Upstream At a Glance

At the end of 2005, worldwide net proved crude oil and natural gas reserves for consolidated operations were 9 billion barrels of oil-equivalent and for affiliated operations were 2.9 billion barrels. Production averaged 2.5 million barrels of oil-equivalent per day, including volumes produced from oil sands and production under an operating service agreement. Major producing areas are Angola, Australia, Indonesia, Kazakhstan, Nigeria, the Partitioned Neutral Zone, Thailand, the United Kingdom, the United States and Venezuela. Major exploration areas are Australia, Brazil, Canada, the Norwegian North Sea, Trinidad and Tobago, the U.K. Atlantic Margin, the U.S. Gulf of Mexico, Venezuela and western Africa.

Chevron's upstream business explores for and produces crude oil and natural gas. We hold strategic positions in the world's largest and most prolific regions, and we are typically among the top three producers wherever we operate. During the year, we made significant progress in advancing our upstream strategy — to grow the profitability of our core areas of operation and to build new legacy positions.

Core Areas

The Unocal acquisition greatly enhanced our position in the Asia-Pacific region, the Caspian and the U.S. Gulf of Mexico, core areas where we already had a significant presence. We also continued to make good progress in maximizing the value of our base business, primarily by lowering costs while increasing reliability and production volumes. In the Gulf of Thailand, for example, we improved production substantially by returning nonproducing wells to production and by removing bottlenecks at several mature fields. Also during the year, we completed the $1.7 billion sale of a wholly owned Canadian subsidiary of Unocal. The disposition was consistent with our recent divestiture of nonstrategic producing properties in western Canada.

"Big 5"

In 2005, we moved forward with a number of major capital investments, including our "Big 5" projects. Initial production began in early 2006 from the Benguela Belize-Lobito Tomboco development offshore Angola. Construction began on production facilities for the giant Agbami Field offshore Nigeria and the Tahiti Field in the U.S. Gulf of Mexico. We made progress on the Tengizchevroil expansion project in Kazakhstan, and we reached milestones in developing our vast natural gas resources in the Greater Gorgon Area offshore Western Australia.

Natural Gas

Commercializing our natural gas resources is an important part of our upstream strategy. In addition to the Gorgon development, we are a partner in the North West Shelf project offshore Western Australia, where a major expansion is under way to increase liquefied natural gas (LNG) export capacity by approximately one-third. We also are pursuing a number of opportunities to import natural gas into North America. We recently increased our capacity at the Sabine Pass LNG import terminal, under construction in Louisiana, and we have filed an application to build an LNG regasification terminal near our Pascagoula, Mississippi, refinery. Through the Sasol Chevron joint venture, we are developing a global business to produce and market high-performing, ultraclean transportation fuels using gas-to-liquids technology.

• Began initial production from developments in Angola, Azerbaijan, Bangladesh, Chad, Indonesia, Thailand, Trinidad and Tobago, and the United Kingdom
• Drilled significant discoveries in Angola, Cambodia, Nigeria, Trinidad and Tobago, the U.S. Gulf of Mexico, and Venezuela
• Acquired promising new offshore acreage in Thailand, the U.K. Atlantic Margin, U.K. North Sea, U.S. Gulf of Mexico, Vietnam, Western Australia and western Venezuela; onshore, the successful bidder on a block in Libya
• Signed framework agreement with joint-venture partners that will enable the combined development of Gorgon and nearby natural gas fields as one world-class project; signed Heads of Agreement with three Japanese utilities for the sale of liquefied natural gas (LNG) from Gorgon
• Moved major projects into engineering and design phase — Gorgon LNG project; Angola LNG project; Usan Field, deepwater Nigeria