Kingdom of Saudi Arabia and Chevron Extend PNZ Operating Agreement 30 years
SAN RAMON, Calif., September 10, 2008 - Chevron Corporation (NYSE: CVX) today announced the extension and amendment of its agreement with the Kingdom of Saudi Arabia. This agreement grants Chevron the right to operate on behalf of the Saudi government for its 50 percent undivided interest in the petroleum resources of the onshore area of the Partitioned Neutral Zone (PNZ) between the Kingdom and the State of Kuwait.
The agreement extends the existing arrangement for 30 years, through February 19, 2039. Under the agreement, Saudi Arabian Chevron (SAC), a subsidiary of Chevron, will continue to explore for and produce crude oil and natural gas on behalf of the Kingdom in the onshore PNZ. The field operations are managed jointly by SAC and Kuwait Gulf Oil Company.
"We are extremely pleased and honored that Chevron will continue to partner with the Kingdom of Saudi Arabia in developing the petroleum resources of the Partitioned Neutral Zone and the Kingdom," said Chevron Chairman and Chief Executive Officer David J. O'Reilly. "Chevron and predecessor companies have worked closely with Saudi Arabia for more than 75 years and have played a significant role in the development of its petroleum industry. We are committed to helping develop the potential of the Partitioned Neutral Zone fully and responsibly.
"The extension of the agreement will ensure that important supplies of much-needed energy continue to reach world markets," said O'Reilly. "The benefits of the extension will be realized both within the region and globally."
"We see tremendous opportunities in the PNZ," said John Watson, executive vice president, Strategy and Development, Chevron. "With the extension of this agreement, our partnership expects to apply innovative technology to grow the recoverable reserves, create jobs and provide other benefits for the region."
"In particular, we are very excited about the possibility of making full-field development of steamflood technology a reality in the PNZ," said Watson. "We are making solid progress in our series of projects to validate the feasibility of utilizing steamfloods to produce the extra heavy oil of the Eocene carbonate reservoirs. If successful, this would mark the first time that this enhanced oil recovery technology has been employed to produce commercial quantities of oil from a carbonate reservoir anywhere in the world."
Saudi Arabian Chevron and the Kuwait Gulf Oil Company, operator for Kuwait's equal 50 percent undivided interest in the petroleum resources of the onshore PNZ, jointly operate four fields in the area - Wafra, South Umm Gudair, South Fuwaris and Humma - that produce mainly heavy crude from 10 reservoirs. In 2004, the 3 billionth barrel of oil was produced in the onshore PNZ. Operations in the PNZ are managed by the Saudi Arabia/Partitioned Neutral Zone Strategic Business Unit of the Chevron Europe, Eurasia and Middle East Exploration and Production Co., one of four Chevron upstream operating companies.
Chevron Corporation is one of the world's leading integrated energy companies, with subsidiaries that conduct business across the globe. The company's success is driven by the ingenuity and commitment of approximately 59,000 employees who operate across the energy spectrum. Chevron explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and other energy products; manufactures and sells petrochemical products; generates power and produces geothermal energy; provides energy efficiency solutions; and develops and commercializes the energy resources of the future, including biofuels and other renewables. Chevron is based in San Ramon, Calif. More information about Chevron is available at www.chevron.com.
Cautionary Statement Relevant to Forward-Looking Information for the Purpose of "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995.
Some of the items discussed in this press release are forward-looking statements about Chevron's activities in the Partitioned Neutral Zone (PNZ) between the Kingdom of Saudi Arabia and the State of Kuwait. Words such as "anticipates," "expects," "projects," "intends," "plans," "targets," "projects," "believes," "seeks," "estimates" and similar expressions are intended to identify such forward-looking statements. The statements are based upon management's current expectations, estimates and projections; are not guarantees of future performance; and are subject to certain risks, uncertainties and other factors, some of which are beyond the company's control and are difficult to predict. Among the factors that could cause actual results to differ materially are changes in demand for and supply of crude oil and natural gas; selection and successful execution of additional development plans; actions of competitors; government-mandated sales, divestitures, recapitalizations, industry-specific taxes, changes in fiscal terms or restrictions on the scope of the company's operations; the potential disruption or interruption of project activities due to war, accidents, political events, civil unrest or severe weather; and general economic and political conditions. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
U.S. Securities and Exchange Commission (SEC) rules permit oil and gas companies to disclose only proved reserves in their filings with the SEC. Certain terms, such as "resources," "oil-equivalent resources," "oil in place," "potentially recoverable volumes," "recoverable reserves," and "recoverable resources," among others, may be used in this press release that are not permitted to be used in filings with the SEC.
In the Kingdom of Saudi Arabia, Chevron pursues a wide range of petroleum and petroleum-related interests with Saudi Aramco and private firms. Chevron is the only major energy company with a continuous upstream presence over the past 75 years in the Kingdom.
Chevron is the world leader in steamflood technology and has an unsurpassed track record in thermal enhanced oil recovery. Employing this technology, it currently produces more than 350,000 barrels per day of heavy oil from reservoirs in the San Joaquin Valley, near Bakersfield, California, and at Duri, on the Indonesian island of Sumatra. Steamflood technology involves the injection of steam under carefully controlled conditions into a reservoir to heat the heavy oil and reduce its viscosity so the oil will flow readily to producing wells.
Active in heavy oil since the early 1900s, Chevron has produced billions of barrels and offers the energy industry's premier heavy oil capability, both onshore and offshore. This includes a portfolio of specialized technologies; production on five continents; a linked global network of specialists; and a strong research and technology heritage and proven operating capabilities in heavy oil refining, conversion and upgrading. Chevron also has an International Heavy Oil Center in California's San Joaquin Valley, as well as heavy oil expertise at Chevron Energy Technology Company in Houston, Texas. In 2007, heavy oil accounted for 18 percent of the company's daily 2.62 million barrels of oil-equivalent production.
Updated: September 2008