing date, Yukos International shall ensure that Mazeikiu and its subsidiaries conduct operations within the ordinary course of business and do not take any action which would materially adversely affect the parties’ ability to consummate the transaction.

In the event the GOL Agreement is approved by the Lithuanian Parliament and signed by the GOL, PKN will purchase an additional 216,915,941 ordinary Mazeikiu shares with the nominal value of 1 litas each, representing approximately 30.6615% of Mazeikiu’s share capital, for the aggregate price of USD 851,828,900.31 (the equivalent of PLN 2,610,174,116.33 pursuant to fixing rates list No. 102/A/NBP/2006 of 26 May 2006), i.e. USD 3.927 per share. The performance of the GOL Agreement is subject to the fulfillment of certain conditions precedent, i.a. (a) the acquisition by PKN ORLEN of 53.7022% of Mazeikiu’s shares from Yukos International; and (b) the receipt of the European Commission’s concentration clearance. If any of the conditions precedent has not been fulfilled by 30 September 2006, neither of the parties will have the obligation to complete the transaction contemplated under the GOL Agreement. However, the parties will remain bound to close the transaction until 31 March 2007 if the only condition that has not been satisfied by 30 September 2006 is the consent of the European Commission.

Together with the GOL Agreement, the GOL will execute the Put Option Agreement, pursuant to which the GOL will be entitled to sell to PKN ORLEN 70,750,000 ordinary Mazeikiu shares, each with a nominal value of 1 litas, representing approximately 10.0006% of Mazeikiu’s share capital. The put option will remain valid for five years after the sale of the 30.6615% stake pursuant to the GOL Agreement. The aggregate price for all option shares is USD 277,835,250 (USD 3,927 per share). However, if the GOL exercises the option within three years from the sale of the 30.6615% stake to PKN ORLEN pursuant to the GOL Agreement, the aggregate price for all option shares will be USD 284,450,375 (USD 4.0205 per share).

Upon the acquisition of Mazeikiu shares from Yukos International, PKN ORLEN will be required under the Lithuanian law to tender for the remaining Mazeikiu shares. PKN ORLEN shall announce a public tender for the remaining shares within 30 days of the purchase of the Mazeikiu shares from Yukos International. The price per share offered in the mandatory public tender must not be lower than the highest price paid by PKN ORLEN for the Mazeikiu shares during the 12-month period preceding the announcement of the tender offer.

Upon the acquisition of Mazeikiu’s shares from Yukos International, PKN ORLEN will become a party to certain agreements related to the two previous privatizations of Mazeikiu conducted in 1999 and 2002, in particular, the 1999 and 2002 privatization agreements and the shareholders’ agreement between the GOL and Yukos International. If the GOL Agreement is executed by the GOL, all agreements related to the previous privatizations of Mazeikiu, including both privatization agreements and the existing shareholders’ agreement to be assigned to PKN ORLEN will be terminated immediately upon the closing of the transaction with Yukos International, and the parties thereto will be fully discharged from any and all liabilities under these agreements. Furthermore, if the GOL Agreement is executed by the GOL, the existing shareholders’ agreement will be replaced by the new shareholders’ agreement between PKN ORLEN and the GOL as of the closing date of the transaction with Yukos International. Pursuant to the new shareholders’ agreement, PKN ORLEN will maintain full operational control over Mazeikiu. The GOL will be entitled to nominate one of the nine members of Mazeikiu’s Supervisory Council and one out of the seven members of Mazeikiu’s Management Board. In addition, the GOL will be entitled to request cancellation of the resolutions of Mazeikiu’s corporate authorities if such resolutions present a threat to the national security or the energy security policy of the Republic of Lithuania. The GOL will be entitled to request that PKN ORLEN sells all its shares in Mazeikiu in any of the following circumstances: (a) Mazeikiu incurs a loss in each of any five consecutive financial years; (b) Mazeikiu’s assets with a value exceeding USD 200,000,000 are seized in connection with the enforcement proceedings following a final and non-appealable court order; (c) over 50% of votes in PKN ORLEN are acquired by an entity that, in the GOL’s reasonable opinion, presents a threat to the national security of the Republic of Lithuania. Every disposal of shares in Mazeikiu by PKN ORLEN and/or the GOL will be subject to the other party’s right of first refusal. The new shareholders’ agreement will expire upon the disposal by the GOL of any of its 70,750,000 shares in Mazeikiu.

All transaction documents are governed by English law.

PKN ORLEN’s investment in Mazeikiu is of a long-term nature.

The Yukos Agreement and the GOL Agreement are material agreements because the value of the transactions contemplated thereby exceeds 10% of PKN ORLEN’s equity.

This announcement has been prepared pursuant to par. 5 section 1 subsection 3 of the Regulation of the Polish Minister of Finance dated 19 October 2005 on the Current and Periodic Information to the Disclosed by Issuers of Securities (Journal of Laws No. 209, item 1744)

The Management Board of PKN ORLEN S.A.