press release

Unocal Statement: Suspension of activities related to proposed natural gas pipeline across Afghanistan

El Segundo, Calif., Aug. 21, 1998 -- As a result of sharply deteriorating political conditions in the region, Unocal, which serves as the development manager for the Central Asia Gas (CentGas) pipeline consortium, has suspended all activities involving the proposed pipeline project in Afghanistan. We are discussing this suspension with the other members of the consortium.

This decision to suspend activities is consistent with Unocal's long-held position concerning its involvement in the project. For the past several months, Unocal has been reviewing this project with CentGas participants. We have consistently informed the other participants that unless and until the United Nations and the United States government recognize a legitimate government in Afghanistan, Unocal would not invest capital in the project. Contrary to some published reports, Unocal has not - and will not - become a party to a commercial agreement with any individual Afghanistan faction.

Unocal was instrumental in proposing the Central Asia gas pipeline project in 1995 and in forming the seven-member CentGas consortium in October 1997. The consortium was formed to evaluate and, if appropriate, to participate in the future construction of a gas pipeline from Turkmenistan through Afghanistan to natural gas markets in Pakistan and, potentially, India.

Unocal will only participate in construction of the proposed Central Asia Gas Pipeline when and if Afghanistan achieves the peace and stability necessary to obtain financing from international lending agencies for this project and an established government is recognized by the United Nations and the United States. For this reason, we strongly support the United Nations conflict resolution process underway in this and other regions.

We believe that the CentGas pipeline would benefit the entire region by providing vitally needed energy infrastructure, employment and training, as well as hard currency revenues to the several countries involved. The proposed pipeline is an example of a large-scale project that may, after the appropriate conditions are met, help Afghanistan move from its present devastation toward economic reconstruction.

Since the pipeline project was first proposed, there have been a number of complex issues that Unocal has taken very seriously. Unocal recognizes the legitimate concerns regarding the treatment of women in Afghanistan. Consistent with our core values and business principles, Unocal is currently providing humanitarian support and skills training to Afghanistan through CARE and the University of Nebraska at Omaha. Neither program is designed to provide pipeline construction skills training. These programs meet or exceed UN guidelines for doing fieldwork in Afghanistan. They include basic job skills training and education for both men and women, and elementary education for boys and girls. Unocal has also contributed relief assistance for victims of the recent earthquakes through the Red Cross and the United Nations.

Updated: August 1998