press release

Texaco Press Release - Texaco Is First International Firm to Sign Coalbed Methane Contract With China

FOR RELEASE: THURSDAY, JANUARY 8, 1998

HARRISON, N.Y., Jan. 8 - Texaco announced today that it has signed the first contract with the China United Coalbed Methane Corporation, Ltd. (CUCBM) to tap the country's extensive coalbed methane reserves. The contract will allow Texaco to conduct a coalbed methane (CBM) exploration program in China's Anhui Province.

Commenting on the agreement, Texaco Inc. Senior Vice President C. Robert Black said, "This agreement offers us the opportunity to apply Texaco's proven coalbed methane technology and expertise to help tap the potentially rich and important coalbed methane reserves of China. It is also a reflection of the importance both Texaco and China place on mutually beneficial long-term commitments, and complements our global energy development strategies."

Black continued, "In addition to supplying a steady, long-term source of energy for the region, coalbed methane provides the environmental benefit of being a clean-burning fuel." China's plentiful coal resources offer the potential for large-scale coalbed methane development, which has been identified as an important strategy within the country's energy development plan.

Texaco's first coalbed methane agreement in China includes an exploration program to be carried out by the company over two prospective blocks totaling 2,663 square kilometers in the Huaibei coal mining area in northern Anhui Province, some 600 kilometers northwest of Shanghai. It is estimated that peak CBM production from these two blocks could be in excess of 1.5 billion cubic meters per year. Huaibei is the fourth-largest coal mining area in China, producing 16 million tonnes per year.

Chinese Premier Li Peng and Vice Premier Zou Jia Hua participated in the signing ceremony at the Great Hall of the People in Beijing. They were joined by Black, who signed the contract on behalf of Texaco China B.V., a subsidiary of Texaco, Sam Snyder, Texaco China Country Manager, and Mr. Chen Ming He, Chairman of CUCBM, who signed the contract on behalf of CUCBM.

Texaco's CBM production in the San Juan Basin of New Mexico and Colorado and in the Uinta Basin of Utah is currently more than one billion cubic meters per year. Additionally, Texaco Slask Sp. z.o.o., a Texaco subsidiary, currently is drilling CBM exploration wells in the Upper Silesian Coal Basin, west of Krakow in southern Poland. This exploratory work is being conducted in a 260 square kilometer concession granted to the company in July 1997 to explore for coalbed methane reserves.

CUCBM was established in May 1996 with the cooperation of the Ministry of Geology and Mineral Resources, the Ministry of Coal Industry, and the China National Petroleum Corporation to more effectively develop China's vast coalbed methane resources.

Updated: January 1998