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Santos Limited provides the following market update on key company activities. The market update is provided in the context of the Santos Retail Entitlement Offer which is currently open and
closes at 5:00pm (AEST) on Friday 5 June 2009, and as such, the usual ASX Listing Rule disclosure exceptions are currently not applicable.

GLNG®
Discussions with an Asian customer for the purchase of liquefied natural gas from GLNG are at an advanced stage. While there is no guarantee that an agreement will be concluded, the discussions are progressing well and there is the prospect that a final agreement will be reached in the near future.

PNG LNG
As previously announced, the PNG LNG Project has reached agreement on key terms for a nonbinding Heads of Agreement for LNG off take with a major Asian customer, the execution of which is subject to final Government approval. Marketing of the remaining PNG LNG volumes is progressing well and Santos expects further Heads of Agreements for LNG off take will be announced in accordance with previous guidance.

The Project Operator Exxon Mobil announced today the award of a construction contract for early civil infrastructure for the upstream portion of the PNG LNG Project. The contract work scope includes the civil engineering, construction and site preparation work required to upgrade existing infrastructure and construct new infrastructure to enable full-scale construction of the Project to commence in early 2010.

A copy of the Operator’s press release is attached to this release.

Portfolio Management
Santos announced on 11 May 2009 that a subsidiary had executed a conditional agreement to sell its 9% interest in the Kakap Indonesian joint venture. The sale agreement has now been successfully closed.

The sale of PRL 5 in Papua New Guinea was announced on 3 June 2009 and therefore the net gain or loss on asset sales to be reported in the 2009 first half accounts is unlikely to be material.

DISCLAIMER
This news release does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States, or to any person that is or is acting for the account or benefit of any U.S. person (as defined in Regulation S under the United States Securities Act of 1933, as amended (the “Securities Act”)) (“U.S. Person”), or in any other jurisdiction. The securities in the proposed offering have not been, and will not be, registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold in the United States or to or for the account or benefit of U.S. Persons except in a transaction exempt from, or not subject to, the registration requirements of the U.S. Securities Act and applicable securities laws of any state or other jurisdiction of the United States.

Santos stock symbols: STO (Australian Securities Exchange), STOSY (NASDAQ ADR), Ref
#82-34 (Securities Exchange Commission)