press release

Unocal reaches agreement with PTT for incentive on incremental gas sales

El Segundo, Calif., Oct. 16, 2001 -- Unocal Corporation (NYSE: UCL) today said its Unocal Thailand, Ltd., subsidiary has reached agreement with the PTT Plc. to provide an incentive for incremental natural gas taken above contract production minimums from certain fields in the Gulf of Thailand over a 15-month period.

Unocal Thailand and its co-concessionaires, Mitsui Oil Exploration Co., Ltd., and PTT Exploration and Production Public Company Limited, will pay PTT 638 million Thai baht (US$15 million) as an incentive for PTT to purchase 18.3 billion cubic feet (Bcf) of gas above the contract minimums between July 1, 2001, and Sept. 30, 2002.

The incentive will reduce PTT's cost for these incremental gas volumes by one-third to US$1.66 per thousand cubic feet (Mcf). The incremental gas volumes represent about 4 to 5 percent of the total current production from the Unocal concessions.

Unocal's long-term gas sales contracts will be maintained to ensure that Thailand has a continued supply of low-cost energy.

"This incentive is an effective way to assist the Thai consumer in a period of rising energy prices and great uncertainty," said Randy Howard, president of Unocal Thailand. "At the same time, our long-term contracts maintain an investment climate that enables us to continue the large capital investments required to explore and develop Thailand's oil and gas resources."

The current contract pricing mechanism will continue for all other quantities of gas taken under the contracts. The current daily minimum contract quantity for the four gas sales contracts in Thailand is 905 million cubic feet per day (MMcfd).

The weighted average price for total production, including the incremental volumes, from Unocal's four contract areas for the full-year 2001 is expected to be US$2.38 per Mcf. Gross daily production for full-year 2001 is projected to average 974 MMcfd (Unocal, 571 MMcfd net), versus 1,020 MMcfd (Unocal, 595 MMcfd net) in the first 6 months. Unocal's preliminary net production in the third quarter ending Sept. 30, 2001, was 577 MMcfd, down 74 MMcfd from the previous three months.

The gas sales prices under the contracts are based on the trailing average prices of fuel oil.

Oil development project

Unocal is currently developing its first oil field in the Gulf of Thailand. Unocal began crude oil production in July. Gross production from the Plamuk and Yala fields is expected to increase to 15,000 barrels of oil per day (Unocal, 71.25% working interest) by early next year.

"We're working closely with the Ministry of Industry, the Department of Mineral Resources and PTT to accelerate this project and assist Thailand in reducing the high cost of crude oil imports," said Tara Tiradnakorn, vice president of operations for Unocal Thailand.

About Unocal Corporation

Unocal is one of the world's leading independent natural gas and crude oil exploration and production companies. The company's principal operations are located in North America (Gulf of Mexico region, Alaska and Canada) and in Asia (Thailand, Myanmar, Indonesia, Bangladesh and Azerbaijan). The company is also pursuing exploration programs in West Africa and Brazil.

Unocal Thailand has been producing natural gas in the Gulf of Thailand since 1981.

This news release contains certain forward-looking statements about Unocal's future production and prices. These statements are not guarantees of future performance. The statements are based upon Unocal's current expectations and beliefs and are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from those described in the forward looking statements. Actual results could differ materially as a result of factors discussed in Unocal's 2000 Form 10-K and subsequent reports filed with the Securities and Exchange Commission.

U.S. investors are urged to consider closely the disclosure in Unocal's 2000 Form 10-K (SEC File No. 1-8483). Copies of the company's SEC filings are available from the company by calling 800-252-2233. The reports are also available on the Unocal web site. You can also obtain this form from the SEC by calling 800-SEC-0330.

Updated: October 2001