Caltex and Shantou Ocean Enterprises create joint venture; establish largest LPG business in China.

DALLAS--(BUSINESS WIRE)--Dec. 13, 1995--Caltex China Ltd. and Shantou Ocean Enterprises (Group) Petroleum and Petrochemical Co. Ltd. announced that on Dec. 4, 1995, the companies had signed Joint Venture Contracts and Articles of Association to establish the largest liquefied petroleum gas business in China, which will be called Caltex Ocean Gas and Energy Company Ltd. (COGECL).

Caltex and SOE will form COGECL to construct and operate a high technology, world-scale liquefied petroleum gas (LPG) terminal in Shantou City, Guangdong Province. The COGECL terminal includes three ocean berths, two mined caverns and eight tank truck bays for the importation, storage, manufacturing and distribution of high quality LPG. The COGECL joint venture, at U.S. $125 million, will be the largest investment ever in China's LPG infrastructure; and, COGECL is an important part of the Chinese government State Planning Commission's Ninth Five Year Plan. The terminal is planned to begin operations by the middle of 1998.

Caltex and Shantou Ocean Enterprises each bring unique and complementary assets, skills and advantages to the joint venture. Caltex, jointly owned by Chevron and Texaco, is a major international refiner and marketer of petroleum products including LPG. Caltex, along and with its two equal shareholders, will provide technology and management expertise to the construction, operation and supply of the COGECL joint venture. Shantou Ocean Enterprises is the largest commercial enterprise in Shantou City, the largest Ministry of Chemical Industry subsidiary in Guangdong and already among the largest LPG importers in China.

The initial designed storage capacity of the LPG caverns is 100 thousand metric tons; this quantity will more than triple China's current storage capacity for imported LPG. The terminal's handling capacity can be easily and cheaply expanded to satisfy future demand. The COGECL terminal will be located in eastern Guangdong Province, inside the Shantou Special Economic Zone, which is the ideal location to meet the current and future high imported LPG demands of South and East China respectively. With this single step, the cooperation and investment of Caltex and SOE efficiently achieves the goals of the State Planning Commission for expanding China's LPG infrastructure to meet the growing needs of the Chinese people and the petrochemical industry.

The COGECL business will provide its customers with competitively priced products, secure supply, local inventory and more responsive service. As the first of its kind in China, the construction and operation of the terminal by itself will contribute to China's infrastructure, technology, capital and human resource development because the terminal has a high proportion of Chinese labor, engineering, materials and equipment productive factors. The COGECL joint venture will bring to China the economic benefits and supply efficiencies not available under the current import supply situation for LPG.

The current offshore LPG suppliers cannot meet China's long term requirement for LPG imports because their non-Chinese operations split capacity with other markets, have physical and safety limitations, or are distantly located away from China. These distant or temporary operations are logistically and economically inferior to a land-based breakbulk terminal situated in Shantou. Consistent with the State Planning Commission's investment plans and regulations, the COGECL joint venture LPG business will use the world-scale terminal in Shantou to be China's lowest cost supplier of clean, safe and efficient LPG for consumers and petrochemical feedstock.

CONTACT: Caltex Petroleum Corp.

Chuck Neubeck, 214/830-3869