Conoco Chairman -- The State of the Global Energy Industry.

Business/Energy Editors

DUBAI, United Arab Emirates--(BUSINESS WIRE)--March 27, 2001

Diversity of thought, creativity and flexibility are key to meeting the world's energy needs, Conoco (NYSE:COCA) (NYSE:COCB) Chairman and CEO Archie W. Dunham said today at the Middle East Petroleum and Gas Conference.

"We know that our planet possesses sufficient oil and natural gas reserves to meet demand, but tapping these reserves requires us to surmount three great challenges -- technology, finance and political/social challenge," Dunham said.

Today, he said, the energy industry operates in harsher and more expensive environments -- in the Arctic, in deep water and in remote deserts -- using "cleaner" and more expensive technologies to safeguard the environment. Technology has enabled companies to find and develop new reserves in these more difficult operating environments without significantly increasing costs.

"Conoco will soon test a new technology -- subsea mudlift drilling -- that will facilitate cost-effective, deep-water drilling," Dunham said. "Another new technology, subsea separation, positions separators on the seabed, enabling us to extract increased volumes of oil. We see great potential in the use of new composite materials for risers and tethers, and multilateral wells are also welcome advances in drilling.

"Meeting the world's energy needs requires enormous amounts of capital, continued technological advances and long-term investment horizons," Dunham added. "Our industry must be willing to invest even in challenging and uncertain times and the marketplace must provide incentives for these investments.

"The rate of return on energy projects must be high enough to attract investors. Global and local financial institutions should participate in the process, and energy companies must work to educate the financial community on the facts of our industry."

Dunham said that host governments should provide an environment that encourages development of energy resources, including: government stability conducive to investment; respect for the sanctity of contracts, supportive fiscal regimes, and regulatory and environmental policies that are reasonable and consistent.

Dunham said he believes that corporations have obligations to respect the laws, customs and people of the countries where they do business. "My own experience as a CEO of a global corporation teaches me that doing the right thing is the only way to do business," said Dunham.

"Undoubtedly, the political and social challenge will prove the most difficult of the three challenges to overcome. But I'm an optimist. I look forward to the day -- which I fully expect will arrive this century -- when we will achieve true globalization of the world's economies, to the benefit of the world's people," Dunham said.

In closing, Dunham spoke about the future shape of the global energy industry, stating that it is not only the mega-major industry participants that can meet future energy needs.

"It's true that meeting the world's energy needs will require enormous amounts of capital, continued technological advances and long-term investment horizons," he said. "Despite the current consolidation trends within our industry, we need diversity ...diversity of industry participants ... diversity of thought, creativity and flexibility in our response to problems and opportunities.

"Conoco has demonstrated through a wealth of innovative projects and technology breakthroughs that mid-sized firms can bring the necessary resources to bear -- both to seize opportunities as they arise and to carry them to completion. Often, we do this more quickly, creatively and with greater sensitivity to our partners' needs than others.

"We all need to be active participants. Working together, we can meet the world's energy needs in the century ahead," Dunham concluded.

Conoco is a major, integrated energy company based in Houston and active in 40 countries.