press release

Texaco Press Release - Texaco Boosts Its Interest in Hamaca to 30 Percentco - Venturers Move Forward

Co-Venturers Move Forward With Venezuelan Heavy Oil Project


HOUSTON, July 1 Texaco announced today that it has acquired from ARCO an additional 10 percent equity interest in the Hamaca project, raising the company's ownership share to 30 percent. Additionally, Texaco and its Hamaca project co-venturers have agreed to proceed with the next phase of their heavy oil project in Venezuela's Orinoco Belt, which will lead to the production and upgrading of 190,000 barrels of oil per day by 2004.

Commenting on the project, John J. O'Connor, Senior Vice President of Texaco Inc. and President of Worldwide Exploration and Production said, "Leveraging technological leadership to increase shareholder value is one of Texaco's key business strategies. The Hamaca project provides a direct strategic fit as it gives us an opportunity to tap the vast resources of Venezuela's Orinoco Belt and, through the application of industry-leading technology, to upgrade the recovered crude to a high-value 26-API gravity oil."

The Orinoco Belt is believed to contain some 1.2 trillion barrels of heavy crude (9-degree API gravity), and is the largest known hydrocarbon deposit in the world. The Hamaca Project area encompasses some 657 square kilometers of the Orinoco and is believed to contain 2.1 billion barrels of oil that is recoverable over a 35-year period with current technology.

Under the project plan, Hamaca crude oil will be mixed with a diluent and transported by pipeline to an upgrading plant to be constructed at the Caribbean coastal town of Jose, Venezuela, where the diluent will be recovered and the crude will be processed using state-of-the-art upgrading technology into a high value 26-degree API gravity oil. After processing, the crude will be exported and sold on the open market.

The efforts of the project co-venturers will now focus on final design work, construction activities and securing project financing. The construction phase, which will include an upgrading plant, pipelines and associated production facilities, is expected to begin by the third quarter of 2000. During the construction phase, there will be early production of approximately 36,000 barrels per day of heavy oil which will be blended with 20,000 barrels per day of lighter (26-30 degree API gravity) diluent oil. The resulting 16-degree API gravity oil will then be transported to Jose for export.

O'Connor added, "Texaco's expanded interest in Hamaca is a demonstration of our confidence in the Venezuelan energy sector. The project leadership's commitment to innovation and creative problem solving will make Hamaca one of the most profitable projects in the Orinoco."

Texaco announced in December of 1996 that it would join Petroleos de Venezuela S.A. (PdVSA), ARCO and Phillips Petroleum Company to pursue the Hamaca heavy oil project. The Hamaca co-ventureship now consists of: PdVSA, 30 percent; Phillips Petroleum Company, 40 percent; and Texaco, 30 percent. The companies manage their interests in the Hamaca Project through a joint operating company called Petrolera Ameriven.

Updated: July 1999