press release

Texaco Press Release - Republic of Kazakhstan and KIO Partners Sign Oil Pipeline Agreement

FOR IMMEDIATE RELEASE: TUESDAY, DECEMBER 21, 1999.

WASHINGTON D.C., December 21 -- The Government of the Republic of Kazakhstan and partners of the Karachaganak Integrated Organisation (KIO), comprising of Agip/ENI, BG, Texaco and LUKoil, announced today the signing of an amendment to the Karachaganak Final Production Sharing Agreement that allows for the construction of a 460-kilometre pipeline from Bolshoy-Chagan to Atyrau, Kazakhstan. In Atyrau, this pipeline will link to the Caspian Pipeline Consortium (CPC) pipeline, and will provide the transportation capability needed to increase production to approximately 9 million tons per year (195,000 BPD) of liquids and 11 billion cubic meter per year (1.1 BCFD) of gas by 2002.

The signing took place in Washington D.C. and was attended by Kazakhstan President Nursultan Nazarbayev, Edward leM. Trafford, Executive Vice President BG International, Massimo Nicolazzi, Senior Vice President ENI Spa, Robert A. Solberg, Vice President of Texaco Inc. and Osman Sapaev, Deputy General Manager, LUKoil.

Jointly commenting on the pipeline agreement, the partners said, "The signing of this agreement allows us to begin construction of the new pipeline, which will have an initial capacity of 7 million tons per year (150,000 BPD). This project will also make it possible for Karachaganak oil to be exported through the CPC pipeline to international markets."

The pipeline agreement allows for full field development of one of the largest gas condensate fields in the world. Karachaganak contains reserves in place of approximately 18 billion BOE and was discovered in 1979. Presently Karachaganak production is averaging approximately 3 million tons per year of liquids and 3.5 billion cubic meters of gas (65,000 BPD and 340 MMCFPD).

Notes to editors:

In November 1997, a production sharing agreement was signed by Texaco, Agip, BG and LUKoil in the presence of President Nazarbayev and Vice President Gore of the United States.

Field partners and their equity interests are:
Agip/ENI (32.5%)
BG (32.5%)
Texaco (20%)
LUKoil (15%)

Updated: December 1999