press release

Unocal deepwater Indonesia PSC area declared commercial; plans for West Seno, Merah Besar development approved by Pertamina

Unocal deepwater Indonesia PSC area declared commercial; plans for West Seno, Merah Besar development approved by Pertamina

El Segundo, Calif., Oct. 26, 1999 -- Unocal Corporation today said that it has received significant approvals from Pertamina, the Indonesian national oil company, which will allow initial development activities to progress on the West Seno and Merah Besar oil and gas fields in the deepwater Kutei Basin, offshore East Kalimantan.

The approved Plans of Development (POD) follow Pertamina's declaration of commerciality for the Makassar Strait production-sharing contract (PSC) area. Unocal Makassar, Ltd., is operator and has a 50-percent working interest in the Makassar Strait PSC area. Mobil Makassar, Inc., holds the remaining 50-percent interest.

"This is a major milestone for Unocal. It will be the first deepwater development in Indonesia, and it establishes Unocal as the premier deepwater operator in this important oil and gas region," said Brian W. G. Marcotte, president of Unocal Indonesia Company.

"Working closely with Pertamina and Mobil, we have taken the West Seno deepwater prospect from initial discovery to an approved POD in a little over a year. The earlier Merah Besar discovery on the adjacent East Kalimantan PSC area established groundwork for Pertamina to quickly and decisively move the West Seno development forward. Furthermore, accomplishing this so quickly is a tribute to the skills, energy, and creativity of Unocal's Indonesian Deepwater Team," Marcotte said. Unocal Indonesia Company is operator and has a 100-percent working interest in the East Kalimantan PSC area.

The West Seno development is expected to utilize mini-tension leg platforms (TLP) with a tender-assisted drilling rig. Produced fluids will be processed on a single floating production unit (FPU) located in close proximity to the first TLP. Oil and gas production from the FPU will be transported ashore via separate pipelines to the existing Santan Terminal located approximately 37 miles (60 kilometers) west of the field.

Development activity is planned in two phases. Phase One is expected to have 24 development wells completed from the first wellhead TLP. First production is expected in 2002. Phase Two, which should follow in about 18 months, will include a second TLP and 21 development wells.

The company estimates the West Seno field will maintain daily plateau production rates of about 60,000 barrels of oil and 150 million cubic feet of gas.

With the approval of the West Seno and Merah Besar PODs by Pertamina, the two fields now qualify to supply gas for the latest package of LNG, LPG and domestic gas sales.

"The West Seno and Merah Besar fields are a very important component of Unocal's future growth projections in Indonesia, and we are on track to achieve our expectations for reserves, earnings, and cash flow from these projects" said Charles R. Williamson, executive vice president of International Energy Operations.

Unocal is one of the world's largest independent oil and gas exploration and production companies, with resource development, power plant and pipeline projects in Asia, the U.S. Gulf of Mexico region and Latin America. Unocal Indonesia operates 9 fields offshore East Kalimantan, northeast of Java, with an average production of about 95,000 oil equivalent barrels per day to its net working interest.

Unocal is currently the most active explorer in Indonesia. The company has a significant acreage position, close to 5.2 million gross acres. Nearly half of the acreage -- the equivalent of about 500 Gulf of Mexico blocks -- is in the deepwater Kutei Basin.

Forward-looking statements about future production and development plans in this news release are based on assumptions concerning geological, market, competitive, regulatory, environmental, operational and other considerations. Actual results could differ materially as a result of factors discussed in Unocal's 1998 Form 10-K report filed with the U.S. Securities and Exchange Commission. The recoverable resource is a speculative estimate of ultimate recovery (including non-proved resource) based on engineering, geophysical and geological studies and may include market risk. Under the terms of the PSCs, Unocal's subsidiaries, as contractors to Pertamina, the Indonesian national oil company, are entitled to varying shares of the oil and gas produced from commercial discoveries.

Updated: October 1999