press release

CHEVRON, MARAVEN FORM
MAJOR ALLIANCE

Chevron to Operate Venezuela's Boscan Oil Field; Maraven to Become Chevron's Partner in West Coast AsphBusiness and to Supply Crude to Chevron's Downstream

SAN FRANCISCO, Dec. 14, 1995 -- Chevron and Maraven S.A. have formed a multi-faceted alliance which will further the development of the Boscan oil field and provide for supplies of heavy crude oil to Chevron in the United States. The agreements were signed by the companies today in Caracas.

The alliance covers an initial period of 20 years with a 10-year extension option. Chevron will operate Venezuela's Boscan heavy-oil field, and anticipates a $2-billion investment over a 20 to 30-year period. Maraven will become Chevron's joint-venture partner in a West Coast asphbusiness, and will also supply crude for Chevron's refinery at Pascagoula, Miss., and for the company's asphplants at Perth Amboy, N.J., Portland, Ore., and Richmond Beach, Wash.

The Boscan Field: Chevron and Maraven have structured an Operating Service Agreement (OSA) to assure continued development of the 50-year-old Boscan field, discovered by Chevron in 1946. "We plan to increase production from 80,000 barrels per day to 115,000 barrels per day during the next three years," said Richard Matzke, president of Chevron Overseas Petroleum Inc. Matzke signed the operating agreement on behalf of Chevron.

Current Boscan production stands at 80,000 barrels a day, and independent studies confirm the field contains 1.6 billion barrels of proven reserves. Chevron will be responsible for operations and production, while Maraven will hold responsibility for marketing. Through the new arrangement, Chevron becomes the first international oil company since 1975 to be responsible for such a high level of production in Venezuela. "We're encouraged by Maraven's demonstration of trust in our technical expertise," Matzke said. The Chevron executive pointed out that the work to be done, albeit challenging, will result in major economic enhancements for the Venezuelan economy.

"Boscan crude, with an API gravity of 10 degrees, is an excellent asphfeedstock," explained Dave O'Reilly, president of Chevron U.S.A. (CUSA) Products Company, who signed the downstream agreements. "This new alliance provides an opportunity for Chevron and Maraven to collaborate on both upstream and downstream ventures," O'Reilly said.

The AsphJoint Venture: Affiliates of Chevron and Maraven will form a partnership to acquire and process feedstock into asphand other products for marketing in the Western United States. The new joint venture, to be named Chevron Ven AsphAlliance, will have a processing and service agreement with CUSA Products which will retain its West Coast asphrefineries and perform supply, processing and marketing functions on behalf of the joint venture. "This venture should increase asphproduction and offer new marketing opportunities," said O'Reilly.

The Supply Arrangements: Three independent supply arrangements have been crafted:

  • Pascagoula: The Pascagoula supply agreement provides for an initial quantity of Venezuelan heavy crudes in excess of 15,000 barrels per day with provision for increase;
  • Perth Amboy: Various Venezuelan crudes sufficient to manufacture approximately 10,000 barrels of asphper day will go to Perth Amboy;
  • West Coast Asphalt: Maraven will supply Boscan crude to the Chevron asphplants at Portland and Richmond Beach.

"Having discovered the Boscan field nearly 50 years ago, Chevron is eager to resume operations in the Lake Maracaibo region, and we are delighted with the downstream agreements and the mutually beneficial opportunities they will provide," Matzke concluded.

Notes to editors:

Chevron Overseas Petroleum Inc., based in San Ramon, California, is the wholly owned subsidiary of Chevron Corporation engaged in the business of exploration for and development and production of hydrocarbon resources outside the borders of the United States and Canada. One of its technological specialties is the enhancement of production of heavy crudes. Chevron Overseas operates in over 20 countries throughout the world, and, as operator for itself and its partners, produces approximately one million barrels of oil per day, with Chevron's share of production being approximately 430,000 barrels OEG (oil equivalent gas). The company first began working in Venezuela in 1921, and continued there until 1976 when the oil industry was nationalized by the government of Venezuela.

Chevron U.S.A. Products Company, based in San Francisco, is the wholly owned subsidiary of Chevron which handles all downstream operations -- that is, from the time the crude oil is produced, through transportation to processing systems or refineries where it is manufactured into a broad slate of products and subsequently marketed to the end users.

Petrleos de Venezuela (PDVSA), the Venezuelan state-owned oil company, is the second-largest oil company in the world. Based in Caracas, it became the parent company of 14 operating subsidiaries in 1976. Those subsidiaries were subsequently reorganized into four major operating divisions, responsible for exploration and production, refining, distribution, and marketing of petroleum products in the country and abroad.

Maraven, S.A., a wholly owned, integrated subsidiary of PDVSA, is an integrated oil company with extensive oil and natural gas producing operations throughout the Maracaibo Basin, one of the world's most important and prolific petroleum regions. Since the first oil discovery in the basin in 1914, the region's cumulative output has exceeded 32 billion barrels. Based in Caracas, Maraven currently produces 835,000 barrels of oil per day, or about 35 percent of Venezuela's total production. Maraven also holds significant refining and marketing operations in Venezuela.

Updated: December 1995