Release: MedcoEnergi signed HOA with PLN to supply gas from Tuban Block

(Jakarta - August 25, 2005) - On August 15, 2005, PT Medco Energi Internasional Tbk (the ?Company?/?MedcoEnergi?) through its wholly owned subsidiary, PT Medco E&P Tuban (?Medco Tuban?), and its partners in a Joint Operating Body Pertamina-PetroChina East Java (?JOB P-PEJ?), PT Pertamina (?Pertamina?) and PetroChina International Java Ltd. (?PetroChina?), has signed a Head of Agreement For Gas Sale and Purchase (?HOA?) with a state electrical company PT Perusahaan Listrik Negara (?PLN?).

In the HOA the JOB P-PEJ will sell and supply the flared associated gas (?gas?) from Tuban Block to PLN. Expected amount of gas supply shall be 5 to 7 million cubic feet per day (?mmcfd?). The gas price shall be USD 1.10 per million british thermal unit (?mmbtu?), and will be re-evaluated after 6 years as from the delivery and acceptance of the gas for the first time. The commencement date and period of the gas supply will be further stipulated in the Gas Sales and Purchase Agreement (?GSA?).

MedcoEnergi effective interest in Tuban JOB is 25%. The Company acquired the block back in 2002. The expiry date of the block is 2018.

The Company?s Management expects that the GSA could be completed soon so that we could create value to the flared gas in Tuban block. (end of release)