sufficient resources for a detailed evaluation of Venezuela’s first liquefied natural gas (LNG) train.

In the third quarter 2005, the company was awarded an exploration license for the Cardon III Block, offshore western Venezuela. The block is in a region with natural gas potential to the north of the Maracaibo producing area.

     In December 2005, Chevron signed a transition agreement with Petróleos de Venezuela, S.A. (PDVSA), the Venezuelan state-owned petroleum company, to convert contracts for the Boscan and LL-652 operating service agreements into an Empresa Mixta (EM). The EM is a joint-stock contractual structure with PDVSA as the majority shareholder. Negotiation of the ownership and format of the final EM structure will be conducted during 2006. Possible financial implications of the EM structure are uncertain, but are not expected to have a material effect on the company’s consolidated financial position or liquidity.

     Global Natural Gas Projects   In Angola, the company awarded contracts in April 2005 for front-end engineering and design studies for a multi-billion-dollar onshore LNG project located in northern Angola. This project will be designed to help reduce flaring of natural gas and represents a major step toward the commercialization of some of Angola’s vast natural gas resources. The company has a 36 percent ownership interest in the Angola LNG project and will co-lead development with the Angolan government’s national oil company. Construction is expected to begin in 2007.

     In April 2005, the company reached an agreement with joint-venture participants in the Greater Gorgon Area, offshore western Australia that will enable the combined development of natural gas at Gorgon and nearby gas fields as one project. The company is a significant holder of gas resources in the area and will have an approximate 50 percent ownership interest across most of the Greater Gorgon Area.

     In June 2005, the company announced the decision to move the Australian Greater Gorgon gas development project into the front-end engineering and design phase for a two-train (10 million metric tons per year) LNG facility and a potential domestic gas plant on Barrow Island, targeting initial production by 2010. Chevron is the operator and has a 50 percent ownership interest in the licenses for the Greater Gorgon Area.

     In the fourth quarter 2005, the company signed a Heads of Agreement (HOA) for first sale of LNG from the Gorgon Project into Japan, the world’s largest LNG market. The preliminary agreement was signed by Chevron Australia Pty Ltd with Tokyo Gas Co. Ltd, a major Japanese utility company, for the purchase of 1.2 million metric tons per year of Gorgon LNG over 25 years. Two additional HOAs were later signed by Chevron Australia Pty Ltd with Chubu Electric Co. Inc and Osaka Gas Co. Ltd, both companies from Japan. Each preliminary agreement was for the purchase of 1.5 million metric tons per year of Gorgon LNG over 25 years commencing in 2010 and 2011, respectively.

 The company and its partners in the North West Shelf (NWS) venture agreed in mid-2005 to expand the project’s onshore LNG facilities in Western Australia.