press release

Unocal unit signs farm-in agreement for Argentina onshore oil exploration block

Sugar Land, Texas, Feb. 26, 1998 - Unocal Corporation today said its Unocal Patagonia, Ltd., subsidiary has reached an agreement to farm-in for a working interest in the CNQ-7 oil exploration block on the eastern flank of the onshore Neuquen Basin in Argentina.

The block, known as the Gobernador Ayala, covers approximately 800 square miles (2,111 square kilometers) in the provinces of Mendoza and La Pampa.

Under the farm-in agreement, Unocal Patagonia will drill three exploration wells on the block to earn a 39.98% interest. Once Unocal earns its working interest, Petrolera Santa Fe S.A., operator of the block, will have a 22.51 percent working interest, and YPF S.A. of Argentina will have a 30.01 percent working interest. Monument Exploracin Limited holds the remaining 7.5 percent working interest.

The Neuquen Basin is Argentina's most prolific oil and gas basin, holding 42 percent of Argentina's total oil reserves and 56 percent of Argentina's natural gas reserves. More than 750 million barrels of oil have been produced in nearby fields. Block CNQ-7 has access to oil export pipelines transporting production to Atlantic and Pacific energy markets. Unocal acquired a 27.75 percent working interest in the Argentina to Chile oil pipeline (Trans-Andean Oil Pipeline) in December 1996, which lies to the west of the block. Other shareholders in the Trans-Andean Oil Pipeline include YPF S.A. (54.25%) and Empresa Nacional del Petroleo (ENAP) of Chile (18%).

The Neuquen Basin farm-in is Unocal's second significant exploration and production project in Argentina and the third joint project with YPF S.A. in the last year. In December 1997, Unocal Patagonia reached an agreement on a joint venture with YPF S.A. for the exploration and development of two large permit areas in the San Jorge Basin offshore Argentina.

Unocal is a leading global energy resource and project development company, with major oil and gas exploration and production activities in Asia, the U.S. Gulf of Mexico and Latin America. The company maintains twin headquarters in California and Malaysia, with major offices in Singapore, Jakarta, Bangkok and Sugar Land, Texas, and Lafayette, Louisiana.

Updated: February 1998