Conoco Awards Contracts for Indonesia Natural Gas Development.

Business/Energy Editors

HOUSTON--(BUSINESS WIRE)--Sept. 6, 2001

Conoco (NYSE:COCA) (NYSE:COCB), under its South Natuna Sea Block B Production Sharing Contract (PSC) with Indonesian state oil and gas company Pertamina, has awarded two engineering, procurement, construction and installation (EPCI) contracts for the US$1.6 billion Belanak natural gas development offshore Indonesia, approximately 125 miles (200 kilometers) from Singapore.

The US$587 million contract for a floating production, storage and offloading (FPSO) unit was awarded to PT Brown & Root Indonesia, and the US$157 million contract for two wellhead platforms and associated pipelines and oil offloading buoy was awarded to PT J. Ray McDermott Indonesia.

The EPCI contracts support two separate natural gas sales agreements, both supplied by the Conoco-operated South Natuna Sea Block B PSC. The first natural gas sales agreement is a 22-year contract between Pertamina and Singapore's SembCorp Gas for the long-term delivery of natural gas to Singapore. The second agreement is a 20-year contract between Pertamina and Malaysia's state oil and gas company Petronas for the delivery of natural gas to Malaysia.

With expected ultimate production of approximately 600 billion cubic feet of natural gas, and 100 million barrels of oil, condensate and liquefied petroleum gas (LPG), Belanak is the cornerstone for supplying future natural gas under both agreements, and for the development of extensive reserves of liquids in the South Natuna Sea Block B PSC.

The Belanak structure will be developed utilizing an FPSO with LPG extraction facilities; two wellhead platforms; 38 wells; a floating storage and offloading (FSO) unit for LPG; a gas export pipeline; and intra-field pipelines.

In addition, an estimated 1.4 trillion cubic feet of natural gas and 150 million barrels of oil, condensate and LPG from at least six other nearby fields will be produced through the Belanak facilities, which will serve as a central gathering hub. This will significantly lower development costs by reusing and avoiding duplication of facilities, as would have been the case with individual, non-coordinated developments.

The Belanak FPSO will process up to 350 million cubic feet of natural gas per day for export; up to 100,000 barrels of oil and condensate per day; and up to 23,000 barrels of LPG per day. The 1,000-foot vessel will have the capacity to store up to one million barrels of oil, which will be off-loaded to tankers for onward transportation. It will be installed and ready for production in late 2004.

Conoco Inc., through its wholly owned subsidiary Conoco Indonesia Inc. Ltd., holds a 40-percent working interest in the South Natuna Sea Block B PSC. Other partners include Inpex Natuna, Ltd. with 35 percent and Texaco South Natuna Sea, Inc. with 25 percent.

Conoco is a major, integrated energy company active in over 40 countries.

Forward-Looking Statement Disclaimer: This document contains forward-looking statements relating to the company's operations and business plans that are based on management's current expectations, estimates and projections. These statements are not guarantees of future performance, involve certain risks, uncertainties and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove to be accurate. Actual outcomes and results may differ materially. Factors that could cause actual results to differ materially include without limitation changes in crude oil and natural gas prices; unsuccessful exploratory and development drilling; failure to achieve expected reserve or production levels for existing and future projects due to operating hazards, drilling risks, and the inherent engineering uncertainties in estimating oil and gas reserves; difficulties or cost-overruns in constructing production facilities; potential disruption or interruption of the Company's facilities and operations due to accidents or political events; general domestic and international economic and political conditions; and other matters set forth in the Company's periodic filings with the Securities and Exchange Commission.

Cautionary Note to U.S. Investors: The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this announcement, such as "reserves" and "estimated...cubic feet of natural gas...and barrels of oil," that the SEC's guidelines strictly prohibit us from including in filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 10-K, File No. 1-14521, available from us at 600 N. Dairy Ashford, Houston, Texas 77079. You can also obtain this form from the SEC by calling 1-800-SEC-0330.