press release

Unocal begins operations of first private geothermal power plant in Indonesia

El Segundo, Calif., Oct. 21, 1997 -- Unocal Corporation today announced the successful start of operations by Indonesia's first privately developed geothermal-powered electric generating plant.

Located at the Gunung Salak contract area, 60 miles south of Jakarta on the Island of Java, the new 55-megawatt, geothermal-powered generating plant is operated by Dayabumi Salak Pratama Ltd. Dayabumi, which serves as a contractor to Pertamina, is jointly owned by Unocal Geothermal of Indonesia, Ltd. (UGI) and PT Nusamba Geothermal. The electricity generated by the power plants is sold to PT. PLN (Persero) (PLN), the Indonesian state electricity utility.

The Unit #4 geothermal power plant at Gunung Salak is the first of three Dayabumi-operated power plants that will begin generating electricity this year. Unit #5 is slated to begin operations later this month and Unit #6 should come on-line in November.

With the three Dayabumi power plants on-line, the geothermal generating capacity of Gunung Salak will total 330 megawatts, making it the largest geothermal project in Indonesia. The other three 55-megawatt power plants at Gunung Salak are operated by PLN. Unocal supplies the geothermal steam to power all of these generating plants through a joint venture between UGI (90% interest) and PT Nusamba Geothermal.

When Units #4, 5 and 6 come on line, the combined results for the steam production and sale of electricity are expected to add an estimated $24 million to Unocal's net earnings and $44 million to operating cash flow on an annualized basis.

"This is an important step forward because geothermal steam is a clean and reliable energy source for Indonesia," said Randy L. Howard, Unocal vice president, geothermal operations. "By using this indigenous resource, Indonesia is able to export more fossil fuels such as gas and oil to improve its balance of payments."

The geothermal steam required to generate 330-megawatts of electricity over the 30-year life of the project is the energy equivalent of 100 million barrels of oil.

Unocal is the world's largest developer of geothermal energy. In addition to the Gunung Salak project in Indonesia, the company has commercial geothermal projects in the United States and the Philippines. In addition, the company recently signed an exploration concession for a geothermal energy prospect in Nicaragua.

Unocal is also exploring the highly prospective Sarulla area of Northern Sumatra, where the company has a contract with Pertamina to develop geothermal resources and build power plants. The electricity from these power plants would be sold to PLN to distribute into the Medan power grid.

Forward-looking statements in this news release, including estimates of profitability and cash flows, are based on assumptions concerning market, competitive, regulatory, environmental, operational and other considerations. Actual results could differ materially.

Updated: October 1997