of the Chuandongbei natural gas area in central China. 

Our global downstream operations continue to focus on increasing refinery flexibility, improving reliability and creating new business opportunities. We completed projects to increase the flexibility and capacity of two major refineries — in El Segundo, California, and at our 50 percent-owned Yeosu refinery complex in South Korea. The downstream business also enhanced its focus on profitable growth through the divestiture of several nonstrategic assets. 

Our 2007 safety performance showed significant improvement, but we will never be satisfied until we have reduced the number of safety-related incidents to zero. We are absolutely committed to achieving this goal. 

In the current business environment, companies with superior ability to source and deploy technology will build a sustainable competitive advantage. 

Our technology strategies are centered on deliver- ing superior performance in our core businesses and establishing leading positions in emerging and transformational technologies. To that end, we opened two new Global Technology Centers —in Aberdeen, Scotland, and Perth, Australia — to expand our research and development capability. In addition, we created a number of strategic alliances with universities to conduct advanced research into new energy sources and processes. 

To build upon our organizational capability, in 2007 we restructured the upstream business into four operating companies — North America; Asia- Pacific; Africa and Latin America; and Eurasia, Europe and Middle East. This new structure will strengthen our focus on long-term growth, enhance business partnerships, and drive more efficiency, standardization and collaboration across the organization. 

In 2007, we launched a new global advertising campaign, “The Power of Human Energy.” It focuses on the realities of energy today — the challenge of meeting rising demand as the global economy expands, together with the imperative to manage the impact of energy consumption on the envi- ronment. These are huge challenges. But as the campaign makes clear, human ingenuity will discover solutions as it has throughout history. The people of Chevron are working every day to apply the kind of ingenuity that will create responsible, practical and sustainable solutions to these challenges. 

Thank you for investing in our company. We look forward to another year of achievement as we continue to create value for our stockholders while working to meet the world’s growing demand for safe, reliable energy. 



Management’s Discussion and Analysis of

Financial Condition and Results of Operations

Business Environment and Outlook

Chevron is a global energy company with significant business activities in the following countries: Angola, Argentina, Australia, Azerbaijan, Bangladesh, Brazil, Cambodia, Canada, Chad, China, Colombia, Democratic Republic of the Congo, Denmark, France, India, Indonesia, Kazakhstan, Myanmar, the Netherlands, Nigeria, Norway, the Partitioned Neutral Zone between Saudi Arabia and Kuwait, the Philippines, Qatar, Republic of the Congo, Singapore, South Africa, South Korea, Thailand, Trinidad and Tobago,