press release

Chevron Press Release - Chevron Overseas And Lukoil Presidents Tour Caspian Pipeline Route In Russia

SAN FRANCISCO, June 29, 1998 -- Chevron said today that it expects the Caspian Pipeline Consortium (CPC) to obtain all necessary permits and rights-of-way for the pipeline in the next few months. This confidence stems from a just-completed tour of the pipeline route by Dick Matzke, a director of Chevron Corp. and president of Chevron Overseas Petroleum Inc., and Vagit Alekperov, president of LUKoil.

"CPC is a model of international cooperation and an indication of the confidence the international community has in Russia and in oil transportation from the Caspian region," said Matzke. The $2 billion pipeline project is one of the largest new infrastructure projects in the former Soviet Union, and will be funded completely by the private sector.

As the largest oil company shareholder in CPC, Chevron will gain, via the pipeline, the ability to fully develop the Tengiz oil field in Western Kazakhstan, where peak production is expected to reach 700,000 barrels per day.

Matzke and Alekperov, representing the two largest oil company partners in CPC, Saturday completed a three-day successful trip to the transportation corridor including Krasnodar Krai, Stavropol Krai, and Astrakhan Oblast. Alekperov and Matkze met with the governors and other officials of the regions to provide an overview of the project.

The officials included Governor Kondratenko of Krasnodar Krai, Governor Chernogorov of Stavropol Krai, Governor Guzhvin of Astrakhan, Mayor Prohorenko of Novorossiysk and Mayor Bour of Anapa.

"The three governors confirmed their support of the CPC project, and gave their assurances that land and construction feasibility issues will be completed soon," said Alekperov. During the trip, the land allocation permits were issued by the Astrakhan Oblast and the port city of Novorossiysk, a critical element which should enable the project to move forward more rapidly.

"CPC management has contributed greatly in laying the ground work to implement the CPC pipeline," said Matzke. "The CPC team, under the leadership of General Director Viktor Fedotov, continues to move the project toward completion in the year 2000. CPC has issued the tender package for the lines pipe materials and anticipates issuing tender packages soon for various other material and construction contracts," he added.

Besides Chevrons 15 percent in CPC, the other shareholders and their equity interest are: the governments of Russia (24 percent), Kazakhstan (19 percent), and Oman (7 percent), as well as LUKarco (12.5 percent), Rosneft-Shell (7.5 percent), Mobil (7.5 percent), Agip (2 percent), British Gas (2 percent), a joint venture between Amoco and Kazakhoil (1.75 percent) and Oryx (1.75 percent).

Updated: June 1998