Release: MedcoEnergi: Final investment decision on Donggi-Senoro LNG project

JAKARTA, January 24, 2011 - PT Medco Energi Internasional Tbk (MedcoEnergi/the Company) (IDX:MEDC) is pleased to announce that PT Donggi-Senoro LNG (DSLNG), a joint venture company which 20% owned by the Company, through its wholly owned subsidiary, PT Medco LNG Indonesia (MLI), has satisfied the formalities of the conditions for the Final Investment Decision (FID) for the development of the Donggi-Senoro Liquefied Natural Gas (LNG) project (LNG Project) on January 21, 2011, following the signing of a Shareholders Resolution regarding a Final Investment Decision (FID) of the Donggi-Senoro LNG Project by MLI and the remaining 59% and 21% shareholders, Mitsubishi Corporation and Pertamina Energy Services Pte. Ltd., wholly owned by PT Pertamina (Persero) (Pertamina), respectively, on December 31, 2010.

DSLNG will construct and operate the Liquefied Natural Gas facility (LNG Plant) with a capacity of approximately two million tons per annum. The total cost of the LNG Project is estimated to be approximately US$2.8 billion, including land acquisition, infrastructure/civil work, operating costs during the construction period (Owner Costs), and Project Financing. DSLNG aims to produce and deliver its LNG and condensate by the third quarter of 2014.

The LNG will be delivered to Chubu Electric Power Co., Inc. (Chubu), Kyushu Electric Power Co. Inc. (Kyushu) and Korea Gas Corporation (KOGAS). The DSLNG project will be Indonesia?s fourth LNG project and the first LNG project developed under Downstream Business Scheme in Indonesia.

In line with the MedcoEnergi?s strategy in developing Key Development Projects, the Company plans to retain its shares ownership in DSLNG to 11.1% after FID.

MedcoEnergi through its other wholly owned subsidiary, together with PT PHE Tomori Sulawesi, will supply the natural gas from Senoro gas field at Production Sharing Contract (PSC) of Senoro-Toili Block, pursuant to the Gas Sales Agreement and its Amendment signed in January 22, 2009 and December 13, 2010.

The Daily Contract Quantity of Natural Gas to be delivered is 277.75 Billion British Thermal Unit per Day (BBTUPD) or equivalent to 250 Million Cubic Feet Per Day (MMSCFD), with the Contract Term extending to the expiry of Senoro-Toili PSC, which is in year 2027 or until the fulfillment of the Total Contract Quantity of Natural Gas amounting 1,307.508 Trillion British Thermal Unit (TBTU). Along with gas production, the field will also produce 8,000 barrel per day of associated condensate. The Natural Gas Price would be determined by using a formula which is linked to the Japanese crude oil index ? Japan Customs-cleared Crude (JCC).

The sales of natural gas from Senoro field to DSLNG will provide significant revenue to the Government of Indonesia. The development of Senoro gas facilities will commence immediately. The total costs for the upstream facilities which consist of Gas Processing Facilities, Pipeline, Drilling, condensate handling and harbor is approximately US$600 millions with target of the first gas produced by second quarter of 2014.

The Senoro Gas Development Project is one of MedcoEnergi?s 7 (seven) Key Development Projects declared in early 2008 which will become MedcoEnergi?s sources of income in the near future. After the acquisition of the 50% Participating Interest in the Senoro-Toili PSC in 2000, MedcoEnergi finally concluded its challenging journey to develop the Senoro gas field with the FID of DSLNG.

This milestone reaffirms MedcoEnergi?s commitment to develop the Senoro gas field which will create greater value to all stakeholders of MedcoEnergi. At the same time, MedcoEnergi is also proud being a national oil and gas company which manages to maintain its existence in Indonesia?s oil and gas industry and continue providing significant contribution to the nation revenues. It is also a pleasure for MedcoEnergi to support the government of Indonesia in developing the infrastructure of Eastern Indonesia through the development of natural gas in Central Sulawesi. (end of release)