The first of these wells to be drilled as part of the Phase II development program on this eastern Indonesian field has been spudded. Oseil-3 is expected to take approximately 40 days to complete and will then be immediately tied into the existing production facilities as a new producing well.

The joint venture parties are Kufpec (Indonesia) 97.5% and Lion Energy’s wholly owned subsidiary Kalrez Petroleum (Seram) Limited 2.5%.

The partners are aiming to lift oil production to about 17,000 barrels of crude oil per day by mid 2005. They also intend to increase block reserves by drilling up at least two satellite structures to the Oseil oil field.

All development wells are engineered as directional wells from existing well sites and are intended to maximise horizontal section within the productive Manusela reservoir to increase production rate and reserves recovery per well, Lion said.

The Oseil oilfield has produced more than 2,000,000 barrels of crude oil since initial start-up in January 2003, from the three existing wells, Oseil-1, 2 & 4.