Release: Medco: Gas sales agreement between Medco E&P Malaka and PIM

(10 December 2007)--PT Medco E&P Malaka and PT Pupuk Iskandar Muda (PIM) have signed a Gas Sales Agreement (GSA) in Jakarta, Monday, December 10, 2007. This GSA is the next phase following the Head of Agreement (HoA) on October 30, 2007 in Jakarta and the Memorandum of Understanding (MoU) on March 21, 2007 in Subang, West Java.

Prior to the signing of GSA, PT Medco E&P Malaka and PT PIM have conducted careful negotiations regarding the value of the gas sales. PT Medco E&P Malaka will acquire 60 percent (%) increase profit on top of the base gas price provided that fertilizer price in the international market is above 365 USD/ton. Such benefit is a part of the many incentives given by PT PIM for the commitment and contribution made by PT Medco E&P Malaka for the domestic fertilizer industries.

Numerous preparations have been conducted for the development of Block A so that gas can be delivered by the fourth quarter 2010. The gas will be delivered from three fields in Block A, namely: Alur Rembong field, Julu Rayeu field and Alur Siwah field via 120 km pipeline construction. Tail gate delivery in SLA is about 60 km from PIM gate.

PT Medco E&P Malaka will supply 110 billion British Thermal Units (BBTU) of gas per day for seven years from 2010 ? 2017. The total value of the contract is estimated to be US$ 1,2 billion. The gas supply from Block A to PT PIM will provide a solution to the current gas supply problems encountered by domestic fertilizer industries.

The forthcoming Plan of Development (POD) for PT Medco E&P Malaka is currently in progress from BPMIGAS. A number of detailed technical discussions have been accomplished by the operator and BPMIGAS. Final Investment Decision (FID) between PT Medco E&P Malaka and its partner will take place at the end of December 2007. The FID is based on three points, namely: POD agreement, GSA signing and PSC extension (2011 ? 2031).

PT Medco E&P Malaka holds a 41,67 percent working interest in Block A, which extends to about 3.019 km2 and which consists of other PSC interests , namely: Premier Oil Sumatra (North) B.V. (41,66 percent) and Japex Block A Ltd, (16,67 percent).(end of release)