and fuel costs, which tend to follow crude oil and natural gas price movements, also influence earnings in this segment.

     Refer to the “Results of Operations” section on page FS-8 for additional discussion of chemicals earnings.

Operating Developments

Key operating developments and other events during 2008 and early 2009 included the following:

Upstream

Australia  Started production from Train 5 of the 17 percent-owned North West Shelf Venture onshore liquefied-natural-gas (LNG) facility in West Australia, increasing export capacity from about 12 million metric tons annually to more than 16 million. The company also announced plans for an LNG project that initially will have a capacity of 5 million tons per year and process natural gas from Chevron’s 100 percent-owned Wheatstone discovery located on the northwest coast of mainland Australia.

     Canada  Finalized agreements with the government of Newfoundland and Labrador to develop the 27 percent-owned Hebron heavy-oil project off the eastern coast.

     Indonesia  Achieved first oil at North Duri Field Area 12, which Chevron operates with a 100 percent interest. Maximum total crude-oil production of 34,000 barrels per day is expected in 2012.

     Kazakhstan  Completed the second phase of a major expansion of production operations and processing facilities at the 50 percent-owned Tengizchevroil affiliate, increasing total crude-oil production capacity from 400,000 to 540,000 barrels per day.

     Middle East  Signed an agreement with the Kingdom of Saudi Arabia to extend to 2039 the company’s operation of the Kingdom’s 50 percent interest in oil and gas resources of the onshore area of the Partitioned Neutral Zone between the Kingdom and the state of Kuwait.

     Nigeria Started production offshore at the 68 percent-owned and operated Agbami Field, with total oil production expected to reach a maximum of 250,000 barrels per day by the end of 2009. The company and partners also announced plans to develop the 30 percent-owned and partner-operated offshore Usan Field, which is expected to have maximum total production of 180,000 barrels of crude oil per day within one year of start-up in 2012.

     Republic of the Congo  Confirmed startup of the 32 percent-owned, partner-operated Moho-Bilondo deepwater project, which is expected to reach maximum total crude-oil production of 90,000 barrels per day in 2010.

     Thailand Approved construction in the Gulf of Thailand of the 70 percent-owned and operated Platong Gas II project, which is designed to have processing capacity of 420 million cubic feet of natural gas per day.

     United States Began production at the 75 percent-owned and operated Blind Faith project in the deepwater Gulf of Mexico. Total volumes are expected to ramp up during 2009 to approximately 65,000 barrels of crude oil and 55 million cubic feet of natural gas per day.

Downstream

The company announced plans to sell marketing-related businesses in Brazil, Nigeria, Benin, Cameroon, Republic of the Congo, Côte d’Ivoire, Togo, Kenya, and Uganda.

Other

Common Stock Dividends  Increased the quarterly common stock dividend by 12.1 percent in April 2008 to $0.65