Santos Signs Indonesian Gas Sales Agreement

Santos Limited (through its wholly owned subsidiary Santos (Sampang) Pty Ltd) and its joint venturers are set to secure a slice of the developing East Java gas market following the signing of a new long term agreement to sell over 90 billion cubic feet (BCF) of gas. Santos and its joint venturers have signed a Gas Sales Agreement (GSA) with PT Indonesian Power for a minimum of 40 million cubic feet of gas per day for up to ten years for the entire reserves of the Oyong field. This follows the Heads of Agreement signed in February 2003.

The Gas Sales Agreement is subject to certain conditions being satisfied, including approval of the development proposal by the Oyong Joint Venture participants. Gas sales are expected to commence in early 2005.

The Oyong field, located in the Sampang PSC, was discovered in August 2001 and has over 90 BCF of proven and probable gas reserves and conservatively estimated reserves of 5 million barrels of recoverable oil.

"The Oyong project is Santos' first operated off-shore gas development in Indonesia. Hence this is a significant milestone in our efforts to build the South East Asian business, said Santos Managing Director, Mr. John Ellice-Flint.

"This is a major step towards final project approval expected before the end of the year." The Oyong gas and oil field is in 45 meters of water, 60 kilometers north east of PT Indonesia Power's 766 megawatt open and combined cycle gas turbine facility at Grati, Indonesia. Onshore gas processing facilities will be established adjacent to the Grati power station.

PT Indonesia power is the largest of the wholly owned generating subsidiaries of the State owned national electricity company, PLN. PT Indonesia Power operates 8968 MW of generating capacity supplying the Java-Bali grid and has a 50 per cent market share. The gas sales agreement could not have been reached without the strong support from the Indonesian government regulator, BPMIGAS, the Ministry of Energy and Mineral Resources and the commitment of Santos, its co-venturers and PT Indonesian Power. The Oyong Joint Venture is working to complete development approval as soon as possible and the final investment decision is expected to be reached by the end of the third quarter 2003.

Participants in the Sampang PSC are Santos (Sampang) Pty Ltd as operator with 45%; Coastal Indonesia Sampang Ltd with 40% and Cue (Sampang) Pty Ltd with the remaining 15%.

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