RELEASE: Seram's Oseil production operations update

Kalrez Energy Limited is a 2.5% shareholder in the Seram Joint Venture that operates the Oseil oilfield. The major shareholder, and Operator of the JV, is KUFPEC (Indonesia) Limited with 97.5%.

Production from the Oseil oilfield commenced on December 30th 2002, with processing taking place through a Temporary Production System ("TPS") nominally rated to approximately 12,000 barrels per day throughput.

The TPS facility is a temporary process facility to be utilized until the permanent facilities currently being installed are completed. Current expectations are that the permanent facilities will be available during April 2003.

REPORTING PERIOD	From midnight (19th Jan 2003) To midnight (27th Jan 2003)
Oil produced for the period	49,976 barrels of oil
Average daily production for the period	6,247 barrels of oil
Cumulative oil produced	206,845 barrels of oil
Oil sold during the period	0 barrels of oil
Oil in stock	206,845 barrels of oil

The above represent total production from the Oseil oilfield as reported by the Operator. Kalrez entitlement is 2.5% of this production after deducting operating costs and Indonesian government entitlements.

COMMENTS

All three wells Oseil #1, 0seil #2 and Oseil #4 on production.

During the reporting period, rates at all wells had to be cut back as BS&W increased. The TPS was not capable of segregating the water to requisite level of 0.5% BS&W delivered to BP tanker Shanghai.

Steam heaters are in transit to the site for installation in the process. The injection of heat into the process is expected to significantly aid the process separation of water, enabling rates to be lifted.

At the reduced rates, process temperatures consequently drop and foaming problems are magnified. Steam heaters will also obviously assist control of the foam problem.

The next scheduled update on Oseil production will be issued February 3rd, 2003.

G A Mercorella, Chairman, Kalrez Energy Ltd. (*)