Release: MedcoEnergi signs Heads of Agreement (HOA) for gas sales with PLN

Jakarta, 14 June, 2005 --PT Medco Energi Internasional Tbk.is pleased to announce that on June 10, 2005, its wholly owned subsidiaries, PT. Medco E&P Lematang (?Medco E&P Lematang?) and PT Medco E&P Indonesia (?Medco E&P Indonesia?), have signed a Head Of Agreement for gas sales commitment with power producer PLN Keramasan, South Sumatra, and an Amendment to the Gas Sales Agreement for PLN Gunung Belah Tarakan, East Kalimantan, respectively. The followings are details of such agreements:

1.Head of Agreement (?HOA?)
The HOA for gas sales commitment was signed between Medco E&P Lematang and PLN Keramasan, Palembang, South Sumatra. According to the HOA Medco E&P Lematang would supply 24 Billion British Thermal Units per Day (BBUTD)* for a total of 90 BCF to the PLN Keramasan for the period of ten (10) years, from 2006 to 2016.The agreed price is USD 2.75/MMBTU, and would be escalated 1.2% per year with price maximal of USD 3/MMBTU.

2.Amendment to Gas Sales Agreement
Such amendment was signed by Medco E&P Indonesia and PLN Gunung Belah, Tarakan East Kalimantan. The amendment was made for the purpose of changing the existing sales point from Gunung Belah to Kampung Satu, Tarakan.The gas sales from the Company?s gas fields in Lematang Block, South Sumatra, reflects MedcoEnergi?s efforts in commercializing its significant stranded gas reserves. The Management believes that such gas sales would contribute to the increase of MedcoEnergi?s overall income and its hydrocarbon proved reserves.(end of release)