ARCO Increases its Investment in Indonesian Natural Gas

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29 March 1999
LOS ANGELES - ARCO (NYSE: ARC) confirmed today that the government of Indonesia has approved its acquisition of a 100% interest in the Muriah block offshore central Java, which includes the Kepodang natural gas field.

The block, to be operated by a wholly owned subsidiary Atlantic Richfield Muriah, Inc., is held under a production-sharing contract with Pertamina, the state oil and gas company. The block covers 7,200 square kilometers in the Java Sea and was previously operated by a subsidiary of Shell.

Kepodang, which was discovered in the early 1980s and later confirmed by Shell with the Keladi-1 well and a high resolution seismic program, is estimated to hold in excess of 400 billion cubic feet of natural gas.

"Acquisition of the Muriah block complements our Java asset portfolio and strategy enabling us to deliver natural gas economically throughout Java. It is further evidence of our long-standing commitment to be a significant natural gas provider in partnership with Indonesia for years to come," said Leon Codron, president of ARCO Indonesia and Atlantic Richfield Muriah.

"This strong partnership is also consistent with the company's thrust to become a global leader in clean energy development. Air quality is a growing concern throughout the Far East, and natural gas is the fuel of choice to replace more carbon-rich fuels."

A Memorandum of Understanding with PLN, the state electricity company, calls for delivery of Kepodang gas to PLN's Tambak Lorok combined-cycle power plant in Semarang 200kms away early in the next century. Atlantic Richfield Muriah has begun preparation of a field development plan.

Los Angeles-based ARCO currently operates 10 production-sharing contracts in Indonesia and is the country's largest natural gas producer for the domestic market. As operator for two groups of companies, ARCO currently delivers more than 600 million cubic feet per day of natural gas to Java from the Offshore Northwest Java and Kangean blocks. ARCO is also pursuing markets for 1.5 trillion cubic feet of uncommitted gas in these two blocks.
Last year, ARCO confirmed that its multi-billion dollar Tangguh liquefied natural gas project in eastern Indonesia has more than 23 trillion cubic feet of proved, probable and possible gas resources. Tangguh development will involve a total investment in excess of US$4 billion.

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