Caspian Update

By Richard H. Matzke, Vice Chairman of the Board
Chevron Corporation

Annual Meeting of Stockholders

San Ramon, California

Also see a press release regarding this speech

Unfortunately, I can't be with you today because I'm in Almaty -- the economic capital of Kazakhstan -- representing Chevron at the World Economic Forum's first conference on central Asia.

I know we're all proud that our company is a leader in energy development in the former Soviet Union. So, even though I couldn't attend the Annual Meeting, I wanted to take this opportunity to report on Chevron's two landmark projects, the Tengiz oil field and the Caspian pipeline.

We've made exciting progress at Tengiz these past several years. Since 1993, we've more than tripled our production to over 200,000 barrels per day, and we're headed for 260,000 by the end of the year. But our story is not just growth, our story is also safe growth -- 7.7 million man hours without a lost-time accident. This speaks very highly not just of safety but also about the quality of our management at Tengiz, the commitment of our people and the technical integrity of our project.

To support the Tengiz expansion, we've made a tremendous effort in recent years to move this oil to world markets. We've shipped Tengiz crude by rail, barge, pipeline and tanker. We've overcome some very tough conditions, but soon a better export solution will open to us.

Here you see the 800-mile Caspian pipeline in green, showing how the oil will move west across Russia. By the middle of next year, tankers filled with Tengiz crude at our new terminal will be crossing the Black Sea, making some oil deliveries to Turkey and moving the rest out to the Mediterranean.

Chevron is the biggest private investor in the Caspian pipeline, with a 15 percent share. We started construction one year ago, and we've obtained most of the new pipe we need from the world-class mill in Volgograd in southwestern Russia. I visited this industrial city a few months ago. It is a place rich in history and symbolism, and during my tour of the Volski mill, I saw much more than just the production of high-quality pipe. I saw jobs and direct financial benefits for the region.

I saw once again that in the Caspian region, we are more than an energy developer and more than just a foreign oil company. We are a strong partner to these countries as they leave behind the centrally-planned model of yesterday and try to embrace the new, market-based economy of today.

Growth at Tengiz, progress on the Caspian pipeline, and our careful attention to these assets for our stockholders and partners, prove why our Chevron Hallmark is now -- and will remain -- a promise of value and the Symbol of Partnership.

Thanks for your attention.

Updated: April 2000