Exillon Energy recognises the importance of protecting the environment in all of its activities and aims to fulfill this commitment by complying with relevant environmental legislation and regulations, continuous improvement of environmental management practices and preventing pollution.

The Group’s operations are subject to various environmental laws and regulations in Russia, including those governing emissions; waste water discharges; the reclamation of contaminated soil; and the use, handling and disposal of hazardous substances and wastes.

In addition, the Group has long-term obligations relating to decommissioning of operational facilities and remediation of soil or groundwater, and waste disposal.

Standards

Exillon Energy seeks to meet high standards for environmental protection. Our commitment to the GOST standards includes specific requirements for environmental protection and hazard control.

The Group regularly audits the environmental impact of all aspects of its activities. Environmental protection and hazard control measures include:

• Daily sampling of air, water and soil
• Control of stationary sources of air pollution emission
• Laboratory analysis of surface water
• Monitoring condition of streams, water conservation zones
• Transporting sewage to treatment facilities
• Installation of equipment for storing dangerous refuse
• Forsage -1 industrial waste furnace
• Training managers and staff in environmental protection and hazard control

In 2010, a Gas Power Generator with 1MW capacity was installed at Exillon TP enabling associated gas to be used as fuel for internal purposes. Before the installation of this equipment the gas which accompanied the extraction of oil was flared, which had a negative impact on the environment.

In addition, the Company intends to build a gas turbine plant and gas pipeline which is already included into the capital expenditure budget of Exillon TP and Exillon WS for 2011.

The Group spent a total of US$0.57 million on environmental protection in 2010 (2009: US$0.1 million), of which US$0.54 was spent at Exillon TP (2009: US$0.093 million) and US$0.03 was spent at ExillonWS (2009: US$0.01 million).