ARCO, BG plc Announce Agreement to Collaborate on Indonesian LNG Project; Another Successful Gas Well Drilled

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30 October 1997

Subsidiaries of ARCO and BG p.l.c. today announced an agreement to collaborate in the supply of gas to the proposed Tangguh liquefied natural gas project in Irian Jaya, Eastern Indonesia, using reserves from the Wiriagar, Berau and Muturi production sharing contracts (PSCs).

Operational responsibility for the fields within the three blocks feeding the previously-announced Tangguh project will belong to ARCO, which has been designated the PSC representative to the state oil company, Pertamina.

Frank Chapman, BG p.l.c. Executive Director for Exploration and Production, said: "I am delighted with the conclusion of the collaboration agreement with ARCO. This will enable the government of Indonesia and all the partners involved to benefit from an optimal development of the reserves in all three licenses."

Last month, ARCO (NYSE: ARC) announced proved and probable reserves in excess of 13 trillion cubic feet of natural gas in support of the Tangguh project, a name meaning "reliability and strength" that was given to the project by Indonesia President Suharto.

Today, Atlantic Richfield Berau Inc., and BG Exploration and Production Ltd announced results of another successful well drilled by ARCO. The well, Vorwata-4, drilled under terms of the collaboration agreement, is located on the leaseline between the ARCO-operated Berau block and the BG-operated Muturi block. The well flowed gas at a tubing-limited rate of 36 million standard cubic feet per day from Jurassic age sandstone formations.

Leon Codron, President of Atlantic Richfield Indonesia, Inc., said: "We are very pleased with the productivity and quality of the gas in Vorwata-4. The results indicate that the Vorwata reservoir discovered by ARCO and its co-venturers this year extends northward into the Muturi PSC, providing the area with additional reserve potential beyond earlier estimates and further supporting a multi-train Tangguh LNG project."

To further prove the extension of the Vorwata reservoir into the Muturi block, BG and its partners — Cairns Limited, a wholly-owned subsidiary of Genting Berhad, and PT Saptapetra Wisesa — plan a continuous campaign of drilling in Muturi through to mid-1998. BG said that some of the wells will be testing the limits of the geological structure.

BG said that gas shows were encountered in several prospective horizons while drilling the Nambumbi-1 well located 4 kilometers northwest of the Vorwata-1 discovery and designed to test for reserves at the northern limit of the Vorwata field. Mechanical difficulties prevented a comprehensive testing of the well and it has now been suspended. Drilling continues in the Muturi block at Sakauni-1 which commenced on 4 October and which is located 11 kilometers northeast of Vorwata-4.

Partners in the Berau block are ARCO (48%), Occidental Berau of Indonesia, Inc(22.856%), Nippon Oil Exploration (Berau) Ltd (17.144%), and KG Berau Petroleum, Ltd (12%). Partners in the Wiriagar block are ARCO (80%) and KG Wiriagar Petroleum, Ltd (20%). ARCO is operator of both blocks through its Atlantic Richfield Berau, Inc., and Atlantic Richfield Wiriagar Inc., subsidiaries.

BG Exploration and Production operates the Muturi concession, which covers 4,652 square kilometers of the Kepala Burung region of Irian Jaya. The first well, Mogoi Deep-1, drilled onshore in the northwest of the concession in 1996, recorded cumulative flows of 40 million cubic feet per day. Partners in the Muturi concession are: BG (50%), Cairns Ltd , a wholly-owned subsidiary of Genting Berhad (45%), and PT Saptapetra Wisesa (5%).

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