POTI TERMINAL IMPLEMENTS HIGH STANDARDS OF SERVICE!

CHANNEL ENERGY
(POTI) LTD GEORGIA

Channel Energy, which has over 20 years of experience in operating third party storage business, has made an important commitment to the Poti Region, in September 2002, when it finalised its Phase I terminal with a total capacity of about 40,000 cbm with the capability to handle all white products supported by 24 wagon discharge units. During the course of the year, Channel Energy will add another 80,000 cbm of capacity that can handle black products and crude oil to become a fully integrated terminal. Channel Energy has already been operating a floating storage terminal since 2000 in the Port of Poti, where more than 300 vessels called for loading and discharge of oil products.

After 15 months of construction period, the Company has now established a state of the art terminal with all permits and health, safety, security and environmental ("HSSE") prerequisites completed. Major oil companies have now inspected the terminal and have commented for it to be a "truly European standard level terminal". Furthermore, the quality of the terminal will raise the standards of the local area by providing developed service and operations quality through know how and training as well as latest standards implementation through the transfer of technical expertise. To ensure the undertaking of such challenge at site, an ex-Cekisan terminal manager (joint venture between BP & Shell) in Turkey has been hired to manage the terminal.

In its short time of land operations, Channel Energy has already stored all white products from the Caspian region, such as jet fuel, gasoil, gasoline and naphtha in the tanks, which are more difficult oil products to handle simultaneously. The terminal is able to provide blending and additives' operations, swaps, and on-site inspection services. The Company is now targeting an annual volume turnover over 1.5 million tons and will increase this throughput to 3 million tons with the addition of the black products and crude oil terminal.

Channel Energy, by making this major investment in Poti, is demonstrating its belief in Georgia and the Region and the re-emergence of the old Silk Road, which in turn is seen as a significant element in the establishment of the TRACECA transport corridor linking Asia to Europe.

Development, however, does not stop here, and Channel Energy is already working on the next stage of its development in Georgia which will make Poti an even greater force to be reckoned within the Region and which will put Poti firmly on the World Oil Map bringing with it greater prosperity for Poti and its people, and the Georgian Economy in general.