Strategic Agreement

Gulfsands Petroleum PLC
08 October 2007

Formation of Strategic Partnership in Middle East

Middle East Strategy Outlined


London, 8th October, 2007: The Directors of Gulfsands Petroleum plc
('Gulfsands', the 'Group' or the 'Company' - AIM: GPX), the oil and gas
production, exploration and development company with activities in the U.S.A.,
Syria and Iraq are pleased to announce the establishment of an important
strategic partnership with Cham Holding, which is well recognized as one of
Syria's most important business groups.

The strategic partnership is to be established in the form of a venture company
owned 65% by Cham Holding and 35% by Gulfsands (the 'Strategic Partnership')
with each party responsible for only their proportionate share of funding.  The
intention of the Strategic Partnership will be to pursue the acquisition of
several high-value energy projects in Syria and potentially Iraq (the
'Projects'). The directors of Gulfsands and Cham Holding have been working
together for some time in pursuing the acquisition of interests in the Projects
and matters have now reached a stage where it was considered appropriate to
formally establish the Strategic Partnership in order to be in a position to
participate in any potential Project through the Strategic Partnership.

In addition to its minority position in the Strategic Partnership, it is the
intention of the partners that Gulfsands should act as the Operator under any
Government Contract acquired by the Strategic Partnership. Gulfsands will also
be entitled to acquire additional direct interests in the Projects alongside any
participating interests acquired by the Strategic Partnership.

Cham Holding, a private joint stock company, was established in 2006 and then
completed a US$360 million equity raising for investment in a range of sectors
including the energy sector, power generation, real estate (including hotels and
leisure), finance, health and education. Cham's significant shareholders include
the Al Mashreq Investment Fund, which recently became a substantial shareholder
in Gulfsands, and a number of prominent Syrian businessmen and corporations.

Cham Holding, currently the largest private Syrian consortium, is chaired by Mr.
Nabil Kuzbari and vice chaired by Mr. Rami Makhlouf.  Cham Holding is currently
developing projects that exceed in value more than one billion U.S. Dollars,
including a wide variety of real estate and hospitality projects, some of which
are being developed within joint ventures with well known international
companies.


Maturing Middle East Strategy



In light of the Company's recent exploration success at Khurbet East in Syria
and the establishment of the Strategic Partnership, the Company will seek to
build upon these important milestones with an expansion of its activities in the
Middle East.

Gulfsands' focus in the region will be on acquiring development or
re-development projects with existing production infrastructure and proven oil
and gas reserves, and on further exploitation and exploration projects with high
potential upside, but lower technical risk.  Gulfsands will concentrate on
forming further strong working relationships with host governments and with
local business interests in a similar manner to the Strategic Partnership formed
with Cham Holding.

The Company's identified opportunities in the Middle East for the short and long
term includes:


1.  Securing early development and production of the Khurbet East discovery;

2.  Expanding the Company's exploration efforts in Syria Block 26 during the 
    period of the recently announced first extension of the Production Sharing 
    Contract during the next 3 years;

3.  Acquiring development projects in Syria, several of which have already been 
    identified by the Strategic Partnership;

4.  Finalizing formal contracts for the development of the Maysan gas gathering 
    and processing project in southern Iraq;

5.  Acquiring exploration and development rights in Kurdistan and upstream field 
    development rights elsewhere in Iraq; and

6.  Acquiring Syrian and Iraqi cross-border oil and gas development 
    opportunities which are expected to become available in the near-term 
    following formal Parliamentary approval of the new Oil and Gas Law in Iraq.



Gulfsands' Chairman, Andrew West, said:



'We are delighted to have reached agreement with Cham Holding for establishment
of the Strategic Partnership which we view as important to our ambitions in the
Middle East.

We are optimistic that, in partnership with Cham Holding, Gulfsands will be able
to acquire direct and indirect interests in several potentially high-value
energy projects which have already been identified in Syria and Iraq and which
we have been considering in collaboration with certain shareholders of Cham
Holding for some time.'

Cham Holding's Chairman, Nabil Kuzbari, said:

'Gulfsands is well known and respected in Syria as a highly professional
operator and for its recent and significant exploration success at Khurbet East
in the north east of Syria. Gulfsands is also widely recognized for its ability
to work with local companies and its competence in efficiently meeting technical
challenges and executing commercial projects.

For some time now, we have enjoyed a close working relationship with Gulfsands'
management and directors and are therefore pleased to be working with Gulfsands
in pursuing several high value energy projects where we believe our combined
skill sets will help us secure one or more significant projects and provide us
with the opportunity to create a great deal of value for our respective
shareholders.'



ABOUT GULFSANDS:



Gulf of Mexico, USA

The Company owns interests in 54 offshore blocks comprising approximately
193,000 gross acres which includes numerous producing oil and gas fields
offshore Texas and Louisiana with proved and probable recoverable reserves net
to Gulfsands at 31 December 2006 of 41.5 BCFGE (6.9 MMBOE), consisting of 27.3
BCFG and 2.36 MMBO.


Onshore USA

Gulfsands owns interests in two oil and gas fields onshore Texas, USA (98.5%
working interest in Emily Hawes Field and 37.5% working interest in Barb Mag
Field) with proved and probable recoverable reserves net to Gulfsands at 31
December 2006 of 3.1 BCFGE (0.5 MMBOE), consisting of 2.8 BCFG and 57,000
barrels of oil.


Syria

Gulfsands owns a 50% working interest and is operator of Block 26 in North East
Syria.  Block 26 covers approximately 8,250 square kilometres and encompasses
existing fields which currently produce over 100,000 barrels of oil per day.
These fields are operated by third parties including the Syria Petroleum
Company.  In the first half of 2007 Gulfsands announced an oil and gas discovery
on Block 26 called Khurbet East.  This discovery is currently under appraisal.
The Company initiated the first extension period of exploration on Block 26 for
a further period of three years commencing on 23 August 2007.  The Company has
also formed a strategic partnership with Cham Holding for acquiring oil and gas
projects in Syria and Iraq.


Iraq

Gulfsands signed a Memorandum of Understanding in January 2005 with the Ministry
of Oil in Iraq for the Maysan Gas Project in Southern Iraq and following
completion of a feasibility study on the project is negotiating details of
definitive contract for this regionally important development.  The project will
gather process and transmit natural gas that is currently a waste by-product of
oil production and as a result of the present practice of gas flaring,
contributes to significant environmental damage in the region.

Certain statements included herein constitute 'forward-looking statements'
within the meaning of applicable securities legislation. These forward-looking
statements are based on certain assumptions made by Gulfsands and as such are
not a guarantee of future performance. Actual results could differ materially
from those expressed or implied in such forward-looking statements due to
factors such as general economic and market conditions, increased costs of
production or a decline in oil and gas prices. Gulfsands is under no obligation
to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by applicable laws.

For further information, please refer to the Company's website www.gulfsands.net
or contact:




Gulfsands Petroleum (Houston)                                + 1-713-626-9564
John Dorrier, Chief Executive Officer
David DeCort, Chief Financial Officer

Gulfsands Petroleum (London)                                 020-7182-4016
Kenneth Judge, Director of Corporate Development             07733-001-002

College Hill (London)                                        020-7457-2020
Nick Elwes
Paddy Blewer

Landsbanki Securities (UK) Limited (London)                  020-7426-9000
Andrew Matharu / Tom Hulme (Corporate Finance)






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