CNOOC says 12.5 percent interest in Tangguh costs $275 million

China?s CNOOC Limited announced today that it has entered into a Heads of Agreement (the "HOA") to acquire a participating interest in the reserves and upstream production of the proposed joint venture known as the Tangguh LNG Project of Indonesia.

The HOA provides for the Company to acquire from BP an equivalent 12.5 percent stake in the Tangguh LNG Project for approximately US$275 million through the acquisition of interests in Production Sharing Contracts ("PSCs"). The Tangguh LNG Project comprises three PSC areas: the Berau PSC, the Muturi PSC and the Wiriagar PSC. The Tangguh LNG Project partners have signed a 25-year LNG Supply Contract to provide up to 2.6 million tonnes per annum of LNG to the Fujian LNG terminal project in China, beginning in 2007.

"The acquisition of a material stake in the Tangguh Joint Venture and the reserves and upstream production would expand both the Company's natural gas reserves and our upstream presence in Indonesia. This proposed acquisition, together with our recently announced proposal to acquire an upstream interest in Australia's North West Shelf's Gas Project, would be a substantial step in executing our commitment to supplying natural gas to the rapidly growing market in China," commented Wei Liucheng, Chairman and CEO of CNOOC Limited.

No indication can be given by the Company of the timing of any definitive agreement or completion of any acquisition pursuant to the HOA. Any acquisition of a participating interest in the Tangguh LNG Project will be subject to various conditions including regulatory approvals, CNOOC said. (alex/robert)