Altona Energy Regulatory News (ANR)

26 May 2011

Altona Energy Plc / Index: AIM / Epic: ANR / Sector: Exploration & Production

Altona Energy Plc (AIM:ANR)

Coal and Biomass Gasification Agreement with Tongjiang, China

Highlights

·; Agreement with Tongjiang International Energy Co. Ltd ('Tongjiang'), to identify and evaluate coal and biomass gasification projects in China for the production of clean energy and transportation fuels

·; Builds on Tongjiang's extensive network in China, including strong track record of project sourcing and financing of coal and other resources. Tongjiang was instrumental in the introduction of China National Offshore Oil Corporation ('CNOOC') to Altona Energy Plc

·; Leverages Altona's experience in gasification, project development and key relationships with clean energy technology partners,

- including Rentech, Inc Agreement (May 2011) covering Fischer-Tropsch Process and biomass gasification proprietary technology, China

·; Principal focus of the Company remains the development of the Arckaringa Project in joint venture with CNOOC-NEIA

Altona Energy Plc ('Altona' or 'the Company'), the AIM-listed Australia-based energy company, today announces that it has entered into a Memorandum of Understanding (the "Agreement") with Tongjiang, to develop a strategic partnership in China to identify and evaluate coal and biomass gasification projects for the production of clean energy and transportation fuels ('Projects').

Tongjiang, a Hong Kong based private investment group, has been a strategic shareholder in Altona since February 2008, and was instrumental in the introduction of CNOOC to the Company. Tongjiang is currently the largest shareholder in the Company, with an interest of 20.9% following completion of the £1m placing, announced on 13 May 2011. Tongjiang has a strong track record in the procurement and financing of significant coal and other resource assets in China.

Under the Agreement, Tongjiang will identify and share with Altona potential Projects in China for initial evaluation. Altona will contribute its experience in gasification and project development and relationships with clean energy technology partners to evaluate the Project opportunity. Should Altona and Tongjiang mutually agree to proceed further with the Project, the parties will negotiate a joint development agreement for that Project. Should Altona decide to not proceed, Tongjiang will have sole right to continue with that Project opportunity, but without any rights to utilise Altona's relationships with technology partners.

Altona has developed relationships with a number of key clean energy technology providers. These relationships include the recently announced agreement with Rentech to evaluate coal and biomass gasification projects. The agreement with Rentech extends to China for the application of Rentech's proprietary technologies for the Fischer-Tropsch Process and the gasification of biomass, for the production of transportation fuels such as low sulphur diesel and aviation fuels. In addition, Altona has relationships with the holder of exclusive rights to proprietary fuel cell technology for application in China for the generation of direct current ('DC') electricity using hydrogen produced from the gasification of coal. The production of DC electricity has the significant advantage in that it can be transmitted to users via buried cable as opposed to conventional transmission tower systems

Commenting today Chris Lambert, Executive Chairman of the Company said: "The principle focus of the Company very much remains the Arckaringa Joint Venture with CNOOC-NEIA and we look forward to updating shareholders on the further progress being made on the bankable feasibility study. In the process of developing the Arckaringa coal-to-liquids project we have built up an experienced team and network, as well as relationships with key proprietary technology partners in gasification and clean energy. The agreement with Tongjiang, our strategic investor, represents an exciting opportunity to leverage our experience and relationships, together with Tongjiang's significant network and resources, to partner in the evaluation and development of coal and biomass clean energy projects in China."

Peter Fagiano, Executive Director of the Company responsible for Project Technology said: "The technology partnerships we have put in place will provide an excellent basis for developing such projects in China. It is our intention to establish an alliance with a Chinese Design-Build Contractor with successful experience in clean energy projects."

**ENDS**

For further information, please contact:

Notes:

Altona Energy Plc is an AIM listed Australian based energy company. Its asset is an estimated 7.8 billion tonne coal resource (non-JORC) in the Arckaringa Basin of South Australia (JORC-compliant: 1.287 billion tonnes). This is considered by the Board to be one of the world's largest untapped energy banks. Per Jacobs Engineering's study for the Company, assuming a 50% conversion of CTL fuels and 50% to synthetic gas ('Syngas'), Arckaringa total coal resources (both JORC and non-JORC) would represent respectively 28% and 29% of current North Sea remaining proven reserves of 10,900mb of oil and 114,800 bcf of natural gas.

Altona has already accomplished a number of key phases in its development:

·; The Company has agreed the terms of a joint venture agreement with CNOOC-NEI, a subsidiary of Chinese oil major China National Offshore Oil Corporation, to accelerate the Arckaringa Project towards commercialisation.

·; Under the terms of the agreement, CNOOC-NEI will fund the bankable feasibility study ('BFS') for a coal mine and an integrated value-added project.

·; The current base case is a 10mb per year CTL plant and 560MW co-generation power facility.

·; CNOOC-NEI will also act as the operator and take responsibility for assessing the full potential of the coal resource, in return for a 51% interest in the exploration licences.

·; It is envisaged that numerous new additional projects may also be opened up to create a multi-project, multi-national business.

CTL

The quality of the Company's coal is suitable for conversion to synthetic gas ('Syngas'), using existing commercial CTL technologies. The process involves two major stages;

1. gasification to produce Syngas rich in hydrogen and carbon,

2. a liquefication stage where the Syngas is reacted over a catalyst to produce high quality, ultraclean synthetic fuels and chemical feedstocks.

CTL is a prime example of clean coal technology - the associated combined cycle units produce negligible sulphur oxides, significantly less nitrogen oxides and 10-20% less CO2 per unit of power generated than a conventional coal fired plant, whilst carbon capture and storage offers the potential to reduce the overall greenhouse gas emissions from CTL to below the 'well to wheel' level of fuels derived from crude oil. The technology is best demonstrated in South Africa, where currently 30% of the country's gasoline and diesel fuel needs are met through CTL plants.