press release

Chevron Press Release - Chevron Signs New Contract To Explore Its First Onshore Tract In China

SAN FRANCISCO, June 9, 1997 -- At ceremonies in Beijing, Chevron Overseas Petroleum Limited signed a production-sharing contract with China National Petroleum Corp. (CNPC) to explore for crude oil on a 695 square-mile (1,800 square-kilometer) tract in the Shengli Field Complex in China's Shandong Province. The new Shengli contract represents Chevron's first onshore exploration contract in China.

"We are proud to be the company chosen to explore the promising Zhan Hua Dong block, and eager to use our expertise to develop new, deeper resources in the Shengli Complex," said Richard Matzke, a director of Chevron Corp. and president of Chevron Overseas Petroleum.

Matzke explained that the Shengli Field Complex is the second-largest oil field in China, with daily production of approximately 650,000 barrels. Chevron has been chosen to explore deeper pre-Tertiary geologic zones which lie beneath the existing production. The company will process and evaluate geologic data gathered from previous seismic surveys conducted in the area. Following interpretation of the data, Chevron will plan its exploratory drilling program. Chevron will be operator for the new Shengli tract, and will hold 100 percent interest during the exploration phase.

Zhan Hua Dong Block

The Shengli Complex is located about 200 miles southeast of Beijing. In 1996, within the same prolific geologic basin, Chevron acquired interests in two offshore exploration areas in the northern Bohai Gulf (Block 02/31 and Block 06/17), and is currently conducting seismic surveys on that acreage.

Mr. Zhou Yongkang, president of China National Petroleum Corp., expressed his confidence in the arrangement, noting, "We are pleased to have Chevron as our partner in this new venture. They have been exploring and producing offshore China since 1983, and have greatly helped our country enhance the value of its natural resources."

Last year in operations offshore China, Chevron, in conjunction with China National Offshore Oil Corp. (CNOOC) and its other partners in the CACT Operators Group, produced 36 million barrels of oil (approximately 100,000 barrels a day) in the Pearl River Delta, giving CACT the distinction of being the largest offshore oil producer in China.

Notes to editors:

In other (offshore) operations in China, Agip, Chevron and Texaco each hold a 16 1/3-percent interest in the South China Sea, Huizhou oil fields, with CNOOC holding the remaining 51 percent.

Agip, Chevron and Texaco formed the ACT Operators Group in 1983 to develop hydrocarbon resources offshore China in the Pearl River Mouth Basin of the South China Sea. On Jan. 1, 1996, CNOOC formally joined the ACT Operators Group as the fourth partner in the operation of the offshore fields. The new joint operating group then changed its name to CACT Operators Group.

The consortium drilled its first well in 1984, and made its first commercial discovery in 1985. Since that time, four oil fields have been brought onto production in the Pearl River Mouth Basin of the South China Sea, and production has increased to 100,000 barrels per day.

In 1996, Chevron and partners signed a new agreement with CNOOC to conduct seismic surveys in a new exploration tract adjacent to their existing operations in the Pearl River Mouth Basin.

Separately in 1996, Chevron was awarded a new exploration area (02/31), and farmed into another exploration area (06/17), in the northern section of the Bohai Gulf. In addition, Chevron was also awarded an exploration contract area (63/15) in the South China Sea.

Updated: June 1997