Report to Stockholders

By Mike Wirth, Executive Vice President for Downstream
Chevron Corporation

Overview of Downstream

Houston, Texas, April 26, 2006

Good morning. I'm pleased to be here today to discuss downstream's accomplishments in 2005, as well as our plans for the future.

Downstream comprises Chevron's supply and trading, refining, and fuels and lubricants marketing operations.

We do business in approximately 175 countries.

We manufacture more than 2 million barrels per day of refined products in 19 wholly owned or joint-venture refineries.

We market motor fuels through more than 26,000 retail outlets and lubricants through a global network.

And, each day we serve millions of customers throughout the world.

Our macro environment is characterized by growing product demand, particularly in the U.S. and Asia-Pacific, and constrained refining capacity worldwide.

Companies that are positioned in or near the fastest-growing markets, and who also possess strong refinery complexity, feedstock flexibility and supply chain capability, will benefit. Chevron is one of those companies.

Our strategy is to improve returns by focusing on areas of market and supply strength.

These areas for us are: the North American West Coast, the U.S. Gulf Coast and Latin America, Asia, and sub-Saharan Africa.

These are also areas where we hold strong market positions supported by our three world-class brands: Chevron, Texaco and Caltex.

We have a particularly strong position in the Pacific Basin, where our refining investments are more heavily weighted compared with our key competitors. We believe this provides us with a strategic advantage in this rapidly growing market.

In 2005, we continued to build momentum.

Our performance was supported by strong market conditions, particularly refining margins, and significant business improvements.

And we achieved our safest year ever, including reducing lost-time injuries by almost half.

We also made progress in selling nonstrategic retail sites. Since 2003, we have divested more than 2,300 sites, 50 percent more than our original commitment. These efforts have generated more than $1 billion in after-tax proceeds.

We also launched several projects to increase refinery scale and flexibility.

As demand for refined products grows, we are expanding our refining capacity and complexity.

Last year, we completed a project at our Los Angeles refinery to increase gasoline production.

And we recently announced that we are taking a stake in a new refinery to be built in India. When complete, the refinery will be part of the world's largest single refining complex.

We began a project at our joint-venture refinery in South Korea to increase capacity to run heavy crude oil and improve the yield of high-value products.

And we are making modifications at our refinery in the United Kingdom to process equity crude from the Caspian.

In Marketing, we continued aggressive efforts to build and leverage our strong brands. According to OPIS, a widely respected ranking of brand power, Chevron was the most powerful brand in the U.S. in 2005 for the second consecutive year, and Texaco was No. 2.

We also began the introduction of our Techron gasoline additive to Texaco and Caltex products globally.

Looking to 2006, we are focused on excellence in execution, advancing our growth projects and generating additional integration value.

We have aggressive efforts under way to increase utilization at our refineries, a key to maximizing the advantages of our portfolio.

This year, we will bring online additional gasoline manufacturing capacity increasing our U.S. gasoline production by 10 percent and execute several projects to extract more value out of each barrel of crude.

Through sustained execution and the right investments, Chevron's downstream business will continue to be highly competitive and create long-term value for our stockholders.

Thank you, and now I will turn it over to Dave.

Read the Summary Remarks by David J. O'Reilly

Updated: April 2006