press release

Chevron Announces Start Of Pipe Laying For The Caspian Pipeline In Russia

CHEVRON ANNOUNCES START OF PIPE LAYING FOR THE CASPIAN PIPELINE IN RUSSIA

Caspian Pipeline First Pipe

SAN FRANCISCO, Nov. 17, 1999 -- Chevron announced today that the Caspian Pipeline Consortium (CPC) began laying pipe for the historic pipeline which will connect Western Kazakhstan to the Russian Black Sea port of Novorossiysk.

The pipe will be laid in a new 450-mile section, which will run from Russia's Komsolmoskya to Novorossiysk. The new section is part of the planned 900-mile Caspian pipeline, which also involves renovation of some existing pipeline assets, connecting Kazakhstan's Tengiz oil field to the Black Sea.

Chevron holds a 15 percent equity interest in the CPC and a 45 percent interest in Tengizchevroil, operator of the Tengiz Field.

"CPC is considered the bellwether project in the former Soviet Union, and Chevron is honored to be a part of it," said Dick Matzke, president of Chevron Overseas Petroleum Inc. and a director of Chevron Corp. "The CPC shareholders are committed to keeping this project moving forward, and that commitment is evident in reaching yet another milestone today."

Earlier this month, the CPC shareholders approved a $1.3 billion budget and work plan for 2000.

The Caspian Pipeline will allow maximum development of the Tengiz Field, which has potential reserves of 6 to 9 billion barrels of recoverable oil and is planned to reach peak production of 700,000 barrels per day in 2010. The pipeline is expected to deliver the "first oil" through the marine terminal at Novorossiysk in mid-2001, with an initial export capacity of 560,000 barrels per day. By adding pumping stations along the line, capacity will ultimately reach 1.5 million barrels per day. Tengizchevroil currently produces around 210,000 barrels per day, rising to over 260,000 barrels per day in mid-2001.

Over the life of the projects, the Tengiz Field and Caspian Pipeline will directly and indirectly add more than $150 billion to the combined gross domestic product in Russia and Kazakhstan. In addition, the implementation of both the CPC and the Tengiz operations will sustain, on average, more than 200,000 jobs annually (directly and indirectly).

The equity interest in the CPC is: Russian Federation (24 percent), Republic of Kazakhstan (19 percent), Sultanate of Oman (7 percent), Chevron Caspian Pipeline Consortium Co. (15 percent), LUKARCO B.V. (12.5 percent), Rosneft-Shell Caspian Ventures Limited (7.5 percent), Mobil Caspian Pipeline Co. (7.5 percent), Agip International (N.A.) N.V. (2 percent), BG Overseas Holdings Limited (2 percent), Kazakhstan Pipeline Ventures L.L.C. (1.75 percent), and Oryx Caspian Pipeline L.L.C. (1.75 percent).

Updated: November 1999