PKN ORLEN shareholding in AB Mazeikiu Nafta

Polski Koncern Naftowy ORLEN S.A. ("PKN ORLEN"), Central Europe’s largest downstream oil company hereby informs that, on 15 December 2006, a transaction was settled through the Vilnius Stock Exchange in which PKN ORLEN purchased from Yukos International UK B.V. (“Yukos International”), headquartered in the Netherlands, 379,918,411 shares in AB Mazeikiu Nafta (“Mazeikiu Nafta”). It means that today PKN ORLEN became the formal holder of 379,918,411 shares of Mazeikiu Nafta.

Thanks to the settlement of this transaction the last of the preceding conditions, as determined in the Agreement for the purchase of Mazeikiu Nafta shares dated 9 June 2006, and signed by PKN ORLEN and the Government of the Republic of Lithuania, has been fulfilled. With reference to that Agreement, on 15 December 2006, in Vilnius, an over the counter transaction was settled in which PKN ORLEN purchased from the Government of the Republic of Lithuania 216,915,941 Mazeikiu Nafta shares.

As a result of the settlement of the transaction with Yukos International and The Government of the Republic of Lithuania, on 15 December 2006 PKN ORLEN became the holder of a total number of 596,834,352 shares of Mazeikiu Nafta. The par value of one Mazeikiu Nafta share amounts to LTL 1 (i.e. approximately PLN 1.10, based on average LTL/PLN exchange rates as of 15 December 2006, as stated by the National Bank of Poland). The Mazeikiu Nafta shares held by PKN ORLEN represent 84.36% of Mazeikiu Nafta’s initial capital and entitles PKN ORLEN to 596,834,352 votes at the General Meeting of Shareholders of Mazeikiu Nafta, representing 84.36% of the total number of votes at the General Meeting of Shareholders of Mazeikiu Nafta.

The total price paid for the Mazeikiu Nafta shares purchased by PKN ORLEN from Yukos International amounted to USD 1,492,000,000 (i.e. approximately PLN 4,315,610,000.00, based on average USD/PLN exchange rates as of 15 December 2006, as stated by the National Bank of Poland). The price paid by PKN ORLEN for the Mazeikiu Nafta shares purchased from the Government of the Republic of Lithuania amounted to USD 851,828,900.31 (i.e. approximately PLN 2,463,915,094.15, based on average USD/PLN exchange rates as of 15 December 2006, as stated by the National Bank of Poland).

The book value of the Mazeikiu Nafta shares purchased by PKN ORLEN will be equal in the PKN ORLEN books to the purchase price including the costs associated with the transaction.

The share purchase was financed from financial resources including revolving credit, bridge credit, and PKN ORLEN’s own financial resources. PKN ORLEN’s purchase of Mazeikiu Nafta shares is of a long-term capital investment nature.

Yukos International is a holding company controlled by the foundation Stichting Administratiekantoor Yukos International.

Except in respect of the relationships referred to in the above mentioned agreements, no other relationship exists between PKN ORLEN and PKN ORLEN’s managing or supervisory personnel, and the sellers of the Mazeikiu Nafta shares.

The Mazeikiu Nafta shares purchased by PKN ORLEN from Yukos International and The Government of the Republic of Lithuania constitutes “significant assets” due to the fact that the price paid for the shares by PKN ORLEN exceeds 10% of the value of PKN ORLEN’s equity.

In reference to the settlement of the purchase transaction by PKN ORLEN of the shares of Mazeikiu Nafta from Yukos International on 15 December 2006, the Shareholder’s Agreement dated 9 July 2006 came into force. A description of the essential provisions of the Shareholder’s Agreement was presented in Regulatory announcement no 33/2006, dated 26 May 2006.

In accordance with Lithuanian law, the exceeding by PKN ORLEN of the level of 40% of the total number of votes at the General Meeting of Shareholders of Mazeikiu Nafta, has obliged PKN ORLEN to announce a public mandatory tender offer for all Mazeikiu Nafta shares that belong to investors other than PKN ORLEN. Until the documents regarding the mandatory tender offer are approved by the Lithuanian Securities Commission, PKN ORLEN is not allowed to vote the total number of shares held at the General Meeting of shareholders of Mazeikiu Nafta. At this time, but for no longer than 100 days, the Government of the Republic of Lithuania will vote its shares held in Mazeikiu Nafta in accordance with PKN ORLEN’s instructions. PKN ORLEN submitted to the Lithuanian Securities Commission, its motion for the approval of the documents regarding the mandatory tender offer.

Additionally Mazeikiu Nafta Supervisory Council on its today meeting appointed to the Mazeikiu Nafta Management Board two additional representatives of PKN ORLEN: Mr. Igor Chalupec and Mr Piotr Kownacki. Next Mazeikiu Nafta Management Board in its new composition appointed Mr. Igor Chalupec to the position of the President of the Mazeikiu Nafta Management Board. It should be underlined that, as it was underlined in the regulatory announcements no 83/2006 and 84/2006 dated 14 December 2006, Mazeikiu Nafta Management Board competencies are focused on making strategic decisions (the similar role has supervisory board in the Polish law). Presently Mazeikiu Nafta Management Board consists of seven members, including six indicated by PKN ORLEN and one indicated by The Government of the Republic of Lithuania.

See also: Regulatory announcement no 84/2006 dated 14 December 2006, Regulatory announcement no 83/2006 dated 14 December 2006, 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 1 and 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).

The Management Board of PKN ORLEN S.A.