press release

Chevron Announces The Approval Of Caspian Pipeline Consortium Budget

CHEVRON ANNOUNCES THE APPROVAL OF CASPIAN PIPELINE CONSORTIUM BUDGET FOR 2000

SAN FRANCISCO, Nov. 2, 1999 -- Chevron announced today that the Caspian Pipeline Consortium (CPC) shareholders have approved a $1.3 billion budget for the year 2000. The 900-mile Caspian pipeline will carry crude oil from Western Kazakhstan to the Black Sea port of Novorrosiysk.
Chevron holds a 15 percent equity interest in the CPC.

"The shareholders' approval of the budget shows a strong commitment to moving this project forward and having the pipeline ready for first oil in 2001," said Dick Matzke, president of Chevron Overseas Petroleum Inc. and a director of Chevron Corp.

"We are very pleased that the project implementation has moved into high gear. Site work at the marine terminal is well underway, and CPC will begin laying the pipeline later this month" said Nick Zana, managing director of Chevron's Eurasia business unit.

He also noted that "the budget for 2000 has been increased significantly over last year's in order to complete the construction by mid-2001 and reflects Chevron's and its partners' long-term commitment to the economic development of Russia and Kazakhstan." To date, expenditures have exceeded $500 million.

Chevron will be a primary beneficiary of the Caspian Pipeline, which will connect Kazakhstan's Tengiz oil field to the Russian Black Sea coast. The Caspian Pipeline will allow for the maximum development of the Tengiz Field, which has potential reserves of 6 to 9 billion barrels of recoverable oil and allow the joint venture to reach peak production of 700,000 barrels per day in 2010. Chevron has a 45-percent interest in the Tengiz Field.

The pipeline is expected to deliver the "first oil" through the marine terminal in mid-2001 with an initial export capacity of 560,000 barrels per day. With upgrades, the pipeline capacity will ultimately reach 1.5 million barrels per day.

Over the life of the projects, Tengiz and the 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 allocated as follows: 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