press release

Texaco Press Release - Texaco Announces Award of Major Contracts for Hamaca Heavy Oil Project

FOR RELEASE: FRIDAY, AUGUST 18, 2000

BARCELONA, VENEZUELA, Aug. 18 - Texaco, and its Hamaca project partners, announced today the approval and intent to award major engineering, procurement and construction contracts valued at $1.074 billion, associated with the Hamaca heavy oil project in Venezuela's Orinoco Belt, where the company holds a 30 percent interest.

The Orinoco Belt is the largest known hydrocarbon deposit in the world. The Hamaca Project area encompasses some 657 square kilometers of the Orinoco and is estimated to contain over 30 billion barrels of oil of which 2.1 billion are recoverable over a 35-year period with current technology. The project is expected to produce 190,000 barrels of crude per day by 2004.

Commenting on the announcement, John J. O'Connor, Senior Vice President of Texaco Inc. and President of Worldwide Exploration and Production, said, "The award of the Hamaca construction contracts will represent a key project milestone. The Hamaca Project is one component of Texaco's upstream strategy, which focuses on the development of a global portfolio of high impact projects. We are pleased with the outcome of the bidding process at Hamaca and look forward to partnering with our winning contractor teams and the start of construction activities."

Together with partners Petrleos de Venezuela S. A. PDVSA, (30 percent) and Phillips Petroleum Company, (40 percent), Texaco authorized contract awards valued at $1.011 billion associated with engineering design, equipment procurement and actual construction of the oil upgrading facilities at Jose, Venezuela. The upgrading facilities will process the 8-degree API gravity crude into a high value 26-degree API gravity crude. In addition, a field production facilities contract valued at $62.450 million was authorized.

The partners, through their operating company Petrolera Ameriven, are finalizing contract terms and conditions with a consortium led by Fluor Daniel Corporation for the crude upgrading facilities and with a consortium led by Inelectra/Parsons for field production facilities. Bid selection was based on an extensive evaluation procedure approved by the Hamaca partners that resulted in maximizing project value, while at the same time, maximizing the use of Venezuelan goods and services.

NOTE. This press release contains a number of forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In particular, statements made concerning Texaco's expected performance and financial results in future periods are based upon Texaco's current expectations and beliefs and are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

The forward-looking statements are subject to risk factors associated with oil, gas, power, chemicals, coal and renewable businesses. It is believed that the expectations reflected in these statements are reasonable, but may be affected that by a variety of variables which could cause actual results or trends to differ materially, including, but not limited to: price fluctuations, actual demand, currency fluctuations, drilling and production results, reserve estimates, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial market conditions in various countries and regions, political risks, project delay or advancement, approvals and cost estimates [include additional relevant risk factors from those listed in Exhibit A hereto]. In addition, you are encouraged to review Texaco's latest reports filed with the SEC, including Texaco's Annual Report on Form 10-K filed with the SEC on March 24, 2000, which describes a number of additional risks and uncertainties that could cause actual results to vary materially from those listed in the forward-looking statements made in this press release.

Updated: August 2000