press release

Chevron Press Release - Chevron Chairman Hails Major Milestone In Development Of Caspian Pipeline

SAN FRANCISCO, Nov. 24, 1998 -- Chevron Chairman and CEO Ken Derr today hailed achievement of a major milestone in development of the $2.2 billion Caspian Pipeline, the long-awaited oil export route from the land-locked Caspian Sea region to the Black Sea.

The 930-mile pipeline is key to unlocking the vast potential of the Chevron-operated Tengiz Field, whose estimated peak production of 700,000-plus barrels per day (bpd) is only achievable via a major new pipeline.

Many said the Caspian Pipeline Consortium couldn't hold together and the project couldn't be done, said Derr, but today's ceremony in Moscow is evidence that this unique partnership among three governments and 11 companies is indeed a healthy reality.

I'm very pleased with how this significant step symbolizes the economic growth and cooperation that is taking place in the region, he added.

The Moscow ceremony was held to celebrate both Russian and Kazakh government approvals of the construction feasibility studies for the project. Attending the ceremony was Richard Matzke, president of Chevron Overseas Petroleum Inc. and a director of Chevron Corp.

The support of the Russian and Kazakhstan governments in achieving this milestone has been an absolutely essential part of this project, said Matzke. I commend the CPCs general director, Victor Fedotov, for his great skill in moving this project forward.

The approvals will enable the CPC to move from the design phase to the construction phase. CPC expects to award contracts for purchase of line pipe by month end and for construction of the pipeline and the marine terminal at the Russian port of Novorissysk on the Black Sea in early 1999.

The main construction effort is scheduled to start early in the first quarter of 1999, with completion and delivery of first oil due in mid-2001. Initial capacity will be about 600,000 bpd. Ultimate capacity will be 1.5 million bpd.

The pipelines principal source of oil will be Tengiz, which is currently producing an average of about 210,000 bpd.

Together, Tengiz and the CPC will directly and indirectly add more than $150 billion to the combined gross domestic product of Russia and Kazakhstan over the life of the projects. In addition, the implementation of both the CPC project and the TCO operations will sustain on average over 200,000 jobs annually (directly and indirectly) during the life of the projects.

The pipeline will encourage the development of Russian and Kazakh oil fields and the industrial and commercial base in the region.

Equity interest in the CPC 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