press release

Unocal concludes negotiations for sale of natural gas from Pailin field in Thailand

El Segundo, Calif., May 22, 1996 -- Unocal Corporation said today its Unocal Thailand, Ltd., subsidiary has successfully concluded negotiations with the Petroleum Authority of Thailand (PTT) for the sale of natural gas from the new Pailin field in the Gulf of Thailand. A 30-year gas sales agreement is expected to be signed next month following certain Thai government approvals.

Unocal is the operator of the Pailin field and heads a consortium that includes PTT Exploration and Production Public Company (PTTEP), Amerada Hess International Exploration and Moeco Thai Oil Development Company (MOTODECO).

Under the proposed agreement, production from the Pailin field would begin in mid-1999 at 165 million cubic feet of natural gas a day (mmcfd), rising to a planned 330 mmcfd in 2001 with the expected delineation of additional reserves. The companies did not disclose the pricing terms of the sale agreement.

"Pailin is Unocal's single largest project ever undertaken in Thailand and represents an important part of our development strategy," said Brian W. G. Marcotte, president of Unocal Thailand.

The Pailin field was discovered in 1990. Unocal has drilled 19 wells in the field to delineate the gas resource. Based on drilling to date, the company currently estimates that the Pailin field contains nearly one trillion cubic feet (tcf) of recoverable gas. "We believe that total recoverable gas could be as high as 2 tcf, but we will need to do additional delineation work," Marcotte said. Unocal expects to book a portion of the proved reserves this year.

In developing Pailin, Unocal plans to install as many as 30 wellhead platforms and two central processing platforms. The gas will be piped through PTT's subsea pipeline to Rayong -- the industrial hub on Thailand's eastern seaboard.

Pailin is located in Concession Block B12/27, south of Unocal's currently producing acreage. Unocal Thailand holds a 35 percent interest in the Pailin field; PTTEP, 45 percent; Amerada Hess, 15 percent; and MOTODECO, 5 percent.

Unocal began production offshore Thailand in 1981, and currently produces natural gas and condensate from eight fields under three separate gas sales agreements. Unocal holds an average interest of about 65 percent (after-royalty) in the three gas production areas along with Mitsui Oil and PTTEP. Most of the produced gas is used to fuel domestic power generation plants, accounting for about one-fourth of the electricity generated by the Electricity Generating Authority of Thailand.

In 1995, gross production from the Unocal-operated fields averaged 720 mmcfd and 25,900 barrels of condensate per day. Gross production is expected to average more than 800 mmcfd this year.

Updated: May 1996