additional discussion of the company’s downstream operations.

     Chemicals Earnings in the petrochemicals business are closely tied to global chemical demand, industry inventory levels and plant capacity utilization. Feedstock 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 chemical earnings.

Operating Developments

Key operating developments and other events during 2009 and early 2010 included the following:

Upstream

Angola Production began at the 39.2 percent-owned and operated Mafumeira Norte offshore project in Block 0 and the 31 percent-owned and operated deepwater Tombua-Landana project in Block 14. Mafumeira Norte is expected to reach maximum total daily production of 42,000 barrels of crude oil in the third quarter 2010, and the Tombua-Landana project is expected to reach its maximum total production of approximately 100,000 barrels of crude oil per day in 2011. The company also discovered crude oil offshore in the 39.2 percent-owned and operated Block 0 concession, extending a trend of earlier discoveries in the Greater Vanza/Longui Area.

     Australia The company and its partners reached final investment decision to proceed with the development of the Gorgon Project, located offshore Western Australia, in which Chevron has a 47.3 percent-owned and operated interest as of December 31, 2009. In addition, the company finalized long-term sales agreements for delivery of liquefied natural gas (LNG) from the Gorgon Project with four Asian customers, three of which also acquired an ownership interest in the project. Nonbinding Heads of Agreement (HOAs) with three additional Asian customers were also signed in late 2009 and early 2010 for delivery of LNG from the project. Negotiations continue to finalize binding sales agreements, which would bring LNG delivery commitments to a combined total of about 90 percent of Chevron’s share of LNG from the project.

     The company awarded front-end engineering and design contracts for the first phase of the Wheatstone natural gas project, also located offshore northwest Australia. The 75 percent-owned and operated facilities will have LNG processing capacity of 8.6 million metric tons per year and a co-located domestic natural-gas plant. The facilities will support development of Chevron’s interests in the Wheatstone Field and nearby Iago Field. Agreements were signed with two companies to join the Wheatstone Project as combined 25 percent owners and suppliers of natural gas for the project’s first two LNG trains. In addition, nonbinding HOAs were signed with two Asian customers to take delivery of 4.9 million metric tons per year of LNG from the project (about 60 percent of the total LNG available from the foundation project) and to acquire a 16.8 percent equity interest in the Wheatstone Field licenses and a 12.6 percent interest in the foundation natural gas processing facilities at the final investment decision.

     In May 2009 the company announced the successful completion of a well at the Clio prospect to further