for the company’s production of natural gas in these locations. In some of these locations Chevron is investing in long-term projects to install infrastructure to produce and liquefy natural gas for transport by tanker to other markets where greater demand results in higher prices. International natural gas realizations averaged about $4.60 per MCF during 2010, compared with about $4.00 per MCF during 2009. These realizations reflect a strong demand for energy in certain Asian markets. (See page FS-11 for the company’s average natural gas realizations for the U.S. and international regions.)

     The company’s worldwide net oil-equivalent production in 2010 averaged 2.763 million barrels per day. About one-fifth of the company’s net oil-equivalent production in 2010 occurred in the OPEC-member countries of Angola, Nigeria, Venezuela and the Partitioned Zone between Saudi Arabia and Kuwait. OPEC quotas had no effect on the company’s net crude oil production in 2010, while production in 2009 was reduced by an average of 20,000 barrels per day due to quotas imposed by OPEC. All of the imposed curtailments took place during the first half of 2009. At the December 2010 meeting, members of OPEC supported maintaining production quotas in effect since December 2008.

     The company estimates that oil-equivalent production in 2011 will average approximately 2.790 million barrels per day. This estimate is subject to many factors and uncertainties, including additional quotas that may be imposed by OPEC, price effects on production volumes calculated under production sharing and variable-royalty provisions of certain agreements, changes in fiscal terms or restrictions on the scope of company operations, delays in project startups, fluctuations in demand for natural gas in various markets, weather conditions that may shut in production, civil unrest, changing geopolitics, delays in completion of maintenance turnarounds, greater-than-expected declines in production from mature fields, or other disruptions to operations. The outlook for future production levels is also affected by the size and number of economic investment opportunities and, for new large-scale projects, the time lag between initial exploration and the beginning of production. Investments in upstream projects generally begin well in advance of the start of the associated crude oil and natural gas production. A significant majority of Chevron’s upstream investment is made outside the United States.

     Refer to the “Results of Operations” section on pages FS-7 through FS-8 for additional discussion of the company’s upstream business.

     Refer to Table V beginning on page FS-71 for a tabulation of the company’s proved net oil and gas reserves by geographic area, at the beginning of 2008 and each year-end from 2008 through 2010, and an accompanying discussion of major changes to proved reserves by geographic area for the three-year period ending December 31, 2010.

     Gulf of Mexico Update In April 2010, an accident occurred on the Transocean Deepwater Horizon, a deepwater drilling rig in the Gulf of Mexico, resulting in a loss of life, the sinking of the rig and a significant oil