PKN ORLEN sent order of payment for AB Mazeikiu Nafta shares

Polski Koncern Naftowy ORLEN S.A. ("PKN ORLEN"), Central Europe’s largest downstream oil company hereby informs that on 14 December 2006 PKN ORLEN and Yukos International UK B.V. (“Yukos International”), headquartered in the Netherlands, signed in a brokerage house in Vilnius irreversible orders in accordance of which:
– Yukos International transfers 379,918,411 shares of AB Mazeikiu Nafta (“Mazeikiu Nafta”) to the account of PKN ORLEN,
– PKN ORLEN, as payment for the Mazeikiu Nafta shares, transfers USD 1,492 million (i.e. approximately PLN 4,287,709,600, based on the average USD/PLN exchange rates as of 14 December 2006, as stated by the National Bank of Poland) to the account of Yukos International.
The settlement of the transaction will be made through the Vilnius Stock Exchange on 15 December 2006.

On 26 May 2006, PKN ORLEN as the buyer, and Yukos International as the seller, concluded a share purchase and sale agreement (the “Agreement”) related to the purchase by PKN ORLEN of a 53.7022% stake in the initial capital of Mazeikiu Nafta (the stake is equal to 379,918,411 common shares of Mazeikiu with a par value LTL 1 per share, i.e. approximately PLN 1.1 based on the average LTL/PLN exchange rates as of 14 December 2006, as stated by the National Bank of Poland).

The transaction closing orders took place after the fulfilling/renouncing by both PKN ORLEN and Yukos International of all of the preceding conditions as determined in the Agreement. The performance of the Agreement was subject to the fulfillment of certain conditions precedent, i.e.
(a) the receipt of all consents, including the European Commission’s concentration clearance, and
(b) the Government of the Republic of Lithuania’s failure to exercise its right of first refusal with respect to the shares being purchased by PKN ORLEN from Yukos International.
The significant precedent conditions had been earlier presented in the regulatory announcement no 33/2005 dated 26 May 2006 and in the Regulatory announcement no 49/2006 dated 4 August 2006.

On 14 December 2006 the Extraordinary General Meeting of the Shareholders of Mazeikiu decided on personnel changes in the Mazeikiu Nafta Supervisory Council. Six persons indicated by PKN ORLEN have been appointed to the Supervisory Council of Mazeikiu Nafta: Mr. Marek Moroz, Mr. Czeslaw Bugaj, Mr. Marcin Wasilewski, Mr Piotr Kearney, Mr Wojciech Wroblewski, Mr. Rafal Zwierz as Members of the Supervisory Council. Mazeikiu Nafta Supervisory Council appointed from its Memebers Mr. Marek Moroz to the position of the Chairman of the Supervisory Council.

Presently the Supervisory Council of Mazeikiu Nafta consists of nine persons. In accordance with the resolutions of the Shareholder Agreement dated 9 June 2006, signed by PKN ORLEN with the Government of the Republic of Lithuania, which will come into force on 15 December 2006 - at the moment of the settlement of the transaction between PKN ORLEN and Yukos International, PKN ORLEN has the right to appoint eight members (from a total number of nine members) of the Mazeikiu Nafta Supervisory Council. It means that PKN ORLEN is authorized to appoint in future an additional two members of the Mazeikiu Nafta Supervisory Council.

The Mazeikiu Nafta Supervisory Council in its new composition may start its work from 14 December 2006. The above-described activities signify the beginning of the execution of the transaction for the purchase of the Mazeikiu Nafta shares by PKN ORLEN from Yukos International and from the Government of Lithuania. According to the current plan, PKN ORLEN will take operational control over Mazeikiu Nafta on 15 December 2006.

PKN ORLEN intention is that the Supervisory Council in its new composition appoint to the Mazeikiu Nafta Management Board six representatives of PKN ORLEN: Mr. Igor Chalupec, Mr Piotr Kownacki, Mr Jan Maciejewicz, Mr Pawel Szymanski, Mr. Krystian Pater and also designated by PKN ORLEN Mr. Paul Nelson English – up till now the General Director of Mazeikiu Nafta. In accordance with Lithuanian Law, Members of the Management Board of the mother company are not allowed to be Members of the Supervisory Council of the daughter company. Members of the Management Board of the mother company are allowed to be appointed as a Members of the Management Board of the daughter company. This fact is also caused by, different than in the Polish law, role of the Management Board in the Company’s Corporate Governance. Most of the current operational management is made by the General Director and the competencies of the Management Board are focused on making the strategic decisions (similar to the role of the Supervisory Board in accordance to Polish law).

With reference to the policy accepted two years ago and used within the PKN ORLEN Group, persons delegated from PKN ORLEN to the Supervisory Council and Management Board of Mazeikiu Nafta will renounce any remuneration from that additional position.

See also: Regulatory announcement no 79/2006 dated 4 December 2006, Regulatory announcement no 76/2006 dated 29 November 2006, Regulatory announcement no 68/2006 dated 7 November 2006, Regulatory announcement no 58/2006 dated 26 September 2006, Regulatory announcement no 49/2006 dated 4 August 2006, Regulatory announcement no 47/2006 dated 13 July 2006, Regulatory announcement no 37/2006 dated 9 June 2006, Regulatory announcement no 33/2006 dated 26 May 2006 and also the record of the Internet transmission of The Extraordinary General Meeting of PKN ORLEN dated November 30th, 2006.

This announcement has been prepared pursuant to par. 5 section 1 subsection 4 of the Regulation of the Polish Minister of Finance dated 19 October 2005 on current and periodic information to be published by issuers of securities. (Journal of Laws No. 209, item 1744).