ARCO/Texaco Sign Contract with CNOOC to Develop China's Second Largest Offshore Oil Field

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18 September 1998

ARCO China, Inc., a wholly-owned subsidiary of Los Angeles-based ARCO (NYSE: ARC), and Texaco China BV, a wholly owned subsidiary of Texaco Inc (NYSE: TX), have entered into a new petroleum contract with the Chinese National Offshore Oil Corp (CNOOC) to develop China's second largest offshore oil field, the Qinhuangdao (QHD) 32-6 field in Bohai Bay.

Discovered by CNOOC in 1995, the QHD 32-6 field is located approximately 250 kilometers (155 miles) southeast of Beijing in Bohai Bay. The field lies 20 kilometers (12 miles) offshore in 20 meters (65 feet) of water. CNOOC will be operator of the field with a 51% interest. ARCO and Texaco each has a 24.5% interest.

The three companies expect to complete the formal development plan by year end. Startup of the field is planned for mid-year 2001, with production reaching a sustainable rate of 60,000 barrels per day in 2002. Oil in place at QHD 32-6 is estimated to exceed one billion barrels.

"We are pleased to participate in this development," said ARCO China President Jim Weeks. "Texaco has been in the Bohai Bay since 1990 and brings a wealth of experience to this partnership. Both Texaco and ARCO have successfully cooperated with CNOOC on many ventures in China over the years."

"Both Texaco and ARCO are very pleased with the complementary strengths and core competencies that each party brings to this major commercial venture," added Texaco China BV President Sam Snyder. "This contract represents a new age of cooperation with China."

ARCO China currently operates China's largest offshore natural gas field, Yacheng 13-1, near Hainan Island in the South China Sea. Texaco China is part of the CACT Operators Group which operates the Huizhou oil fields in the Pearl River Mouth area of the South China Sea.

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