RELEASE: Oseil oil field flows and loads

Following is a release from Kalrez Energy Limited:

Oil production has commenced from the Oseil Oilfield, with oil currently flowing from Oseil-4 at a rate of approximately 4,000 barrels of oil per day being delivered directly onto the oil tanker at the Oseil Jetty. There is currently over 10,000 barrels of oil in stock within the tanker.

The Temporary Production System (?TPS?) is being stabilized with production from Oseil-4, prior to Oseil-1 and Oseil-2 being brought on stream over the next few days. The objective is to increase the flow rate to about 12,000 bopd over the next 7 to 10 days.

The President of Kufpec (Indonesia) Limited, David Lamb, has been quoted in early December 2002 in Petromindo.Com as saying ?First phase development of Oseil field will commence between December 19 to December 21 this year with initial output of 8,000 barrels per day (BPD) of crude with peak production expected to reach 15,000 BPD in February next year.?

Kalrez Energy Limited is a 2.5 percent shareholder in the Seram Joint Venture which owns and operates the Oseil oilfield. The major shareholder, and operator of the JV, is Kufpec (Indonesia) Limited with 97.5 percent.

This first production is the result of a work program that commenced with the initial discovery of Oseil-1 in 1993, with the development plan approved by Pertamina in January 2000.

Initial oil production is through the IFS as the Final Acceptance Date for the Main Production Facility (?MPF?) is currently scheduled for March 30th. As a result the current crude production will be unprocessed and will sell at a discount to the Products to be produced from the MPF when available.

This unprocessed crude is being sold under contract to BP in Singapore, with contract pricing relating to Singapore High Sulphur Fuel Oil (?HSFO?) pricing.

More information on the Seram JV and the Oseil Oilfield is attached. For further enquiries please feel free to contact Eddie Smith or Simon Lill at the Company?s offices on (618) 9362 9330. (*)

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