press release

Caltex to Convert Batangas Refinery into World-Class Finished Product Import Terminal

Regional Product Surplus, Changing Marketplace and Increased Competition, Spur Company to Adopt New Strategy to Bolster Position as Philippines Oil Major

This is news concerning ChevronTexaco but issued by a ChevronTexaco subsidiary, Caltex (Philippines), Inc., and archived here for record purpose.

MAKATI CITY, Philippines, Sep. 23, 2003 -- Caltex (Philippines), Inc., a subsidiary of ChevronTexaco Corporation, today announced that it is converting its Batangas Refinery into a world-class finished product import terminal. The conversion is part of Caltex's long term strategy to enhance its competitive position as a major oil company and reinforce its commitment to provide competitively priced fuels and energy products to its millions of customers in the Philippines.

In making the announcement, Timothy D. Leveille, country chairman, Caltex (Philippines), said: "This product import strategy reflects Caltex's strong determination to be a major supplier of the nation's energy requirements. This new strategy will transform Batangas into a regional supply and distribution hub where 100 percent of our products will be imported and then distributed under the well-recognized Caltex brand throughout the Philippines."

The decision follows an extensive 16 month study which is part of a broader portfolio review by ChevronTexaco designed to further strengthen the overall financial performance of the company.

The conversion involves investing more than PhP750 million (US $13.6 million) to turn the refinery into a world class product terminal. The terminal is expected to be operational by the fourth quarter of 2003.

The Batangas Refinery, the Philippines' first refinery and built by Caltex in 1954, has a 72,000 barrels of oil per day (bopd) total capacity. The converted terminal will have a storage capacity of roughly 2.7 million barrels.

Adjusting To Changing Conditions

The move to adopt an import strategy was driven by the competitive conditions in the Philippines marketplace. These conditions require cost efficiencies only available in refineries with greater scale and modern technology. There also continues to be overcapacity in the market, and this is expected to continue to depress refining margins. There is roughly 1.2 million bopd in excess refining capacity throughout the Middle East and Asia Pacific at present.

Leveille said: "In short, the Batangas Refinery has reached the end of its economic useful life and we must change the way we do business if we want to remain viable and competitive. The way to get there is to adopt a product import strategy and thereby turn a competitive disadvantage into a strength."

Leveille added, "Imports are already a proven and reliable source of energy supply for the nation, and this move will help to enhance security of supply by further diversifying the sources of petroleum products into the country.

"Maintaining reliable supply is one of our core commitments. Alternative import arrangements are now in place. This move will be transparent to Caltex customers who will continue to receive a reliable supply of the full range of high quality Caltex products everywhere in the Philippines. In addition, we will continue to engage in discussions with our employees, the local community and government officials during this transition period," said Leveille.

About Caltex (Philippines) and ChevronTexaco

Caltex (Philippines), Inc., a subsidiary of ChevronTexaco Corp., the world's 4th largest energy company in terms of oil and gas reserves, is one of the largest foreign investors in the Philippines. In addition to Caltex (Philippines), ChevronTexaco has a 45 percent interest in the Malampaya Gas project and runs a fast growing shared service operation located in Manila that provides human resources, accounting and information technology services for ChevronTexaco operations throughout Southeast Asia. Recently, ChevronTexaco formed a new company, Caltex Services (Philippines) Inc., to both own and operate Caltex branded service stations, making it the first energy major in the country to directly participate in the recently deregulated retailing sector in the Philippines.

About ChevronTexaco:

Caltex is a wholly-owned subsidiary of ChevronTexaco, a leader in the global integrated energy business and active in more than 180 countries. ChevronTexaco is the world's fourth-largest integrated energy company on oil-equivalent reserves (net proven reserves of approximately 11.9 billion barrels of crude oil and natural gas equivalent) and in production (net production of 2.6 million barrels of crude oil and natural gas equivalent per day). It has the capacity to refine more than 2 million barrels per day, sells more than 3.9 million barrels of refined products per day and maintains a worldwide network of 24,000 outlets, including affiliates, under the Chevron, Texaco and Caltex brands. It ranks among the top three global lubricants companies, is an industry leader in the power and gasification businesses and has extensive technology operations.

Updated: September 2003