Go-ahead to Develop Sahara Gas for Europe

BP Amoco PLC
23 February 2000


BP AMOCO AND SONATRACH GIVE GO-AHEAD TO DEVELOP SAHARA GAS FOR EUROPE

BP Amoco and the Algerian state company, Sonatrach, are to go ahead with
developing a $2.5 billion complex of gas fields in the Sahara Desert in
central Algeria which will supply some nine billion cubic metres of gas a year
to the fast-growing markets of southern Europe.

First deliveries of gas from the seven In Salah fields, 1,200 kilometres south
of Algiers, are due in 2003. Some four billion cubic metres of gas a year have
already been assigned to ENEL in Italy and negotiations are at an advanced
stage to sell the balance in the Italian and Spanish markets.

The decision to develop In Salah follows a three-year exploration and
appraisal programme which established reserves of more than 7.5 trillion cubic
feet of high-quality gas in the seven fields, with additional volumes
identified in adjacent reservoirs.

Describing the go-ahead as 'a very significant step for us and Sonatrach', BP
Amoco Exploration chief executive Richard Olver said: 'Gas forms a major plank
of BP Amoco's growth strategy and southern Europe is a region where demand for
gas is expanding rapidly and, we believe, will continue to grow over the
coming decades.

'We and Sonatrach aim to meet a substantial portion of that demand. This
project is a key development in that process, but we are also looking with
Sonatrach at ways of extending our partnership to bring further quantities of
gas to market in the future.'

In Salah is BP Amoco's second major project with Sonatrach in Algeria.
Preparation work is also under way on the In Amenas project, a gas and
condensate development based on four fields in the east of the country for
which Amoco signed a production-sharing contract in mid-1998. In Amenas will
produce 20 million cubic metres of gas a day and 45,000 barrels of condensate
and LPG.

The estimated $2.5 billion capital cost of the In Salah development over the
life of the fields will be funded 65 per cent by BP Amoco and 35 per cent by
Sonatrach. The companies expect to award the main design and construction
contracts in the second quarter, with construction work due to begin before
year-end.

Notes for editors:

BP and Sonatrach signed a contract in December 1995 to explore and appraise
the gas fields in District 3 and set up a joint marketing venture - In Salah
Gas Marketing, based in the Hague - to secure sales contracts for this
potential new source of gas. Two jointly-staffed organisations were
established to conduct the exploration and appraisal operations in the desert
and market the gas in southern Europe.

The exploration and appraisal programme required the acquisition of 750 square
kilometres of 3D seismic and 2,000 kilometres of 2D seismic data, one of the
industry's largest land-based programmes in recent years. Five appraisal and
four exploration wells were drilled on the fields to provide data to develop
plans for production. The programme, conducted between April 1997 and February
1999, required some 1.5 million man-hours in remote desert locations and was
carried out within schedule, below budget and without incident.

In Amenas is a gas and condensate development project centred on four fields
located in eastern Algeria. The production-sharing contract was originally
signed by Amoco in June 1998.  The development will produce 20 million cubic
metres of gas and 45,000 barrels of condensate and LPG from the second half of
2002. BP Amoco will lift its share of liquids from Algerian ports and the gas
produced will be retained by Sonatrach. The project team recently completed a
programme of tests on existing wells in the fields and will undertake a 3-D
seismic survey later this year. This will provide information for engineering
design of the production facilities, the construction of which is expected to
begin in early 2001.