© CVX 2011

Global Gas

Chevron Progress in Associated Gas Utilization Focus on Kazakhstan and Angola Flare Reduction Programs

GGFR Steering Committee 30Nov2011 Babak Fayyaz Jim Wisner

© CVX 2011

Chevron Successes Part of Long-Term Integrated Flare Reduction Plan

• Chevron has fully incorporated GGFR Associated Gas

Recovery Planning processes.

• Six years of repeated annual planning, execution and

review.

• Strong integration with commercial major capital

project activities of business units.

• Strong cooperation with government programs and

development of regional infrastructure.

• 40-50% overall global reductions achieved over past 6

years.

• Major lessons learned from successes and challenges.

© CVX 2011

Example Success Stories

Kazakhstan

• 90% flaring reduction while increasing production by

150%

• Integrated planning and execution with Kazakhstan

government and Tengiz Chevroil (TCO) partners and

Major Capital Project programs

- Intentional operator-government planning to

reduce flaring while enhancing production

- Achieved with high local content

• Part of $2.2 Billion environmental improvement project

program of TCO

Additional detail on GGFR Success Story website.

© CVX 2011

Global Gas

Angola LNG: Key Insights from a Successful Associated Gas LNG Project

Prepared by: Jim Wisner, Commercial General Manager, Southern Africa, Chevron ; Chevron Lead, GGFR Steering Committee Presented by: Babak Fayyaz, Coordinator Chevron AGRP Process Washington D.C. November 29, 2011

4

© CVX 2011

Keys to A Successful Associated Gas LNG Project

1. Opportunity Identification (resource, land and

marine access)

2. Clear Project Vision

3. Government Support and Stakeholder Alignment

4. Aligned Upstream and Midstream Objectives

5. Market solution

6. Effective Project Planning and Execution

7. Environmental Mitigations

8. Host Community Acceptance

5

Early Development Phase

Later Development Phases

© CVX 2011

Project Scope

Anchored by Associated Gas supply

• Future Non-Associated Gas

Gathering from multiple gas sources

Single train 5.2 mmtpa LNG plant

LNG and LPG loading facilities

7 dedicated LNG ships

Employee housing and infrastructure

Construction team of ~7,000

• ~50% Angolan

Multiple Community Projects

Key Milestones

December 10, 2007:

Final Investment Decision

LNG Ship Delivery In Progress

LNG Plant Commissioning in Progress

Q1 2012: 1st LNG cargo

Angola LNG: A Case Study in Value Chain Integration

36.4%

22.8% 13.6% 13.6% 13.6%

© CVX 2011 7

Key #1: Identify Gas Resource, Land and Marine Access

Early Angola studies found: Sufficient gas resource for reliable

supply: both associated and non-associated gas

Long term solution for associated gas required to enable continued oil development

Potential plant locations provided acceptable marine access

Sufficient LNG market demand

Project could be economically viable

Importance: LNG is only feasible with reliable gas supplies, land and port access

© CVX 2011 8

Block 15 AG

Block 17 AG

Block 0 & 14

AG & NAG

SOYO

CONGO RIVER

LOMBO EAST

CABINDA

LNG Plant

Block 15 AG

(EM)

Block 17 AG

(TOTAL)

Block 18 AG

(BP)

Block 0 & 14 AG

(CVX)

SOYO

CONGO RIVER

LOMBO EAST

One 5.2 MMTPA LNG Train

on Kwanda Island

next to Kwanda Base

CABINDA

Quiluma

NAG

Atum &

Polvo NAG

Enguia

NAG

Key #2: Clear Project Vision

Importance: A clear project vision is necessary to create stakeholder alignment and government support

Angola LNG Vision:

Gather associated gas from multiple upstream suppliers, with some participating in the LNG project

Develop a regional integrated gas solution to enable oil development

Contribute to the social and economic development of Angola.

Develop an economically viable project for all stakeholders

© CVX 2011

Key #3: Stakeholder Alignment and Government Support

ALNG aligned with Angolan government objectives and strategies

Strong support and resources from Sonangol

Solution for associated gas to enable oil development and align interests

Foundation for regional gas gathering network

Foundation for domestic gas supply by Sonangol

Significant local content

Enabling legislation and fiscal regime timed to support major project commitments

9

Importance: stakeholder alignment and government support were needed to ensure smooth project development and implementation.

© CVX 2011

Key #4: Aligned Integrated Upstream & Midstream

10

Integrated value chain aligns interests from field to LNG

Multiple sub-projects require coordinated planning

Upstream stakeholders and aligned value chain helps to ensure gas supply is reliable

Back-up non-associated gas supply

Robust value chain governance

Multiple Companies bringing resources to a large LNG project

LNG expertise

Human and financial capital

ALNG shareholders in LNG offtake chain

Importance: Close planning between upstream and midstream is necessary to ensure reliable flow of associated gas to the LNG plant

36.4% 22.8% 13.6% 13.6% 13.6%

Block 0 & 14 Gas

Block 15 Gas

Block 18 Gas

Block 17 Gas

Other Gas

Angola LNG

Shipping

International Markets

Alig

ned

In

terests

en

han

ce r

elia

bility

© CVX 2011

Key #5: Aligned Marketing Solution

11

Product offtake assurance was critical to avoid impact on oil operations

Supply competition increasing, LNG market evolving

Different marketing models were considered

Early alignment of Angola LNG shareholders on the preferred marketing model supported the final investment decision.

• For Angola LNG, 3 LNG Ships will be owned by Sonangol-E.P. Shipping Holding Ltd.

• Sonangol/Chevron ship operations joint venture

Importance: reliable market access for LNG is essential for gas flow assurance through the entire value chain.

© CVX 2011

Key #8: Host Community Acceptance

12

~US$ 1.7 billion Angolan content during project construction

~3,800 Angolans employed during the construction phase

Includes skill training

Soyo area road and bridge new construction and road refurbishment

Construction of 22 MW power plant for Soyo community

Regional hospital major expansion and refurbishment

School major expansion and refurbishment

Major community housing project

ALNG staff residential housing integrated with Soyo community

Soyo airport upgrades

Support for regional health initiatives

Multiple other community projects.

Extensive use of Soyo community services and businesses.

Importance: Acceptance by a project’s host community is critical for long term success

© CVX 2011

The Angola LNG Journey

13

July 2008 December 2009 November 2011

© CVX 2011 14

The “Early Keys” enabled Angola LNG’s Success and Can serve as a Model for any Large Scale Associated Gas Development …. November 2011