part of the announcement

KALREZ ENERGY LIMITED 2003-01-02 ASX-SIGNAL-G

HOMEX - Perth

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Oil production has commenced from the Oseil Oilfield, with oil
currently flowing from Oseil-4 at a rate of approximately 4,000
barrels of oil per day being delivered directly onto the oil tanker
at the Oseil Jetty. There is currently over 10,000 barrels of oil in
stock within the tanker.

The Temporary Production System ("TPS") is being stabilised with
production from Oseil 4, prior to Oseil-l and Oseil-2 being brought
on stream over the next few days. The objective is to increase the
flow rate to about 12,000 bopd over the next 7 to 10 days.

The President of Kufpec (Indonesia) Limited, Mr David Lamb, has been
quoted in early December 2002 in Petromindo.Com as saying "First
phase development of Oseil field will commence between December 19 to
December 21 this year with initial output of 8,000 barrels per day
(BPD) of crude with peak production expected to reach 15,000 BPD in
February next year."

Kalrez Energy Limited is a 2.5% shareholder in the Seram Joint
Venture which owns and operates the Oseil oilfield. The major
shareholder, and operator of the JV, is Kufpec (Indonesia) Limited
with 97.5%.

This first production is the result of a work program that commenced
with the initial discovery of Oseil-1 in 1993, with the development
plan approved by Pertamina in January 2000.

Initial oil production is through the TPS as the Final Acceptance
Date for the Main Production Facility ("MPF") is currently scheduled
for March 30th. As a result the current crude production will be
unprocessed and will sell at a discount to the Products to be
produced from the MPF when available.

This unprocessed crude is being sold under contract to BP in
Singapore, with contract pricing relating to Singapore High Sulphur
Fuel Oil ("HSFO") pricing.

More information on the Seram JV and the Oseil Oilfield is attached.
For further enquiries please feel free to contact Mr Eddie Smith or
Mr Simon Lill at the Company's offices on (618) 9362 9330.