BP Farming Out Prospect in East Java Sea

BP Indonesia is offering to farm-out, on a promoted basis, a minority working interest in the Bawean-1 Production Sharing Contract. There may be a potential opportunity to equalize equity with the adjacent Muriah PSC (containing the Kepodang Gas Field), pending approval of the development and given an economic discovery in the Bawean 1 PSC. Currently, BP Indonesia holds a 100% working interest in both concessions.

The Bawean-1 PSC is located in offshore East Java, near Bawean Island, and approximately 110 km northeast of the recent BP Kepodang Field gas discovery.

BP Indonesia has identified a robust exploration gas prospect named 'Titan', as well as several other potential gas leads. The Titan prospect has been defined by high quality 3D seismic and is located in 270 feet of water, with bright seismic gas anomalies in the Middle Miocene at 2100 feet subsea, analogous to the Kepodang Field. Estimated GIIP for the prospect is 600 bcf.

Bawean-1 PSC firm work commitments include the drilling of two (2) exploration wells, a remaining 3D seismic commitment of approximately 325 square kilometers (within the first 3 years of the contract), and a G&G commitment.

BP is also offering for farmout to a selected group of companies undivided interests of up to 40% in the West Arguni, East Arguni and Bomberai (Babo) Exploration Production Sharing Contracts (PSC's) which lie adjacent to the Wiriagar, Berau and Muturi PSC's containing the Tangguh Field complex. BP currently holds an 80% interest in each of the three Exploration PSC's while its partners, Inpex in the West and East Arguni PSC's and Kanematsu Petroleum in the Babo PSC, hold 20%, respectively.

The Arguni and Babo PSC's are located immediately to the south of the Berau, Muturi and Wiriagar PSC's, which with their 18 tcf (2P) of certified gas reserves provide the underpinning for the Tangguh LNG project. The project expects sanction in 2002 and is currently tendering for LNG supplies to facilitate a two-train start up in 2006. BP currently holds approximately a 40% equity share of Tangguh reserves.

Located in the migration pathway to the Tangguh gas accumulations to the north, the Arguni and Babo blocks offer prime exploration potential. 15-20 tcf of mean unrisked reserves have been identified in prospects and leads in the blocks on offer. Being analogs to discoveries in the neighboring blocks to the north, several of the prospects and leads are moderate risk and will be further derisked by 2002 seismic acquisition currently in progress on the West Arguni PSC.