press release

Chevron Press Release - Chevron Sells 5 Percent Stake In Tengiz Joint Venture

SAN FRANCISCO, Jan. 16, 1997 -- Chevron announced today that it has reached an agreement in principle to sell 10 percent of its interest in the Tengizchevroil joint venture in Kazakhstan to LUKoil. At the conclusion of the sale, Chevron will retain a 45 percent share compared to its previous 50 percent ownership. A definitive agreement will be concluded in the coming weeks.

"LUKoil will add real benefits to the Tengiz joint venture," said Dick Matzke, president of Chevron Overseas Petroleum Inc., which is responsible for the venture. "As a premier Russian oil company, LUKoil is a partner that can enhance the value of Tengiz by contributing Russian expertise and experience."

"The future of Tengizchevroil has never been brighter," said Chevron Chairman Ken Derr. "The Tengizchevroil joint venture is a model of successful economic cooperation in the former Soviet Union, bringing Kazakhstan together with American and now Russian investors."

Financial terms of the sale were not disclosed.

The Tengiz field is estimated to hold recoverable reserves of more than 6 billion barrels of oil. Production has increased dramatically in the past year and is currently at 160,000 barrels per day. The field has the potential to reach peak production of 700,000 barrels per day.

The recent signing of the Caspian Pipeline Consortium (CPC) restructuring agreement puts the development of the Tengiz field on an even faster track, Matzke said. Chevron (15 percent) and LUKoil (12.5 percent) are the largest oil company shareholders in CPC, which will ultimately increase oil exports from the Russian Black Sea coast by 1.5 million barrels per day.

Chevron and the Republic of Kazakhstan entered into the $20 billion, 40-year joint venture in April 1993, forming Tengizchevroil to operate the Tengiz Field near the northeastern shore of the Caspian Sea. Last year, Kazakhstan sold half of its stake to Mobil Corp. Upon completion of this agreement, equity ownership will be Chevron, 45 percent; Kazakhstan and Mobil, 25 percent each; and LUKoil, 5 percent.

Updated: January 1997