Arakis Announces Pipeline Under Construction.

CALGARY, ALBERTA--(BUSINESS WIRE)--May 7, 1998-- Arakis(NASDAQ:AKSEF) Arakis Energy Corporation ("Arakis") (NASDAQ: AKSEF) today announced that pipeline construction has begun in Sudan - another major step forward in development of the Sudan Petroleum Project. On May 4, 1998, the first length of 28" diameter steel pipe was laid near the Port Sudan end of the planned 1,500 kilometer pipeline that will run from the oil concession in south central Sudan to a marine terminal to be constructed near Port Sudan on the Red Sea coast.

On May 5, 1998, construction also began along another stretch of the pipeline route, close to Khartoum. The target date for completion of the pipeline is mid-1999. To meet the fast-track schedule, construction will be carried out simultaneously along several stretches of the pipeline right of way. The pipeline design provides for an initial throughput capacity of 250,000 barrels of oil per day.

Through its wholly-owned subsidiary, State Petroleum Corporation, Arakis holds a 25 percent interest in the Consortium that is developing the oil concession and constructing the pipeline. The Company's Consortium partners are: China National Petroleum Corporation (40 percent), Petronas Carigali Overseas Sdn. Bhd. (30 percent) and Sudapet Limited (5 percent).

Supply of the steel pipe for the pipeline began arriving in Port Sudan in early February 1998 and by the end of May 1998 an estimated 40 percent of the project's requirements will have been landed. All of the necessary excavating equipment for trenching along the pipeline route is either on site or in transit. The engineering and manufacture of the remaining components for the pipeline project, including pumps and drivers, marine facilities, field facilities, and the SCADA and telecommunications system are underway at various international locations.

Concurrently with the construction of the pipeline, the Consortium is pursuing an aggressive upstream development program on the concession to achieve a minimum 150,000 barrels per day of crude oil deliverability by mid-1999. Initial production plans encompass development of the Heglig, Unity, Toma South, El Nar and El Toor fields, including the installation of production facilities, field gathering pipelines, and a central processing facility at Heglig. Production from these areas will be transported by a 20" diameter pipeline running from Unity to Heglig, with gathering lines to collect production from the three other fields. Following treatment at the Heglig processing facility, the crude oil will be transported through the main pipeline to the marine oil terminal near Port Sudan for export.

Commenting on the recent developments, Raymond P. Cej, Arakis' President and Chief Executive Officer said, "The commencement of pipeline construction is a momentus occasion for the people and Government of Sudan - a major step towards bringing substantial oil production on stream and with it the potential for a significant improvement in the country's economic well-being. For Arakis, the fast-track program being pursued presents not only a significant challenge but also growing excitement. With first production little more than a year away, Arakis and its shareholders can begin anticipating the rewards from this major international project that has consumed the Company's energies since 1993."

CONTACT: Arakis Energy Corporation

Kristine Dow or Ron Burrows, 403/263-8069

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