Ivanhoe Energy Ecuador granted environmental license and authority to initiate operations on Ecuador's Pungarayacu oil field



    QUITO, Ecuador, May 26 /CNW/ - Robert Friedland, Executive Chairman,
President and CEO of Ivanhoe Energy Inc. (TSX: IE; NASDAQ:   IVAN), and David
Martin, Chairman and CEO of Ivanhoe Energy Latin America Inc., announced today
that Ivanhoe Energy Ecuador Inc. has received authority to assume control of
Block 20 and initiate operations on the Pungarayacu field in Ecuador. This
follows the receipt by Ivanhoe Energy Ecuador of a key environmental license
issued by the Ecuadorean government, related to the development of the
Pungarayacu field.
    Pungarayacu is considered by Ecuador to be the country's largest known
single accumulation of hydrocarbon resource. The Pungarayacu oil field,
covering 250 square miles (647 square kilometres), was discovered and partly
delineated approximately 30 years ago by Petroecuador. The field was found to
include a substantial resource of heavy oil, but development was held back due
to the challenges associated with heavy-oil production. Ivanhoe Energy's
unique and patented HTL (Heavy-to-Light) heavy-oil upgrading process provides
a solution to these challenges, enabling the field to be developed and
produced.

    The Environmental License

    Ivanhoe Energy Ecuador received an important and highly-prized
Environmental License from Ecuador's Ministry of Environment following the
Ministry's review and approval of an Environmental Impact Study (EIS) carried
out on Ivanhoe Energy's initial development plans. The EIS, initiated
approximately six months ago, was carried out by an independent consulting
firm certified by the Ministry of Environment. The EIS includes a detailed
analysis of the potential impact of Ivanhoe's initial drilling program on the
people and communities surrounding the proposed area of operations. Ivanhoe
consulted with a number of local indigenous communities and incorporated their
opinions into the proposed development plan.
    The Ecuadorian government places great emphasis on the protection of the
diverse natural habitat of the Amazon region. Ivanhoe is pleased that the
government authorities appreciate Ivanhoe's perspectives on environmental
stewardship and the environmental benefits of the company's Integrated
Heavy-to-Light (HTL) heavy oil upgrading process.

    Authority to Initiate Petroleum Operations

    Admiral Luis Jaramillo, President of Petroecuador, and Captain Freddy
Garcia, Vice President of Petroproducción, officiated in a ceremony yesterday
that granted Ivanhoe Energy Ecuador the authority to begin petroleum
operations on the Pungarayacu field in Block 20. This event formally initiated
the Appraisal Period, the first of three phases of the development program.
The authorization allows Ivanhoe Energy Ecuador to proceed to secure the
permits to begin drilling operations in the field.

    Pungarayacu Appraisal Schedule

    The first quarter of 2009 was the first full quarter of activity on the
Pungarayacu project following the signing of the contract with Petroecuador
and Petroproducción in October, 2008. During the quarter, Ivanhoe accelerated
a detailed geologic analysis of existing data on Block 20 to identify the most
promising areas of the field for the early drilling program. This analysis
also increased Ivanhoe's understanding of the future potential for Block 20.
The early wells Ivanhoe Energy Ecuador proposes to drill will help to define
the characteristics of the oil and the quality of the reservoir. Ivanhoe
expects to begin drilling operations in the third quarter of 2009.

    Pungarayacu Project Summary

    The Pungarayacu Project is a heavy-oil project in Ecuador's Amazon Basin.
Block 20 contains the Pungarayacu field, a heavy-oil field covering
approximately 250 square miles that was discovered in the early 1980s. Block
20 covers a 426-square-mile (1,100-square-kilometre) area located
approximately 125 miles (200 kilometres) southeast of Quito. Ivanhoe Energy
Ecuador Inc. signed a Specific Services Contract with Petroecuador and
Petroproduccion in October 2008 that provides Ivanhoe Energy Ecuador with the 
right to explore and develop Block 20 in exchange for a fixed fee per barrel
of oil produced and delivered to Petroproducción.
    The contract has an initial term of 30 years. To recover its investments,
costs and expenses, and to provide for a profit, Ivanhoe Energy Ecuador will
receive from Petroproducción a payment of US$37 per barrel of oil produced and
delivered to Petroproducción. The payment will be indexed (adjusted) quarterly
for inflation, starting from the contract date, using the weighted average of
a basket of three U.S. Government-published producer price indices relating to
steel products, refinery equipment and upstream oil and gas equipment. Ivanhoe
Energy Ecuador also has the right to lift oil at a Pacific coast terminal in
lieu of cash payments. Ivanhoe Energy Ecuador also has the right to develop,
produce and blend any light oil that may be found on the block.

    Corporate Structure

    Ivanhoe Energy Latin America is the parent company of Ivanhoe Energy
Ecuador. Both are part of the Ivanhoe Energy Inc. group of companies.

    FORWARD-LOOKING STATEMENTS: This document includes forward-looking
statements, including forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
include, but are not limited to, statements concerning Ivanhoe Energy
Ecuador's agreement with Petroecuador and Petroproduccion to develop Block 20
in Ecuador, Ivanhoe Energy Ecuador's ability to obtain the financing necessary
to fund this project, Ivanhoe Energy Ecuador's plan to establish an integrated
HTL heavy-oil project on Block 20 and other statements which are not
historical facts. When use in this document, the words such as "could",
"plan", "estimate", "anticipate", "intend", "may", "potential", "should", and
similar expressions relating to matters that are not historical facts are
forward-looking statements. Although Ivanhoe Energy and Ivanhoe Energy Ecuador
believe that their expectations reflected in these forward-looking statements
are reasonable, such statements involve risks and uncertainties and no
assurance can be given that actual results will be consistent with these
forward-looking statements. Important factors that could cause actual result
to differ from these forward-looking statements include the possibility that
the company will be unable to raise financing, the potential that the
company's projects will experience technological and mechanical problems, new
product development will not proceed as planned, the HTL technology to upgrade
bitumen and heavy oil may not be commercially viable, heavy oil samples from
Block 20 may not have the product qualities anticipated, Ivanhoe Energy's lack
of history in developing commercial HTL opportunities, geological conditions
in reservoirs may not result in commercial levels of oil and gas production,
the availability of drilling rigs and other support services, uncertainties
about the estimates of the reserves, the risk associates with doing business
in foreign countries, environmental risks, changes in product prices, our
availability to generate cash flow and raise capital as and when required,
competition and other risks disclosed in Ivanhoe Energy's Annual Report on
Form 10-K files with the U.S. Securities and Exchange Commission on EDGAR and
the Canadian Securities Commissions on SEDAR.





For further information:

For further information: Investors Contact: Ian Barnett, (647) 203-6588;
Bill Trenaman, (604) 688-8323; Media Contact: Bob Williamson, (604) 688-8323;
Website: www.ivanhoeenergy.com

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