press release

Unocal subsidiary receives payment under Philippines geothermal compromise agreement

El Segundo, Calif., July 21, 2004 - Unocal Corporation (NYSE: UCL) today said that its subsidiary, Philippine Geothermal, Inc. (PGI), has received payment under a compromise agreement that has been reached to settle an eight-year dispute over operation of the Tiwi and Mak-Ban geothermal steam fields in the Philippines.

The Republic of the Philippines' Department of Energy and the Philippine courts approved the compromise agreement among PGI, the state-owned National Power Corporation (NPC) and its holding company, the Power Sector Assets and Liabilities Management Corporation (PSALM). PSALM is the successor-in-interest to the geothermal facilities.

The settlement provides for PGI to continue steam field production until 2021.

The terms of the settlement provide PGI after-tax payments totaling US$76 million (PGI received $50 million of the total payment today, with the remaining $26 million expected July 30.). Unocal will record a $46 million after-tax special item gain in the second quarter 2004. The payments to PGI include a portion of PGI's service fees that were set aside under an interim agreement previously reached between the parties while they were negotiating a settlement.

About Unocal Corporation

Unocal is one of the world's leading independent natural gas and crude oil exploration companies. The company's principal oil and gas activities are in North America and Asia. Unocal is also one of the world's largest producers of geothermal energy, with operations in the Philippines and Indonesia.

This news release contains forward-looking statements about matters such as the accounting impact of settlement payments, the amount and timing of future settlement payments and future geothermal operations by PGI in the Philippines, including the expected duration of those operations,. Although these statements are based upon Unocal's current expectations and beliefs, they are subject to both known and unknown risks and uncertainties that could cause actual results and outcomes to differ materially from those described in, or implied by, the forward-looking statements, including changes in commodity prices; demand for power in the Philippine markets; future disagreements with the Philippine government regarding PGI's geothermal operations; the extent of the company's operating cash flow and other capital resources available to fund its capital expenditures; adverse geological and other operational factors; regulatory, political, and economic factors; performance by foreign governments and other third parties and other risks and uncertainties discussed in Unocal's 2003 Annual Report on Form 10-K, as amended, and subsequent reports filed by Unocal with the Securities and Exchange Commission (SEC File No. 1-8483). Copies of the company's SEC filings are available from the company by calling 800-252-2233 or from the SEC by calling 800-SEC-0330. The reports are also available on the Unocal web site. Unocal undertakes no obligation to update the forward-looking statements in this news release to reflect future events or circumstances.

Updated: July 2004