press release

Texaco Press Release - Venezuelan Congress Approves Texaco Heavy Oil Project

FOR RELEASE: WEDNESDAY, JUNE 11, 1997

WHITE PLAINS, N.Y., June 11 - Texaco Inc. announced today that the Venezuelan Congress has approved the conditions and the agreement under which an association of companies that includes Texaco will be authorized to pursue the development of extra-heavy crude oil in the Hamaca Region of the Venezuelan state of Anzoategui.

The companies holding interests in the project include subsidiaries of: Texaco, 20 percent; Atlantic Richfield (ARCO), 30 percent; and Phillips Petroleum, 20 percent. Corpoven, a subsidiary of Petroleos de Venezuela S.A. (PDVSA), holds the remaining 30 percent. Following the signing of an association agreement by the four companies, the project is expected to begin later this year with basic engineering work.

Texaco Inc. Senior Vice President C. Robert Black said, "This endorsement of the Hamaca project by the Venezuelan Congress symbolizes the government's openness to major new investments in the petroleum sector. For Texaco, Hamaca will be another opportunity to apply our heavy oil expertise and to aggressively increase worldwide crude oil production and reserves." Current data indicates that Venezuela's Orinoco Belt, which includes the Hamaca acreage, is one of the largest known hydrocarbon deposits in the world with 270 billion barrels currently considered recoverable.

If fully developed, the project is expected to recover an estimated 2.4 billion barrels of approximately 9-degree API gravity crude oil over a contract period of 35 years. Current plans call for production to begin in early 1999 at 36,000 barrels per day (BPD) and to peak at approximately 200,000 BPD in 2006.

The crude would be transported by pipeline to a proposed upgrading plant at Jose on the Caribbean coast of Venezuela where it would be processed for sale on the open market. State-of-the-art upgrading technology would convert the heavy crude into a marketable 25-degree API gravity oil. The total cost of the project is estimated at $3.5 billion.

The Venezuelan project would further expand Texaco's participation in cost-effective and strategically located heavy crude production, upgrading and refining. The company carries out significant heavy crude production in California, the U.K. North Sea, Indonesia and the Partitioned Neutral Zone between Saudi Arabia and Kuwait.

Updated: June 1997