Lundin delays phase 2 Block PM-3 offshore Malaysia-Vietnam

Lundin Oil, operator of Block PM-3 CAA, the Commercial Arrangement Area between Malaysia and Vietnam, announces that Phase-II of the PM-3 CAA oil and gas development has been deferred due to the current low oil price environment.
The Company is in close consultation with Petronas and its partners, Petronas Carigali and PetroVietnam Exploration and Production with a view to agreeing a new timetable for Phase II which was originally due to come onstream in December 2000 at the rate of 250 mm cfpd of gas and 40,000 bpd of oil.

Phase I, which consists of a light weight structure on the Bunga Kekwa Field and a FPSO, continues to produce at the rate of approximately 12,000 bpd and the Company is currently studying ways to enhance oil production in the short to medium term.
The deferment of Phase II offers an opportunity to optimise the overall development of the Block in view of recent drilling successes in the Bunga Seroja channel sands which resulted in a material increase in the hydrocarbonreserves within the Block (380 mm boe at the beginning of 1998). Petronas and PetroVietnam have both expressed continuing interest in taking gas from the Block to meet their future gas demands.

Ian Lundin, president of Lundin Oil said, "This deferment is actually a positive development as it allows us to fine tune the Project and take a fresh look at all aspects of the development with a particular focus on reducing the capital costs and optimising production levels. We enjoy an excellent working relationship with Petronas, PetroVietnam and our partners and are grateful for their continued support in this difficult market environment. We remain committed to the project and are very confident that the substantial oil and gas reserves in PM-3 CAA will be fully developed in the most prudent and efficient manner possible."
Lundin Oil AB has a 41.44 % interest in the Block, Petronas Carigali and PetroVietnam E & P have 46.06 % and 12.5 % interest respectively.