press release

Chevron Press Release - Chevron Named Company of Choice to Supply Fuel for Ghana Power Plant

New agreement big boost for West African Gas Pipeline Project

ACCRA, GHANA, Oct. 21, 1998 -- Chevron announced today that the company has been selected by a KMR Power-led consortium to supply fuel for its 220-megawatt power plant under development at Tema, Ghana, near the capital city of Accra.

The 20-year agreement will serve as a foundation for construction of the West African Gas Pipeline, a major transportation infrastructure project that will bring Nigerian gas to Ghana, Togo and Benin upon its completion scheduled for late 2001.

In signing ceremonies held here, Chevron Nigeria Ltd. -- on behalf of itself and its joint-venture partner, Nigeria National Petroleum Corp. (NNPC) -- agreed to provide 40 million cubic feet of natural gas per day to power the consortium's plant.

The facility will begin generating electricity by using crude oil, followed later by gas supplied from Chevron and NNPC's Escravos Gas Plant in western Nigeria upon completion of the West African Gas Pipeline Project (WAGP).

This new arrangement underscores Chevrons commitment to the creation of a regional infrastructure to convert currently unused Nigerian natural gas into a viable power-generation source for the surrounding region, said Richard Matzke, president of Chevron Overseas Petroleum and a director of Chevron Corp.

Today's agreement is yet another example of Ghana's successful efforts to attract private investment to its energy sector and is in alignment with the country's Vision 2020 economic objectives. Not only will this arrangement provide energy to Ghanas growing markets, it is key in the development of the West African Gas Pipeline, a major economic development to provide a low-cost, environmentally preferred fuel supply for the entire region, Matzke said. He noted that Ghanaian energy demand is expected to grow significantly during the next 20 years under Vision 2020.

KMR Power President and CEO George Kappaz congratulated Chevron on the award. We are extremely pleased to have Chevron on our team. It is hoped that this project will do more than alleviate the energy shortage in Western Africa -- it is hoped we will significantly and positively impact the infrastructure of this rapidly growing region.

George Kirkland, chairman and managing director of Chevron Nigeria Ltd., added, We are honored to be chosen to fuel the KMR facility. With the feasibility study for the West African Gas Pipeline now underway and the governments of Benin, Ghana, Nigeria and Togo cooperating to accelerate the WAGP, we are confident we will be supplying Nigerian gas into the region by the end of 2001 and then for decades to come.

Today's signing ceremony in Accra was attended by senior Ghanaian government officials, executives of Chevron Nigeria Ltd., and representatives of the KMR Power consortium.

Note to Editors:

Following is a descriptor of Chevrons associated projects in Nigeria.

Chevron Nigeria Limited (CNL) has developed plans to eliminate routine flaring from it operations and to move toward the vision of commercializing its natural gas resource base. CNLs gas commercialization plan is based on sales to developing domestic markets, emerging regional markets and existing international markets.

The Escravos Gas Project (Phase 1): Chevrons gas utilization strategy centers on the phased development of the Escravos Gas Plant. Located adjacent to CNL's existing infrastructure in Nigeria, the first phase of the Escravos Gas Plant (EGP) was completed in mid-1997, and was Nigeria's first associated gas project of its kind. EGP Phase 1 gathers 165 MMCFD of previously flared gas production, removes the hydrocarbon liquids, and transports the conditioned gas to the domestic gas market. Phase I included construction of offshore gas gathering and compression facilities, an onshore gas processing plant and an offshore Floating LPG Storage vessel. Total cost for Phase I was U.S. $550 million.

EGP, Phase 2: The next expansion of the EGP, Phase 2, is currently under construction and will come online in late 1999. It will gather an additional 120 MMCFD of associated gas, essentially eliminating gas flaring in CNL's western onshore operations. This phase is projected to cost approximately US $82 million. The conditioned gas will be sold to regional markets via the West African Gas Pipeline.

EGP Phase 3 is currently entering engineering design phase. EGP 3 will gather the remainder of the flared gas in CNL's Western operations, processing an additional 300 MMCFD of gas. The conditioned gas will then be used in a proposed Gas-to-Liquids plant adjacent to the gas processing plant. This project, currently undergoing design and engineering studies will, using Sasol's proprietary Fischer-Tropsch and Chevrons Hydroprocessing technologies, convert the gas to environmentally superior transportation fuels. The primary product will be a sulfur-free diesel that has very low particulate emissions.

These projects in CNL's Western operations serve to underscore Chevrons commitment to eliminate gas flaring in Nigeria.

West African Gas Pipeline Project: Chevron is currently co-sponsoring a feasibility study for the West African Gas Pipeline with several other companies. The study will be complete in early 1999. At that time, licensing negotiations are expected to begin with the governments of Ghana, Togo, Benin and Nigeria for the pipeline, which will bring natural gas currently flared during production of Nigerian oil to customers in Ghana, Benin and Togo. Chevron envisions the West African Gas Pipeline (WAGP) as a 620-mile-long transmission system linking producers in Nigeria's Western Niger Delta area with gas markets in the sub-region. The WAGP will cost around US $400 million, with costs shared by participating companies. By having access to a secure source of gas, consumers in the sub-region will be able to substitute natural gas for oil, significantly reducing carbon dioxide (CO2) and sulfur dioxide (SO2) emissions. In addition, it has been estimated that having gas available at a competitive price in Ghana, via the WAGP, will create thousands of jobs in industries that cannot be developed now because of lack of power.

Ghana has recently enacted a new Energy Act that is fostering private power development in the country in support of Ghana's Vision 2020 economic growth objectives. Recent lack of rainfall in the country has caused a serious drop in the levels of the Akosombo reservoir, resulting in a shortage of electricity and prompting a concerted effort among regional governments to focus on timely development of the WAGP to bring Nigerian gas to Benin, Ghana and Togo.

Updated: October 1998