Chevron Texaco is having one of its best years for exploration, and is well on its way toward creating a global natural gas business, according to CEO Dave O’Reilly.

Speaking to a shareholders’ meeting Thursday in Midland, TX, O’Reilly offered his take on several of the integrated major’s accomplishments in the past year. He said that the merger between Chevron and Texaco was completed, with common systems, policies and practices in place, and the combined company has achieved an annual synergy savings of $2.2 billion, well above the original $1.2 billion estimated.

O’Reilly noted that Chevron Texaco’s new global natural gas business already has “strong” positions in the United States, Australia and West Africa, with technologies and infrastructure in place to produce and deliver more gas. Earlier in the week, ChevronTexaco announced the creation of Chevron Texaco Global Gas, a new subsidiary that is expected to play a key role in strategic plans to commercialize its existing natural gas resource base and enable the creation and development of new natural gas growth opportunities worldwide.

The new subsidiary — ChevronTexaco Global Gas (CTGG) — will consist of existing gas-focused organizations including ChevronTexaco Natural Gas (current marketer of North American gas), the International Gas Group and Worldwide Power and Gasification.

Effective June 1, John D. Gass, 51, will lead CTGG, and will serve as a corporate vice president. Gass currently serves as managing director of ChevronTexaco’s Southern Africa business unit located in Luanda, Angola. As Gass’ replacement, James R. Blackwell, 44, currently president of ChevronTexaco Pipeline Co., will become managing director in Luanda.

In his new position, Gass will be responsible for building the company’s global natural gas business. He also will oversee ChevronTexaco’s shipping company and pipeline operations. The company noted that natural gas is expected to become a larger part of its businesses over time. The new company will also have oversight of ChevronTexaco’s participation in the Sasol Chevron gas-to-liquids joint venture, and Gass will serve as a director on the board of the joint venture.

Gass will report to Peter Robertson, ChevronTexaco vice chairman, who is also responsible for the company’s worldwide exploration and production activities.

In other comments at the shareholder’s meeting, Robertson described major projects under way in the upstream business. New production is slated to begin this year from the Athabasca oil sands in Canada as well as in Chad-Cameroon, and production is increasing at the Karachaganak development in Kazakhstan.

“From now through 2007, we’ll be steadily bringing on major new oil and gas developments that will enable us to maintain a strong production profile well into the future,” said Robertson.

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