ChevronTexaco Increases 2005 Budget to $10 Billion

ChevronTexaco announced a $10 billion capital and exploratory (C&E) spending program for 2005, which includes $1.8 billion for the company's share of affiliate expenditures. While actual 2004 C&E expenditures will not be known until year-end, they are estimated to be in the range of the 2004 budgeted amount of $8.5 billion.

"Our capital program continues to target our strategies to focus on high-return upstream growth projects, to commercialize our company's large natural gas resource base and to enhance the financial returns in our downstream business. These are the right strategies at the right time and continue to yield very strong results," said ChevronTexaco Chairman and CEO Dave O'Reilly.

"We have made great strides in improving the company's overall return on capital employed and the 2005 program reflects a continued emphasis on spending discipline while maintaining our financial flexibility to take advantage of new growth opportunities. It also recognizes we are entering into higher spending stages on several key growth projects," O'Reilly said.

Exploration, Production and Global Gas

Approximately 74 percent of total capital spending, or $7.4 billion, is targeted for upstream investment in exploration, production and global gas-related projects, including $2.5 billion in the United States.

Peter Robertson, ChevronTexaco's vice chairman, said, "Our exploration and production focus continues to be on growth while maximizing overall performance in our base business. We will continue to select projects that represent the best economic opportunities and work diligently to deliver superior results."

Robertson said the upstream program builds on a series of exploration successes over the past three years and includes continued investment in high-impact exploration opportunities in the deepwater Gulf of Mexico and West Africa, as well as in prospective areas outside those regions. He cited major 2005 spending on longer-term projects in the following areas:

Angola -- ongoing investment in near-shore producing fields following the recent Block 0 concession renewal, in the Sanha condensate project and in deepwater developments at Benguela/Belize

Nigeria -- ongoing investment in deepwater developments at Agbami Kazakhstan -- continued development of the Sour Gas Injection and Second Generation projects at Tengiz, which are targeting production increases in 2006

Gulf of Mexico -- continued appraisal and engineering work for deepwater discoveries, including the Tahiti and Blind Faith projects

Robertson said the 2005 program also includes significant spending to commercialize the company's international natural gas resource base to help meet future demand. The upstream portion of global gas-related investments in 2005 is estimated at $400 million and includes projects in the following areas:

Australia -- further development of the Gorgon natural gas resource offshore Western Australia

Angola and Nigeria -- reduction of natural gas flaring through the construction of pipelines, liquefied natural gas facilities and a world-scale gas-to-liquids plant

United States and Mexico -- continued investments to ensure import capability in both the Atlantic and Pacific basins in support of our future upstream equity gas production

Global Downstream

About $1.9 billion, or 19 percent of total spending, is targeted for global downstream. Refining and marketing investments are estimated at about $600 million in the United States and $900 million internationally. These investments will allow ChevronTexaco to meet future product specifications and to enhance our ability to process these products from heavy and/or sour crudes. Another $400 million is budgeted primarily for supply and transportation projects, including pipelines to support expanded upstream production.

Chemicals and Other

Investments are expected to total about $700 million in chemicals, technology and power.

         ChevronTexaco 2005 Planned
         Capital & Exploratory Expenditures*      $ Billions

         U.S. Upstream                               $2.5
         International Upstream                       4.9
         U.S. Downstream                              0.7
         International Downstream                     1.2
         Chemicals and Other                          0.7

         TOTAL C&E                                   10.0
         Affiliate (noncash)                        (1.8)

         Cash C&E                                    $8.2

    *  Global gas-related expenditures are included in each business segment,
       depending on the nature of the investment.

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