SOURCE: Synthesis Energy Systems

February 19, 2007 10:31 ET

Main Construction Contract for SES' First Coal Gasification Facility Awarded

HOUSTON, TX -- (MARKET WIRE) -- February 19, 2007 -- Synthesis Energy Systems ("SES" or the "Company") (OTC: SYMX) announced that SES (Zaozhuang) New Gas Company, Ltd., its 95%-owned joint venture (the "Joint Venture") with Shandong Hai Hua Coal & Chemical Company Ltd. ("Hai Hua"), signed the main construction contract for its first coal gasification facility of low rank coals in China. With this contract, construction of the new 28,000 Normal cubic meters ("Ncum") per hour coal gasification facility in Shandong Province, China (the "Project") continues to progress according to schedule. The Project will use the U-GAS® licensed technology to cleanly convert low rank coal to synthesis gas ("syngas").

Pursuant to the terms of the contract, the Shanghai Wuye Construction Company, Ltd. ("Wuye") will provide the Project's civil construction and related project equipment and piping installation. Wuye was previously assigned the Project's initial civil work, which was completed in early February 2007. The Project is targeting substantial mechanical completion by mid summer of 2007, and the start-up to begin in the third quarter of this year. Upon successful start-up, the Company is hoping to also begin commercial operations during the third quarter, less than one year from the Project's initial ground breaking in December 2006.

Preparations for the Project have been ongoing since the Joint Venture began in August 2006. Upon successful start-up, the Project will provide approximately 100 jobs in the local community, and will be a part of expanding Shandong's economic diversification, as well as supporting the clean and efficient conversion of low-rank fuels into a stable, affordable supply of energy and chemicals. Hai Hua will use the syngas produced from the coal gasification facility as a feedstock for its newly constructed methanol plant, and as a fuel in its coke ovens and for its internal power generation facility. Future expansion plans would increase capacity up to 100,000 Ncum per hour and would accommodate Hai Hua's planned increase in methanol production and meet the gas demands of other Xuecheng industrial park tenants.

The Project is an important milestone in SES' growth strategy and the first among a number of additional project opportunities SES' international marketing and business development team is pursuing in Asia, Europe and the United States. Worldwide, SES is rapidly developing and commercializing alternative energy and chemical projects, technologies and systems based on the "clean" gasification of low-cost fuel sources and establishing U-GAS® as a reliable and efficient alternative source of energy and chemical products to manufacturers.

Tim Vail, SES President and CEO, stated, "The signing of this agreement further strengthens our commitment to complete the Project on time and on budget. Wuye has clearly demonstrated their ability to deliver as promised given their successful completion of the Project's initial civil work. Given Wuye's excellent performance, the Project is moving according to schedule, and if the start-up proceeds as anticipated we are positioned to achieve commercial operation as planned later this year."

"We're excited to continue our rapid progress towards our goal of building and owning our first U-GAS® coal gasification plant in China that provides a cost-effective and environmentally responsible solution for Hai Hua's syngas needs and pleased to have the support of Wuye as our main construction contractor to help us achieve this significant development," concluded Vail.

About Synthesis Energy Systems

Synthesis Energy Systems, Inc. is an energy and technology company that deploys proprietary systems and technology to efficiently and cleanly gasify low value fuels to replace high cost energy and chemical products sold to major global markets. The U-GAS® technology, which the Company licensed from the Gas Technology Institute, is designed to turn waste coal products into high value synthesis gas for use in power and chemical applications. The technology performs this gasification without many of the harmful emissions normally associated with coal fired energy production. SES currently has offices in Houston, Texas, Shanghai and Beijing, China. For more information on SES, visit or call (713) 579-0600.

Forward-Looking Statements

Except for historical information contained herein, the matters discussed in this press release contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended that involve substantial risks and uncertainties. When used in this press release and in any documents incorporated by reference herein, the words "expects," "will" and similar expressions identify certain of such forward-looking statements. Actual results, performance, or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of SES and are subject to a number of risks and uncertainties that are subject to change based on factors which are, in many instances, beyond SES's control. These include, but are not limited to, risks and uncertainties associated with: our early stage of development, the limited history and viability of our technology and our results of operation in foreign countries. SES cautions that the foregoing factors are not exclusive. SES assumes no obligation to update the information contained in this press release.

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