press release

Unocal power project in Thailand is major step forward in company's long-term growth strategy

El Segundo, Calif., April 2, 1997 -- The signing of agreements for the first independent power project (IPP) in Thailand was a major step forward in Unocal Corporation's long-term growth strategy, said Thomas E. Fisher, Unocal vice president for commercial affairs, today.

"This power plant project is a major step forward in our strategy of developing projects that allow us to participate in the entire energy value chain," Fisher said. "We are building on our solid business relationships and established presence in Asia, our international reputation for technical competence and innovation, and our proven track record as an efficient, low-cost project developer."

The 700-megawatt, gas-fired power plant is being developed by Independent Power (Thailand) Company Limited (IPT), a joint venture between Unocal Asia-Pacific Ventures Ltd. (24% interest), Thai Oil Power Co. Ltd. (56% interest) and Westinghouse Electric S.A. (20% interest). The power plant, to be located in Thailand's eastern seaboard industrial zone at Si Racha, Chon Buri, is expected to come on-line in 1999.

The US$350 million IPT plant is the first project being developed under the Electrical Generating Authority of Thailand's (EGAT) independent power producer program. The power plant will be built under a fixed-price, turnkey contract with Westinghouse Corp., which includes completion and performance guarantees.

The project negotiations included a long-term gas sales agreement with the Petroleum Authority of Thailand (PTT), an electric power sales agreement with EGAT, and financing.

Under the long-term gas sales agreement, PTT will supply natural gas to the project as needed, up to 120 million cubic feet of natural gas per day for a period of 25 years.

Under the electric power sales agreement, IPT will sell electricity generated by the new power plant to EGAT for a period of 25 years. The agreement includes a monthly capacity payment that covers operating and maintenance, debt repayment, depreciation, and return on investment. In addition, IPT will be allowed a pass-through of variable costs, including all fuel costs.

The electricity generated will be distributed through EGAT's grid to meet Thailand's growing energy demand.

Financing for the project includes $280 million in loans. The non-recourse project financing is equally divided between a 15-year loan in U.S. dollars from a group of international banks and 17-year loan in baht from a group of Thai banks. An additional $70 million will be provided by the participants as equity.

Updated: April 1997