We refer to our announcement dated 3 January 2006 in relation to the notification of award dated 30 December 2005 from Oil and Natural Gas Corporation Limited ("ONGC") to our wholly-owned subsidiary, Sarku Engineering Services Sdn Bhd ("Sarku"), awarding the contract for the revamping of 26 well platform project ("Contract").

The Board of Directors of SapuraKencana Petroleum Berhad (the "Company") wishes to announce that, on 21 September 2012, Sarku has commenced Arbitration Proceedings by filing a Statement of Claim against ONGC in relation to disputes pursuant to the Contract for a sum of INR1,063,759,201.45 and USD123,819,632.10 (including interest, costs, losses and damages).

The arbitration proceedings are not expected to have an adverse material impact on the earnings and net assets of the Company. Based on the advice from Sarku's legal advisors, the Directors of the Company are of the opinion that Sarku has a reasonable basis for its claims against ONGC.

None of the directors or major shareholders of the Company or persons connected with them has any interest, direct or indirect in the aforesaid proceedings.

This annoucement is dated 21 September 2012.