press release

Unocal Vietnam unit signs production sharing contract for new block

El Segundo, Calif., Oct. 19, 1999 -- Unocal Corporation today said its Southwest Vietnam Exploration & Production, Ltd., subsidiary signed a production-sharing contract for petroleum exploration with Petrovietnam for Block 52/97.

Block 52/97 is in the northern part of the Malay Basin in approximately 195-230 feet (60-70 meters) of water. It is approximately 330 miles (530 kilometers) west-southwest of Vung Tau and 160 miles (260 kilometers) east of Songkhla, Thailand. It covers more than 500,000 acres (2,060 square kilometers).

"The potential development of Vietnam's indigenous natural gas resources can be a strong underpinning to Vietnam's planned economic growth," said Randy Howard, Unocal's vice president for international energy operations in the region. "Using natural gas in modern, efficient gas turbines costs 20 to 30 percent less than using fuel oil or imported coal to generate electricity, providing a highly efficient, long-term power base to build upon," he said.

Block 52/97, adjacent to Unocal's Block B exploration area, had been part of the offshore overlap area between Vietnam and Thailand. The two countries agreed on the delimitation of their shared continental shelf in December 1997, making the strip available for exploration. Block B was awarded to Unocal and its coventurers in May 1996; the adjacent block 48/95 in September 1998. The addition of block 52/97 brings Unocal's total exploration area to approximately 4.15 million acres (16,790 square kilometers). Unocal Thailand has a 16-percent interest in the adjacent Blocks 14, 15 and 16 on the Thailand side of the shared continental shelf.

Unocal discovered gas with its first exploration well on the Kim Long prospect on Block B in late 1997. Two drill stem tests on the well yielded a combined rate of 52.9 million cubic feet per day (mmcfd) of gas. Unocal conducted a 3-D seismic acquisition program on Block B and Block 52/97 in 1998. Unocal has a 45-percent working interest and is operator of Block B.

"It was economical and fit our long-term strategy to include 52/97 in the seismic program," said Howard. "We now have a head start on the exploration program as the processing of the 3-D data is already in its final stages."

Unocal Southwest Vietnam Exploration & Production, Ltd. has a 70-percent working interest in Block 52/97 and serves as operator, while Moeco Southwest Vietnam Petroleum Co., Ltd., a subsidiary of Mitsui Oil Exploration Co., Ltd., holds the remaining 30-percent interest. Petrovietnam has an option to retain its 30-percent working interest at the time of a commercial gas discovery. If exercised, Unocal's and Moeco's interests would be reduced proportionately.

Updated: October 1999