Petro-Canada Sells Mature Syrian Production for C$676 Million

Petro-Canada has reached an agreement to sell the company holding its producing assets in Syria to a joint venture of companies owned by India's Oil and Natural Gas Corporation (ONGC) Limited and the China National Petroleum Corporation (CNPC) for EUR 484 million ($676 million Cdn(x)), before adjustments. The sale is retroactive to July 1, 2005 and is expected to close in early 2006, subject to Syrian government consent.

"The sale of these mature assets aligns with our strategy to increase the proportion of long-life and operated assets within our portfolio," said Peter Kallos, Executive Vice-President, International. "Syria remains an important part of our North Africa/Near East producing region, with an active exploration program in Block II and the continued pursuit of new opportunities."

As part of its ongoing portfolio management, Petro-Canada initiated a review of this portion of its production portfolio early in 2005. The company decided to put these mature, non-operated assets up for sale. Substantial interest was shown in the assets, with several companies visiting the London data rooms and submitting offers. Final bids were received in mid-November. Harrison Lovegrove and Co. Limited advised Petro-Canada in this transaction.

The assets are operated by the Al Furat Petroleum Company, a company owned by the Syrian Petroleum Company, Syria Shell Petroleum Development B.V. (Shell) and Petro-Canada. Petro-Canada interests being divested include:

• 37.5% interest in the Deir Ez Zor Service Contract and its associated Annexes
• 33.3% interest in the Ash Sham Contract and its associated annexes
• 36.0% interest in the Gas Utilization Agreement
• associated interests in the deep and lateral agreement.
• The remaining interests in these contracts are held by Shell.

These interests represent about 58,000 barrels of oil equivalent (boe) per day (before royalties) in Petro-Canada's forecasted 2006 production. Approximately $50 million in capital was to have been directed to these assets within the 2006 capital budget. From a reserves perspective, these interests account for 66.3 million boe of proved reserves (before royalties) or 24.2 million boe of proved reserves (after royalties) as at December 31, 2004. During the first six months of 2005, these assets produced 13.1 million boe (before royalties) or 4.0 million boe (after royalties).

"While these assets contribute significant volume, they represent less than 4% of Petro-Canada's consolidated earnings from operations," said Kallos.

The company expects to book an after-tax gain on the sale. The exact amount of the gain will be determined upon closing of the sale. Subject to business conditions and opportunities, Petro-Canada expects to use the majority of the proceeds from the sale to buy back shares within its ongoing Normal Course Issuer Bid program.

Petro-Canada is one of Canada's largest oil and gas companies, operating in both the upstream and the downstream sectors of the industry in Canada and internationally. Its common shares trade on the Toronto Stock Exchange under the symbol PCA and on the New York Stock Exchange under the symbol PCZ.

ONGC Limited is India's largest corporation by market capitalization. ONGC Videsh Limited (OVL), a wholly owned subsidiary of ONGC, is the second largest exploration and production company in India. OVL has a mandate to accrete overseas reserves and bring the reserve replacement ratio of ONGC close to 1.

CNPC is one of the world's leading integrated energy companies. It is a state holding company whose business operations cover a broad spectrum of upstream and downstream activities, domestic marketing and international trade, technical services, and equipment manufacturing and supply.

(x) Canadian dollar currency translation as at December 19, 2005.