Update on Crude Oil Swap Agreement

8 April 2010

DRAGON OIL PLC

(the "Company" or together with its subsidiaries "Dragon Oil" or the "Group")

Update on Crude Oil Swap Agreement

Since the commencement of the PSA, Dragon Oil has been marketing the majority of its entitlement barrels through a crude oil swap agreement with a subsidiary of the National Iranian Oil Company, Naftiran Company Limited. In 2009, Dragon Oil sold approximately 90% (2008:80%) of its entitlement barrels through this marketing route. The term of the swap agreement was for 10 years and it has recently expired.

To gain further access to international markets and maintain flexibility in operations, Dragon Oil has historically maintained alternative routes for its crude oil. Accordingly, in 2009 Dragon Oil exported 10% (2008: 20%) via Baku, Azerbaijan despite achieving lower realised prices as compared to sales via Iran.

Dragon Oil is currently negotiating with Naftiran Company Limited in relation to a new swap agreement or extending the term of the existing swap agreement. As there is no certainty at this time with regard to the outcome of these negotiations, Dragon Oil is making interim arrangements to market additional quantities of crude oil through the western route via Baku, Azerbaijan.

Dragon Oil is satisfied that there is sufficient capacity in its existing and other marketing routes to satisfy current production.

For further information please contact:

Media enquiries:

Citigate Dewe Rogerson (+44 20 7638 9571)

George Cazenove

Investor and analyst enquiries:

Dragon Oil plc (+ 44 20 7647 7804)

Sally Marshak, Investor Relations

About Dragon Oil

Dragon Oil Plc is an innovative international oil and gas development and production company, quoted on the London and Irish Stock exchanges (Ticker symbol: DGO). Its principal producing asset is in the Cheleken Contract Area, in the eastern section of the Caspian Sea, offshore Turkmenistan.

Dragon Oil (Turkmenistan) Ltd., a wholly owned subsidiary of Dragon Oil Plc, holds 100% interest in and is the operator of the Production Sharing Agreement for the Cheleken Contract Area in the Caspian Sea, offshore Turkmenistan. Operational focus is on the re-development of two oil producing fields, Dzheitune (Lam) and Dzhygalybeg (Zhdanov).

www.dragonoil.com