Good afternoon.

Before I begin, U.S. law requires me to point out that my remarks contain forward-looking statements, and that actual results may differ materially from these statements.
A list of material factors that may affect our future results is in our filings with the U.S. Securities and Exchange Commission.
On behalf of ConocoPhillips, we are pleased to take part in this important conference, and to offer our thoughts on U.S.-Russian Relations and Energy Security.
Clearly, these topics are of vital interest to us.
As you may know, ConocoPhillips has a history of successful involvement in Russia.
We were one of the first U.S. energy companies active here, and are now one of the largest foreign investors.
Since 1990, we have invested more than $9 billion into our Russian joint ventures. These include the Polar Lights Company, a 50-50 venture with Rosneft that was one of the first Russian-American efforts to develop a new oil field.
This year is the 15^th anniversary of the Polar Lights venture.
Then in 2004 we entered a strategic alliance with LUKOIL, and have since established a 20% ownership position in LUKOIL.
More recently, again with LUKOIL, we formed the Naryanmarneftegaz joint venture to develop oil production in the Timan-Pechora area.
We are also working with LUKOIL to identify new opportunities, both here and in other countries.
We are very pleased with our progress, and are optimistic about Russia’s energy future.
The geology is promising, and your domestic companies have a great deal of experience and expertise.
We are also optimistic about the future of relations between our two countries.
Both recognize the mutual benefits of foreign trade and investment, and the need to secure energy supplies as well as markets.
The U.S. is the world’s largest energy market, and demand is growing there.
Meanwhile, Russia is one of the world’s energy production giants – in both current output and long-term potential.
So it is only natural that our two countries have an active dialog on energy topics, one that will hopefully lead to greater energy trade.
After all, in the case of ConocoPhillips and our Russian partners, we have found that we share common goals.
Those goals are to develop your energy resources for the benefit of the Russian people and improve energy access for consumers around the world.
There is every reason to believe that our two countries also share many common goals.

Benefits of foreign participation

Without question, Russia is a driving force in the world oil market.
Indeed, you are providing much of the growth in production taking place outside of OPEC.
You also have a key role in the global natural gas market, since more than a quarter of the world’s reserves are here.
Certainly, there are obstacles to be overcome – in technology, human resources, market access and finance.
We believe that foreign companies can serve as productive partners in meeting these obstacles.
For example, in the area of finance, the International Energy Agency estimates that the world needs $8.2 trillion in investment into oil and natural gas development over the next 25 years.
Of this, $37 billion in investments are needed in Russia each year – a staggering amount.
Foreign companies can serve as sources of some of that capital.
In technology, Russia faces the same challenges confronting other producing nations. Such as:
Extending the lives of producing fields through higher efficiency and improved recovery.
Reducing the costs of remote developments.
Better exploiting complex reservoirs.
And improving the economics of developing sour gas and heavy crude oil.

Of course, Russian companies have experience in facing these challenges.
But international oil companies can bring much to the table – both their own expertise, as well their exposure to the ideas of the many other companies with which they have worked.
So Russian companies that collaborate with foreign partners can gain access to a much broader array of potential solutions.
These solutions can in turn be enhanced by applying your local experience and expertise.
Marshalling a diversity of ideas and approaches in this manner often yields the most successful solutions.
An example is what ConocoPhillips has achieved in extending the life of the Ekofisk field in the North Sea.
By working closely with our partners and the Norwegian government to develop and apply new technologies, we tripled the field’s estimated recovery.
We now expect to recover nearly 50 percent of the oil in place, over a lifespan of more than 50 years.

New models of engagement

Challenges and opportunities like this are increasingly common, because the operating environment is changing.
To establish and sustain production, companies must:
- go greater distances,
- operate in more difficult geologic and surface environments,
- and build more complex and highly integrated delivery systems.
These require more sophisticated technologies, skilled personnel and greater investments.
To spread the cost, share the risk and find the most effective solutions, new models of collaboration are emerging – such as our LUKOIL alliance.

The COP-LUKOIL experience

This alliance is much more than just a financial transaction. It is a true partnership, with our objectives aligned with those of LUKOIL and its other shareholders.
There is shared respect at both the executive and technical levels, and a common desire to improve both companies through the sharing of knowledge and best practices.
We are exchanging employees between our companies, with our people working side-by-side for months at a time.
Both companies are focused on creating value by using complementary technologies and strengths to increase production and improve operations – both upstream and downstream.
In the Timan-Pechora venture, we are providing a predominately West Siberian-style project with an infusion of several high-impact applications from ConocoPhillips’ operations on Alaska’s North Slope.
These have helped reduce the number of drilling pads from ten to three – while doubling peak production, reducing environmental impact and improving development economics.
We’re also using some construction methods that proved successful in Alaska.
Overall, the blending of the two companies’ technologies has saved more than $500 million.

Assisting the global aims of Russian companies

Looking beyond Russia, we believe that international oil companies can be useful to Russian firms that are expanding their scope into other nations.
This collaboration can extend throughout the value chain – from exploration and production, to refining and marketing, to gaining increased access to large, well-established markets.
In fact, market security is becoming just as critical as supply security, given the huge investments and long lead times required by today’s projects.
Other opportunities for collaboration extend to the global natural gas market, in which Russia is already a major participant.
Our experience in natural gas goes back more than 70 years, to the beginning of the U.S. long-distance pipeline market.
We are North America’s leading non-government producer of natural gas, and have served as a pioneer in development of LNG production and Arctic operations.
Just as diversification of energy sources enabled our own company to grow, we expect this concept to improve energy supply security for Russia and the world.

Continued confidence in Russian collaboration

We strive to be open-minded and innovative in working with our partners – both in Russia and elsewhere.
Our relationship with LUKOIL is very successful, and we are confident it will flourish.
It is not an exclusive relationship, and we are seeking other partnerships.
Of course, we are aware of the possibility that Russia may revise the subsoil law to restrict foreign investment in strategic resources.
We recognize the right of every country to manage its resources for the maximum benefit of its citizens.
Therefore, we have no objections to the changes that have been proposed.
We are seeking meaningful positions in projects that would enable us to contribute our financial capabilities, management experience and technical expertise.
In return, we seek a level of decision-making participation that is proportionate to our investment.
We also believe that foreign investment should be a two-way street.
Just as we seek a greater presence here, we support those Russian firms that seek a greater presence in other countries – including in the U.S.
All the benefits we ascribe to foreign investment in Russia, also apply to Russian investment in foreign markets.
Such as opportunities for risk sharing, the exchange of technology and operational knowledge, and integration across value lines.
We believe that other benefits will develop as Russian companies expand into foreign markets.
Regardless of the specifics of a particular business venture, we believe that successful collaboration must be built around five components:
Complementary business and technical strengths.
Material investment stakes for each company.
A common dedication to maintaining good relations throughout the companies, starting with the CEOs.
A commitment to uphold the sanctity of contracts.
And finally, a strong alignment of goals – not just project goals but also the broader long-term aspirations of both companies.
ConocoPhillips views Russia as a country committed to resource development and an expansion of exports.
That is why we are investing here.
You are vital to the world’s energy supply security – just as the international oil companies can be vital to your energy market security.
And these facts, combined with our experience working side-by-side with Russian companies – give us great optimism for your energy future.

Thank you.