press release

Chevron Press Release - Caspian Pipeline Consortium Study Receives Kazakh Government Approval

SAN FRANCISCO, Nov. 2, 1998 -- Chevron confirmed today that the Caspian Pipeline Consortium (CPC) has received final approval of its Modernization Feasibility Study from the Kazakhstan government and has received official assurances of an imminent green light from the Russian government for its final approval.

These approvals will allow the CPC to launch an aggressive construction schedule, awarding contracts for pipe, other major equipment and the main construction effort during the next four or five months," said Richard Matzke, president of Chevron Overseas Petroleum Inc. and a director of Chevron Corp.

Scheduled completion of the pipeline is in early 2001, with first oil expected in mid 2001. Initial capacity will be about 600,000 barrels of oil per day (bpd). Ultimate capacity will be about 1.5 million bpd, which can be achieved by adding more pumping stations to the line and additional marine loading facilities.

The Caspian Pipeline project is the key to unlocking the tremendous potential of the Tengiz oil field in Western Kazakhstan.

We are extremely pleased with the Kazakh governments approvals, said Matzke. And were very pleased with the support the CPC has received from both the Russian and Kazakh governments, he added. The strong relationships and deep knowledge of the consortium partner LUKoil and CPCs General Director, V. Fedotov, have been key factors in moving this project forward.

Chevron holds 15 percent interest in the $2.2 billion pipeline consortium and also operates the Tengiz field, which will be the principal source of oil to the CPCs 1,500-kilometer line from Tengiz to the Black Sea port of Novorossiysk.

The Tengizchevroil joint venture produced 30,000 bpd when it began in 1993 and now averages more than 200,000 bpd. Tengiz is expected to produce 700,000 bpd in the year 2010.

Together, the Tengiz field and CPC will directly and indirectly add more than $150 billion to the combined GDPs of Russia and Kazakhstan over the life of these projects, said Matzke. The local economies will benefit from orders for equipment by domestic industries and by local contractors.

The CPC is a model of successful international cooperation and a demonstration of the confidence the Western business community has to invest in Russia and Kazakhstan, Matzke added. Furthermore, the project will be a model from the technical, safety and environmental point of view.

The CPC was founded in 1992. Equity interest is: Russia, 24 percent; Kazakhstan, 19 percent; Oman, 7 percent; Chevron, 15 percent; LUKARCO, 12.5 percent; Rosneft-Shell, 7.5 percent; Mobil, 7.5 percent; Agip, 2 percent; British Gas, 2 percent; Kazakhstan Pipeline Ventures, 1.75 percent; Oryx, 1.75 percent.

Updated: November 1998