SANTOS LIMITED — Capital/Financing Update 2002

MOSAIC OIL NL

$\rightarrow \rightarrow$ ASX ANNOUN

MOSAIC OIL N.

Australian Business Number: 56 003 329 084

3rd Floor 6-8 Underwood St. Sydney NSW 2000 Australia

Phone: (02) 9247 9324 International Phone: (612) 9247 9324 Fax: (02) 9241 1655 International Fax: (612) 9241 1655

CHURCHIE PIPELINE RECEIVES GO-AHEAD

The Queensland Government have passed the requisite approvals for the award of Pipeline Licence 87 (the Churchie Pipeline) to Mosaic Oil N.L. and Santos Ltd.

This approval means that pipeline construction will begin in January and the first gas is expected to be online in the Ist Quarter of 2003. It will deliver gas from the Churchie Production Licence that was awarded recently and which covers over a 90 sq km area. Gas will be delivered to the existing Silver Springs to Wallumbilla pipeline where connections exist to the Queensland gas grid.

The Churchie Field was discovered in 2001 and is located near the town of Surat in southeast Queensland. To date Churchie 1 and 2 and 3 have been drilled.

Churchie 1A (which has already encountered 10 metres of net pay in the secondary target) will drill ahead towards the primary target using nitrogen technology this weekend and is presently at 2081 metres.

Dr Brady said, " This pipeline approval is the final go-ahead and allows us to develop a new frontier and will enable us to supply high volumes of traditional gas to the Queensland market".

Dr Howard Brady, CEO Mosaic Oil (Operator):

Phone: 02-9247-9324

Interest in PPL 87 will be: Mosaic Oil Qld Pty Ltd 49% (Operator) Santos Group 51%