Release: Seram's Oseil production operations update July ?03

Kalrez Energy Limited is a 2.5 percent 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 percent.

Production from the Oseil oilfield commenced on December 30th 2002, with processing taking place through a Temporary Production System (?TPS?).

On 29th April 2003, wells were diverted to the new Field Facility for commissioning, with production directed to the skim oil tank to build stock until the Main Production Facility is ready to process the crude oil. The wells have been on-line intermittently depending on the requirements of the commissioning team. As of 23rd June 2003 the field has been shut-in as the skim oil tank is full.

Average production during June 2003 was 1,645 BOPD, reflecting the interruptions to production due to commissioning.

No production was recorded during July 2003, A HAZOP study of the new plant has revealed several design faults that the operator KUFPEC and the contractor (a consortium of PT Istana Karna Karang Laut and Daewoo Corporation) are now addressing.

Until these issues are resolved, commissioning of parts of the plant cannot proceed. KUFPEC anticipate that the problems will be resolved during the latter part of August 2003.

Your faithfully,
Guiseppe (Joe) Mercorella
Chairman Kalrez Energy Ltd