Re Contract

Cairn Energy PLC
4 July 2001

FOR IMMEDIATE RELEASE

                                                                   4 July 2001



                               CAIRN ENERGY PLC


The following release was issued by Shell Hydrocarbons Holdings B.V. in Dhaka,
Bangladesh today:-

Shell, Cairn and BAPEX sign Block 10 and 5 with Bangladesh

The Government of the Peoples Republic of Bangladesh and Bangladesh Oil, Gas,
and Mineral Corporation (Petrobangla), have today formally entered into
Production Sharing Contracts for Blocks 10 and 5 with a joint venture
comprising Shell Hydrocarbons Holdings BV (Shell) Cairn Energy PLC (Cairn) and
Bangladesh Petroleum Exploration and Production Co. Ltd. (BAPEX). The
Production Sharing Contracts were signed at a ceremony today in Dhaka. Block
10 (greater Noakhali & Bhola) is located in the south of the country and Block
5 (greater Khulna) in the south west.

The document was signed by Mr. Khalid Anwar (Deputy Secretary Ministry of
Energy and Mineral Resources), Mr. Saiful Ahmed (Secretary Petrobangla), Major
Md. Muqtadir Ali, Retd. (Managing Director BAPEX), Mr. Reinier Reddingius
(Managing Director Shell Hydrocarbons Holdings BV) and Mr. Bill Gammell (Chief
Executive Officer Cairn Energy PLC). Guests attending the signing ceremony
included Mr. M. Akmal Husain (Secretary Ministry of Energy and Mineral
Resources), high officials of Petrobangla, BAPEX, British High Commission and
The Royal Dutch Embassy.

BAPEX will have 10 per cent interest in Blocks 10 and 5; Shell and Cairn are
both 45 per cent partners. Shell is designated as operator of the joint
venture. The total exploration phase work program for Block 10 includes 2,500
km of seismic survey and the drilling of 5 exploration wells. The total
exploration phase work program for Block 5 includes 6,500km aerial survey, 500
km of seismic survey and one exploration well. The PSCs for Blocks 10 and 5
were initialed in May 2000.

No exploration activities will be carried out within the Sundarbans Reserved
Forest, located in Block 5. Before commencing any exploration activities in
both Blocks 5 and 10, environmental and social studies will be conducted to
assess the possible impact of exploration activities. The results will be
shared with all interested parties.

The signing is a positive step forward for Bangladesh. The signing is evidence
of a long-term commitment by the co-venturers to the future of Bangladesh. If
exploration is successful, this could result in the development of a
much-needed energy infrastructure within the Southwest region of Bangladesh.
This in turn could lead to local economic benefits, as well as providing a
possible new indigenous energy source for domestic use and commercial
activity.

Mr. Reinier Reddingius, Managing Director of Shell Hydrocarbons Holdings BV
said: 'We are very pleased the PSCs have been signed. This augurs well for
Shell's and its co-venturers' long-term commitment to, and partnership with
Bangladesh. We will carry out our activities in these blocks in an
environmentally and socially responsible manner that brings benefits to all
parties.'


Enquiries:-

Cairn Energy PLC:


Kevin Hart, Finance Director                    Tel: [phone]

Brunswick Group Limited:
Victoria Sabin, Mark Antelme                    Tel: [phone]