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CHEVRON AND REPUBLIC OF KAZAKHSTAN SIGN JOINT VENTURE FOUNDATION AGREEMENT

 CHEVRON AND REPUBLIC OF KAZAKHSTAN
 SIGN JOINT VENTURE FOUNDATION AGREEMENT
 WASHINGTON, May 18 /PRNewswire/ -- In ceremonies at Blair House this evening, Republic of Kazakhstan President Nursultan Nazarbaev and Chevron Corporation Chairman and CEO Kenneth T. Derr signed historic documents paving the way for a unique 40-year joint venture to develop the Tengiz and Korolev oil fields on the northeastern Caspian Sea coast in western Kazakhstan.
 Also signing were Chevron Overseas Petroleum Inc. President Richard H. Matzke and Kazakhstan Deputy Prime Minister Kalyk Abdullaev.
 The project, which envisions potential peak oil production of over 700,000 barrels per day by 2010, represents the largest such arrangement between a major republic of the Commonwealth of Independent States and a major multinational oil company.
 The documents signed today follow an announcement earlier this month that the two new joint-venture partners had ironed out terms and conditions upon which to base a project. Chevron and Kazakhstan began discussions about Tengiz two years ago.
 Work by the Tengizchevroil joint venture -- comprising Chevron Overseas Company and the Kazakh production association Tengizneftegaz -- is expected to begin January 1993 after an operating agreement is finalized and other significant details are worked out, such as plans for an export pipeline.
 "This project represents a tremendous, long-term opportunity for both the Republic of Kazakhstan and for Chevron," said Derr. "The agreement that we have signed this evening represents countless hours of very hard work and the dedication by many people from Kazakhstan and from Chevron. Our journey to this point has been a long and sometimes difficult one. But the documents we've signed demonstrate the value of persistence by two parties who were both sincere in their commitment to establishing a commercial venture together.
 "We anticipate a long business relationship with tremendous benefits to both parties, and we are looking forward to participating in the development of one of the most important resources of a vibrant and progressive new nation -- Kazakhstan," Derr continued.
 The agreement calls for Chevron to acquire a 50 percent interest in a joint venture to develop the Tengiz and Korolev fields, and to explore for oil in an area of about 1,500 square miles. Including taxes and royalties paid to Kazakhstan, distribution of income over the life of the project will average close to 80 percent for Kazakhstan and 20 percent for Chevron.
 Kazakhstan was assisted during its negotiations with Chevron by John Deuss, representing the Oman Oil and Gas Ministry; and by the investment bank of J. P. Morgan; and the British law firm of Slaughter & May. Last week, the government of the Sultanate of Oman issued a statement saying it "considers that the terms and conditions of the transaction between the Republic of Kazakhstan and Chevron Corporation (to be) fair and equitable judged by world standards and represent a proper distribution of the balance of interests between the parties."
 The Tengiz field was discovered in 1979, and Korolev was discovered in 1986. Production began at Tengiz in 1991 and is currently about 60,000 barrels of oil per day. The Korolev field is expected to begin production in 1999.
 Combined original oil in place at Tengiz and Korolev is estimated at about 25 billion barrels. Depending on the economic and technical success of the project, it is estimated that the Tengizchevroil joint venture will recover an estimated 6 to 9 billion barrels of oil. Production is expected to increase from present rates of 60,000 barrels a day to more than 700,000 barrels over an extended period. About 600 wells will be required for the project; roughly 60 have been drilled to date.
 The Tengiz field itself covers about 200 square miles. The reservoir had an initial pressure in excess of 11,000 pounds per square inch and produces a 46 degree API gravity crude oil.
 The joint venture's investments in field development and processing facilities are estimated to be about $20 billion over the life of the project, with an initial investment of some $1.5 billion over the first three years. As part of its involvement in the development of the joint venture, Chevron will assist Kazakhstan with infrastructure improvements, such as rebuilding of roads, schools and hospitals.
 -0- 5/18/92
 /CONTACT: Sherri Zippay of Chevron, 415-894-4581/
 (CHV) CO: Chevron Corporation ST: California IN: OIL SU: JVN


MC-RM -- SF009 -- 1579 05/18/92 19:05 EDT
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Publication:PR Newswire
Date:May 18, 1992
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