Premier Oil signs Heads of Agreements with PT Perusahaan Listrik Negara (PLN) and PT Universal Batam Energy (UBE) for the sale of gas for use in power generation in Batam, from the Gajah Baru, Naga and Iguana fields in Natuna Sea Block A.

Detailed negotiations will now commence to conclude Gas Sales and Purchase Agreements (GSPA) with both PLN and UBE.

The agreement with PLN will be a "life of field" contract with plateau gas deliveries at a maximum rate of 20 billion British thermal units (“BBtu”) per day commencing in 2010, with an option for PLN to increase deliveries to a maximum rate of 35 BBtu per day.

The agreement with UBE will be a "life of field" contract with plateau gas deliveries a maximum rate of 20 BBtu per day commencing in 2010. In November, Premier announced the signature of a Heads of Agreement with Sembcorp Gas Pte Ltd for a "life of field" contract with plateau gas deliveries into the Jurong petrochemical complex in Singapore at a daily contract quantity of 90 BBtu per day commencing in 2010.

Premier is the operator of Natuna Sea Block A with a 28.67% interest and Natuna Sea Block A is a 36.9% owner of the WNTS pipeline. Premier also holds an 18.75% interest in the Kakap field. Premier’s partners in Natuna Sea Block A are Kufpec (33.33%), Hess (23%) and Petronas (15%).

North Sumatra Block A – signature of Gas Sales and Purchase Agreement

Further to Premier’s announcement on 2nd November 2007, we are pleased to announce that operator PT Medco E&P Malaka (MEDCO) and PT Pupuk Iskandar Muda (PIM) signed a GSPA in Jakarta, on Monday, December 10th, 2007. The GSPA will govern the sale of gas from the Alur Rambong, Julu Rayeu, and Alur Siwah fields in North Sumatra Block A to the PIM fertilizer plants on the northern Aceh coast.

Gas will be delivered at a plateau rate of 110 BBtu per day. MEDCO and PIM have agreed a fixed floor price of US$5.00 per MMBtu for gas with an additional upside profit share element which is related to urea prices. The contract allows for minimum sales of 223 Tbtu with ultimate sales of over 400 Tbtu.

Gas will be delivered through a new 20 km pipeline to a delivery point at an existing pipeline which will transport the gas to the PIM plant, approximately 70km away. Development activities are on-going with a view to delivering first gas in the 4th Qtr 2010. MEDCO and partners are currently seeking approval from Indonesian regulator BPMIGAS for the Block A Plan of Development and an extension of the Block A Production Sharing Contract to 2031.

Premier Oil holds a 41.66% participating interest in North Sumatra Block A. The operator MEDCO holds a 41.67% participating interest, with Japex holding the remaining interest.

Simon Lockett, Premier’s Chief Executive, commented,“We are pleased to announce the signature of Heads of Agreements for domestic gas sales into Batam and the completion of the Gas Sales and Purchase Agreement for North Sumatra Block A. These agreements commercialise discovered undeveloped gas reserves in our Indonesian acreage, which will materially contribute to achieving our production target of 50,000 boepd in 2010.”

Tags: Premier Oil, PT Perusahaan Listrik Negara, PT Universal Batam Energy