Form 10-K -CHEVRONTEXACO CORPORATION

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Aggregate market value of the voting stock held by nonaffiliates of the Registrant

Number of Shares of Common Stock outstanding as of February 28, 2002 – 1,067,200,937

Notice of the 2002 Annual Meeting and 2002 Proxy Statement, to be filed pursuant to Rule 14a-6(b) under the Securities Exchange Act of 1934, as amended, in connection with the company’s 2002 Annual Meeting of Stockholders (in Part III)

ChevronTexaco Corporation¹, a Delaware corporation, manages its investments in subsidiaries and affiliates, and provides administrative, financial and management support to, U.S. and foreign subsidiaries that engage in fully integrated petroleum operations, chemicals operations, coal mining, power and energy services. The company operates in the United States and approximately 180 other countries. Petroleum operations consist of exploring for, developing and producing crude oil and natural gas; refining crude oil into finished petroleum products; marketing crude oil, natural gas and the many products derived from petroleum; and transporting crude oil, natural gas and petroleum products by pipelines, marine vessels, motor equipment and rail car. Chemicals operations include the manufacture and marketing, by an affiliate, of commodity petrochemicals and plastics for industrial uses, and the manufacture and marketing, by a consolidated subsidiary, of fuel and lubricating oil additives.

In this report, exploration and production of crude oil, natural gas liquids and natural gas may be referred to as “E&P” or “upstream” activities. Refining, marketing and transportation may be referred to as “RM&T” or “downstream” activities. A list of the company’s major subsidiaries is presented on page E-2 of this Annual Report on Form 10-K. As of December 31, 2001, ChevronTexaco had 55,763 employees (excluding 11,806 service station employees), down about 1,600 from year-end 2000. Included in this net change between periods was an addition of about 1,000 employees who had previously been classified as contractors in certain international operations. Approximately 32,000, or 47 percent, of the company’s employees, including service station employees, were employed in U.S. operations, of which approximately 4,500 were unionized.

This annual report on Form 10-K of ChevronTexaco Corporation contains forward-looking statements relating to ChevronTexaco’s operations that are based on management’s current expectations, estimates and projections about the petroleum, chemicals and other energy-related industries. Words such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “projects,” “believes,” “seeks,” “estimates” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, ChevronTexaco undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Among the factors that could cause actual results to differ materially are crude oil and natural gas prices; refining margins and marketing margins; chemicals prices and competitive conditions affecting supply and demand for aromatics, olefins and additives products; actions of competitors; the competitiveness of alternate energy sources or product substitutes; technological developments; inability of the company’s joint-venture partners to fund their share of operations and development activities; potential failure to achieve expected production from existing and future oil and gas development projects; potential delays in the development, construction or start-up of planned projects; the successful integration of the former Chevron, Texaco and Caltex businesses; potential disruption or interruption of the company’s production or manufacturing facilities due to accidents or political events; potential liability for remedial actions under existing or future environmental regulations and litigation; significant investment or product changes under existing or future environmental regulations (including, particularly, regulations and litigation dealing with gasoline composition and characteristics); and potential liability resulting from pending or future litigation. In addition, such statements could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not discussed herein also could have material adverse effects on forward-looking statements.

¹ Incorporated in Delaware in 1926 as Standard Oil Company of California, the company adopted the name Chevron Corporation in 1984 and ChevronTexaco Corporation in 2001. As used in this report, the term “ChevronTexaco” and such terms as “the company,” “the corporation,” “our,” “we,” and “us” may refer to ChevronTexaco Corporation, one or more of its consolidated subsidiaries, or to all of them taken as a whole, but unless it is stated otherwise, does not include “affiliates” of ChevronTexaco – i.e., those companies accounted for by the equity method (generally owned 50 percent or less), or investments accounted for by the cost method. All of these terms are used for convenience only, and are not intended as a precise description of any of the separate companies, each of which manages its own affairs.

Petroleum industry operations and profitability are influenced by many factors, over some of which individual petroleum companies have little control. Governmental policies, particularly in the areas of taxation, energy and the environment, have a significant impact on petroleum activities, regulating where and how companies conduct their operations and formulate their products and, in some cases, limiting their profits directly. Prices for crude oil and natural gas, petroleum products and petrochemicals are determined by supply and demand for these commodities. The members of the Organization of Petroleum Exporting Countries (OPEC) are typically the world’s swing producers of crude oil, and their production levels are a major factor in determining worldwide supply. Demand for crude oil and its products and natural gas is largely driven by the conditions of local, national and worldwide economies, although weather patterns and taxation relative to other energy sources also play a significant part. Natural gas is generally produced and consumed on a country or regional basis.

Refer to page FS-2 of this Annual Report on Form 10-K in Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion on the company’s current business environment and outlook.

On October 9, 2001, Texaco Inc. (Texaco) became a wholly owned subsidiary of Chevron Corporation (Chevron) pursuant to a merger transaction, and Chevron changed its name to ChevronTexaco Corporation. The combination was accounted for as a pooling of interests, and each share of Texaco common stock was converted on a tax-free basis into the right to receive 0.77 shares of ChevronTexaco common stock. In the merger, ChevronTexaco issued approximately 425 million shares of common stock, representing about 40 percent of the outstanding ChevronTexaco common stock after the merger. Further discussion of the Texaco merger transaction, including merger-related expenses and synergy savings, is contained on pages FS-2 and FS-3 of this Annual Report on Form 10-K.

ChevronTexaco’s primary strategic objective is to achieve the highest total stockholder return in its peer group for the five-year period 2000 - 2004. British Petroleum, ExxonMobil and Royal Dutch Shell are the primary competition where ChevronTexaco operates and comprise the company’s competitor peer group. The company had the highest total stockholder return in its peer group for the 2000 - 2001 period.

As a foundation for attaining this goal, the company has established four key priorities:


•	Operational excellence through safe, reliable, efficient and environmentally sound operations;

•	Cost reduction by lowering unit costs through innovation and technology;

•	Capital stewardship by investing in the best project opportunities and executing them successfully (safer, faster, at lower cost); and

•	Profitable growth through leadership in developing new business opportunities in both existing and new markets.


•	Organizational Capability: The company has developed strategies to build capability systems to achieve top performance in the four priorities described above.

The company’s largest business segments are exploration and production, and refining, marketing and transportation. Chemicals is also a significant operation, conducted mainly by the company’s affiliate – Chevron Phillips Chemical Company LLC (CPChem). The petroleum activities of the company are

CPChem has operations in the United States, Belgium, China, South Korea, Singapore, Saudi Arabia, Qatar and Mexico. The company’s wholly owned Oronite additives business has operations in the United States, France, Netherlands, Singapore, Japan and Brazil.

An affiliate, Dynegy Inc. (Dynegy), is one of the leading marketers of energy products and services in the United States with customers in the United States, Canada, the United Kingdom (U.K.) and other European countries. Its business activities include energy marketing; independent power generation; gathering, processing, selling and transportation of natural gas and natural gas liquids; and broadband trading.

Tabulations of segment sales and other operating revenues, earnings, income taxes and assets, by United States and International geographic areas, for the years 1999 to 2001, may be found in Note 11 to the consolidated financial statements beginning on page FS-28 of this Annual Report on Form 10-K. In addition, similar comparative data for the company’s investments in and income from equity affiliates and property, plant and equipment are contained in Notes 14 and 15 on pages FS-31 to FS-33.

The company’s worldwide operations can be affected significantly by changing economic, tax, regulatory and political environments in the various countries in which it operates, including the United States. Environmental regulations and government policies concerning economic development, energy and taxation may have a significant effect on the company’s operations. Management evaluates the economic and political risk of initiating, maintaining or expanding operations in any geographical area. The company monitors political events worldwide and the possible threat these may pose to its activities – particularly the company’s oil and gas exploration and production operations – and the safety of the company’s employees.

The company attempts to avoid unnecessary involvement in partisan politics in the communities in which it operates, but participates in the political process to safeguard its assets and to ensure that the community benefits from its operations and remains receptive to its continued presence.

A discussion of the company’s capital and exploratory expenditures is contained on page FS-10 of this Annual Report on Form 10-K.

In 2001, ChevronTexaco conducted its worldwide exploration and production operations in the United States and approximately 25 other countries. Worldwide net crude oil and natural gas liquids production, including that of affiliates but excluding volumes produced under operating service agreements, decreased by about 2 percent from the 2000 levels. Net worldwide production of natural gas, including affiliates, fell 1 percent in 2001. Net liquids and natural gas production in the United States was down about 8 percent and 7 percent, respectively. The lower production reflected normal field declines and asset sales, partially offset by new and enhanced production in the deepwater and other areas of the Gulf of Mexico. International net liquids production, including affiliates, increased about 1 percent, while net natural gas production rose 10 percent from 2000. The increase in gas production occurred primarily in Trinidad, Canada and the company’s Tengizchevroil (TCO) affiliate in Kazakhstan.

While worldwide oil-equivalent production in 2001 was down less than 2 percent from 2000 levels, the company has targeted an oil-equivalent production growth rate over the next five years of 2.5 to 3 percent annually. However, 2002 production is expected to increase only about 1 percent because of OPEC-related constraints.

At December 31, 2001, the company owned or had under lease or similar agreements undeveloped and developed oil and gas properties located throughout the world. The geographical distribution of the company’s acreage is shown in the next table.


¹	Gross acreage includes the total number of acres in all tracts in which the company has an interest. Net acreage is the sum of the company’s fractional interests in gross acreage.

²	Developed acreage is spaced or assignable to productive wells. Undeveloped acreage is acreage where wells have not been drilled or completed to permit commercial production, and may contain undeveloped proved reserves.

Refer to Table IV on page FS-48 of this Annual Report on Form 10-K for data about the company’s average sales price per unit of oil and gas produced, as well as the average production cost per


¹	Includes wells producing or capable of producing and injection wells temporarily functioning as producing wells. Wells that produce both oil and gas are classified as oil wells.

²	Gross wells include the total number of wells in which the company has an interest. Net wells are the sum of the company’s fractional interests in gross wells.

Table V on pages FS-48 and FS-49 of this Annual Report on Form 10-K sets forth the company’s net proved oil and gas reserves, by geographic area, as of December 31, 2001, 2000 and 1999. During 2002, the company will file estimates of oil and gas reserves with the Department of Energy, Energy Information Agency. Those estimates are consistent with the reserve data reported on page FS-49 of this Annual Report on Form 10-K.

In 2001, ChevronTexaco’s worldwide oil and equivalent-gas (BOE) barrels of net proved reserves additions exceeded production, with a replacement rate of 127 percent of net production, including sales and acquisitions. Excluding sales and acquisitions, the replacement rate was 112 percent of net production. In the United States, the reserves replacement rate was impacted by a significant downward revision in proved crude oil reserve quantities for the Midway Sunset Field in California’s San Joaquin Valley. The revision was the result of a determination of lower-than-projected oil recovery from the field’s steam


¹	mmbbls = millions of barrels

²	bcf = billions of cubic feet

³	Includes equity in affiliates

The company sells crude oil and natural gas from its producing operations under a variety of contractual arrangements. Most contracts generally commit the company to sell quantities based on production from specified properties but certain gas sales contracts specify delivery of fixed and determinable quantities. Dynegy and ChevronTexaco have entered into long-term strategic alliances whereby Dynegy purchases substantially all natural gas and natural gas liquids produced by legacy Chevron in the United States, excluding Alaska, and supplies natural gas and natural gas liquids feedstocks to the company’s U.S. refineries and chemical plants. In March 2002, the company reached agreement with Dynegy to expand those contracts to include substantially all of legacy Texaco’s U.S. natural gas and natural gas liquids production. Outside the United States, the company is contractually committed to deliver approximately 110 billion cubic feet of natural gas through 2004 from both Australian and U.K. reserves, and approximately 335 billion cubic feet of natural gas post-2004 through 2020 from Australian reserves only. The company believes it can satisfy these contracts from quantities available from production of the company’s proved developed Australian and U.K. natural gas reserves. Substantially all of the contracts discussed above include variable-pricing terms.

The table below summarizes the company’s net interest in productive and dry development wells completed in each of the past three years and the status of the company’s development wells drilling at December 31, 2001. A “development well” is a well drilled within the proved area of an oil or gas reservoir to the depth of a stratigraphic horizon known to be productive. “Wells drilling” include wells temporarily suspended.


¹	Indicates the number of wells completed during the year regardless of when drilling was initiated. Completion refers to the installation of permanent equipment for the production of oil or gas or, in the case of a dry well, the reporting of abandonment to the appropriate agency.

²	Gross wells include the total number of wells in which the company has an interest. Net wells are the sum of the company’s fractional interests in gross wells.


¹	Indicates the number of wells completed during the year regardless of when drilling was initiated. Completion refers to the installation of permanent equipment for the production of oil or gas or, in the case of a dry well, the reporting of abandonment to the appropriate agency.

²	Gross wells include the total number of wells in which the company has an interest. Net wells are the sum of the company’s fractional interests in gross wells.

“Exploratory wells” are wells drilled to find and produce oil or gas in unproved areas and include delineation wells, which are wells drilled to find a new reservoir in a field previously found to be productive of oil or gas in another reservoir or to extend a known reservoir beyond the proved area. “Wells drilling” include wells temporarily suspended. The company had $783 million of suspended exploratory wells included in properties, plant and equipment at year-end 2001, a decrease of $87 million from 2000. Decreases in the United States, United Kingdom, Australia and Angola were partially offset by increases in Nigeria, Brazil and China. The wells are suspended pending a final determination of the commercial potential of the related oil and gas fields. The ultimate disposition of these well costs is dependent on: (1) decisions on additional major capital expenditures, (2) the results of additional exploratory drilling that is underway or firmly planned, and in some cases, (3) securing final regulatory approvals for development.

Details of the company’s exploration expenditures and costs of unproved property acquisitions for 2001, 2000 and 1999 are presented in Table I on page FS-45 of this Annual Report on Form 10-K.

ChevronTexaco’s 2001 key upstream activities not discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations beginning on page FS-2 of this Annual Report on Form 10-K are presented below. The comments include reference to “net production,” which excludes partner shares and royalty interests. “Total production” includes these components. In addition to the activities discussed, ChevronTexaco was active in other geographic areas, but these activities were less significant.

United States exploration and production activities are concentrated in nearly 850 fields located mainly in the Gulf of Mexico, Texas, New Mexico, the Rocky Mountains, California and Alaska.

Gulf of Mexico: In the Gulf of Mexico Shelf, the company maintained average net production rates of 142,000 barrels of oil, 1.237 billion cubic feet of gas, and 14,200 barrels of natural gas liquids per day.

In the Gulf of Mexico deepwater, ChevronTexaco has interests in three significant developments. The company operates and has a 57 percent interest in Genesis, which averaged net daily oil-equivalent production of 33,000 barrels during the year. Production began in July 2001 at a second development, Typhoon, in which the company has a 50 percent interest. Net daily production averaged nearly 18,000 barrels of oil-equivalent during the fourth quarter 2001. ChevronTexaco has a 50 percent interest in a third deepwater development, Petronius, which averaged net oil-equivalent production of 27,000 barrels per day during 2001. Exploration programs resulted in discoveries at Trident, Boris and Blind Faith, and confirmation of the 2000 Champlain discovery. The Trident appraisal is ongoing.

Mid-Continent/ Permian Basin: Onshore operations in the mid-continent United States are located in Utah, Texas, and Wyoming. Net natural gas production averaged 921 million cubic feet per day, while net production of crude oil and natural gas liquids averaged 31,000 barrels per day. Capital spending was focused on natural gas development and coalbed methane activity, located in northeast Utah. Permian Basin operations are located primarily in New Mexico. In 2001, net daily production averaged 117,500 barrels of crude oil and natural gas liquids and 275 million cubic feet of natural gas.

California: During 2001, average net daily production from the company’s San Joaquin Valley fields was 245,100 barrels of crude oil, 116 million cubic feet of natural gas and 3,900 barrels of natural gas liquids. Approximately 210,000 barrels per day of the crude oil production was heavy oil.

Offshore Florida: Development of the Destin Dome area of the Norphlet trend offshore Florida continues to be hampered by delays in obtaining regulatory approvals. A draft environmental impact statement was issued in August 1999 by the governing agencies indicating no significant environmental impacts from the project. In July 2000, ChevronTexaco and its partners in the Destin Dome development filed a lawsuit against the federal government to recover exploration expense and future lost profits following continuing delays in obtaining the necessary development permits. The company has filed a motion for summary judgement, which could decide the liability portion of the case and leave the amount of damages to be decided later.

Nigeria: ChevronTexaco’s principal subsidiary in Nigeria, Chevron Nigeria Limited (CNL), operates and holds a 40 percent interest in 11 concessions, predominantly in the swamp and near-offshore regions of the Niger Delta. CNL operates under a joint venture arrangement with the Nigerian National Petroleum Corporation (NNPC), which owns the remaining 60 percent interest. ChevronTexaco’s subsidiaries Chevron Oil Company Nigeria Limited (COCNL) and Texaco Overseas Nigeria Petroleum Company Unlimited (TOPCON) each hold a 20 percent interest in six concessions. TOPCON operates these concessions under a joint venture agreement with NNPC, which owns the remaining 60 percent interest.

In 2001, daily net production from the 33 CNL-operated fields averaged 143,000 barrels of oil and 2,700 barrels of liquefied petroleum gas (LPG). During 2001, net production from the six TOPCON-operated fields averaged approximately 12,000 barrels of oil per day.

Phase 2 of the Escravos gas project was completed in the first quarter 2001. As a result, processing capacity at the plant increased to 285 million cubic feet per day. Preliminary design for Phase 3, which includes adding a second gas plant and expanding processing capacity to 680 million cubic feet per day,

Feasibility engineering and preliminary technical evaluations have been completed for a proposed gas-to-liquids (GTL) plant at Escravos. Front-end engineering and design started in March 2001. The proposed 33,000 barrels-per-day (12,000 barrels per day net) GTL project is the first to use the Sasol Chevron Global Joint Venture’s technology and operational expertise. Project start-up is expected to be in 2005. ChevronTexaco holds a 37.5 percent interest.

Angola: ChevronTexaco is the largest producer in Angola and the first to produce in the deepwater. Cabinda Gulf Oil Company Limited (CABGOC), a wholly owned subsidiary of ChevronTexaco, is operator of two concessions, Blocks 0 and 14, off the coast of Angola’s Cabinda enclave. Block 0, in which CABGOC has a 39 percent interest, is a 2,100-square-mile concession adjacent to the Cabinda coastline. Block 14, in which CABGOC has a 31 percent interest, is a 1,560-square-mile deepwater concession located west of Block 0.

In Block 0, the company operates in 3 areas – A, B and C. Area A, containing 15 fields currently producing, averaged net production of approximately 96,000 barrels of crude oil per day in 2001. Area B, with 3 fields producing, averaged net production of 32,500 barrels of crude oil per day. Area C averaged net production of 10,500 barrels of crude oil per day from 7 fields. Major development projects during 2001 included phase 1 of a waterflood project in Area A and a production and gas injection platform in the Area B North Nemba Field.

In Block 14, net production in 2001 from the Kuito Field, Angola’s first deepwater producing area, averaged approximately 19,000 barrels of crude oil per day. Development plans are under way for other fields within the Block.

Texaco Panama Angola Inc., a subsidiary of ChevronTexaco, is operator of and has a 20 percent interest in Block 2, a 160-square-mile concession adjacent to the northwestern part of Angola’s coast. Average net daily production from Block 2 was about 7,000 barrels of crude oil in 2001.

The company operates and has a 40 percent interest in offshore exploration Blocks, 9 and 22, which encompass approximately 2,000-square-miles each and are located south of Luanda, Angola’s capital.

Republic of Congo: ChevronTexaco has interests in two license areas, Haute Mer and Kitina/ Sounda, in offshore Congo and adjacent to the company’s concessions in Cabinda. ChevronTexaco has a 30 percent interest in the Haute Mer exploration permit and a 29 percent interest in the Kitina/ Sounda exploitation permits. The company’s interest in the deepwater Mer Profonde Sud license area was relinquished in 2001. Net production from ChevronTexaco’s concessions in the Republic of Congo averaged 20,000 barrels per day in 2001. Field development studies continue for the deepwater Moho and Bilondo discoveries in Haute Mer. Appraisal drilling was underway in early 2002.

Chad-Cameroon: ChevronTexaco is a 25 percent partner in a project that will develop landlocked oil fields in southern Chad and transport crude oil by pipeline to the coast of Cameroon for export to world markets. Project financing was secured during the second quarter 2001. At the end of 2001, the overall development project was about one-third complete. Pipeline construction began in the fourth quarter and drilling initiated in the first quarter 2002. First production is expected in 2004.

Equatorial Guinea: ChevronTexaco is a 65 percent partner and operator of the L Block offshore the Republic of Equatorial Guinea. The initial 3D seismic survey was completed in 2001 and is presently being analyzed.

Indonesia: ChevronTexaco’s interests in Indonesia are managed by two wholly owned subsidiaries, PT Caltex Pacific Indonesia (CPI) and Amoseas Indonesia (AI). CPI accounts for approximately 50 percent of Indonesia’s total crude oil output and holds an interest in six production-sharing contracts. AI is a power generation company that operates the Darajat geothermal contract area in West Java and a

cogeneration facility in support of CPI’s operation in North Duri. ChevronTexaco’s net share of production during 2001 averaged about 320,000 barrels of crude oil and condensate per day. CPI continues to implement enhanced oil recovery projects to extract more oil from its existing reservoirs. The Duri Field in the Rokan Block, under steamflood since 1985, is the largest steamflood project in the world. Currently 9 of 13 areas are under steam injection, with total production averaging about 260,000 barrels of oil per day during 2001. Area 10 is currently under development and will be placed on injection in the second quarter of 2002. CPI was awarded a new production-sharing contract for the Kisaran Block in 2001. The block is located in a gas prospective basin adjacent to the Rokan Block. A seismic review is planned for 2002.

Thailand: The company operates Block B8/32 in the Gulf of Thailand with a 52 percent interest. The company holds a 33 percent interest in adjacent exploration Blocks 7, 8 and 9, which are currently inactive pending resolution of border issues between Thailand and Cambodia. Block B8/32 produces oil and natural gas from three fields: Tantawan, Maliwan, and Benchamas. Initial production from the Maliwan Field occurred in October 2001. Net average daily production during 2001 from the company’s interests in Thailand was 75 million cubic feet of natural gas and 16,000 barrels of crude oil. In 2002, the Benchamas Field will go through a major processing upgrade to bring total field production levels up to 60,000 barrels of oil per day. Development of the Maliwan Field will continue with production from multiple platforms expected to begin in 2005. Nine of the 11 exploration wells drilled in 2001 were successful, extending the productive areas in Block B8/32 significantly. During 2002, an exploration program is planned to evaluate the remaining portions of the concession.

Australia: ChevronTexaco has a one-sixth interest in the North West Shelf (NWS) Project in offshore Western Australia. Average daily net production from the NWS Project during 2001 was 230 million cubic feet of natural gas and 16,000 barrels per day of condensate. Net crude oil production from the NWS Project averaged approximately 17,000 barrels per day and total LPG production averaged about 4,000 barrels per day. Approximately 68 percent of the natural gas was sold, primarily under long-term contracts, in the form of liquefied natural gas (LNG) to major utilities in Japan. The remaining gas was sold to the Western Australia domestic gas market. In 2001, ChevronTexaco approved the development of the Train 4 LNG expansion project, which is planned to increase LNG capacity by about 50 percent in 2004. The North West Shelf Venture LNG sellers have secured LNG Sales and Purchase Agreements and Letters of Intent with several Japanese customers, for a total volume equal to the capacity of the new LNG Train.

The company is operator and has a 57 percent interest in the undeveloped Gorgon area gas field offshore north-west Australia. ChevronTexaco is actively pursuing long-term gas sales from Gorgon to Australian industrial customers and in international LNG markets including China, Korea, and the west coast of North America.

Philippines: ChevronTexaco holds a 45 percent interest in the Malampaya gas field located about 50 miles offshore of the Palawan Island. The Malampaya gas-to-power project represents the first offshore production of natural gas in the Philippines. In September 2001 production commenced. The gas will be delivered to three power plants under Gas Sales and Purchase Agreements. Gas sales are projected to increase throughout 2002 as the power plants are commissioned and brought into commercial operation.

Middle East: ChevronTexaco holds a concession with the Kingdom of Saudi Arabia to produce onshore crude oil from the Partitioned Neutral Zone (PNZ). The Kingdom of Saudi Arabia and the State of Kuwait each own 50 percent of the hydrocarbon resources. ChevronTexaco is entitled to 50 percent of the gross field production, for which it pays a royalty and other taxes to the Kingdom of Saudi Arabia. During 2001, record production was achieved from the four producing fields – averaging 144,000 net barrels of crude oil per day. Planned development drilling, workover, and facilities enhancement programs during the next few years are expected to maintain production at similar levels. The company also has exploration agreements in Bahrain and Qatar.

Caspian Region: The company holds a 20 percent equity interest in the Karachaganak Field located in northwest Kazakhstan. Net daily production for 2001 was 14,300 barrels of condensate and 67 million cubic feet of gas from the existing production facilities. The current phase of the Karachaganak

Europe: The company holds producing interests in 24 fields in Denmark, Norway and the United Kingdom. The combined net average daily production during 2001 was 171,000 barrels of crude oil and condensate and 454 million cubic feet of natural gas. The Alba Field in the United Kingdom North Sea, where ChevronTexaco is operator and holds a 21 percent equity interest, produced a net average of 17,000 net barrels of crude oil and 2.8 million cubic feet of natural gas per day. Development of the Alba Extreme South project, which is expected to begin production in late 2002, will maintain the Alba Field’s total production of 80,000 barrels of crude oil per day. ChevronTexaco holds an approximate 32 percent interest in the Britannia Field and shares operatorship. Net production averaged 9,600 barrels of crude oil and condensate per day and 208 million cubic feet of natural gas per day. The Captain Field net daily production averaged 49,000 barrels of crude oil during 2001. ChevronTexaco is operator and holds an 85 percent interest.

In Denmark, ChevronTexaco holds a 15 percent interest in the Danish Underground Consortium (DUC) currently producing crude oil and natural gas from 14 fields in the Danish North Sea. The DUC also holds nine exploration licenses with company interests ranging from 12 to 27 percent.

Canada: Total production from the Hibernia Field offshore Newfoundland, in which ChevronTexaco holds an interest of about 27 percent, averaged approximately 151,000 barrels of crude oil per day. Average net daily production from the company’s onshore Canadian operations was 52,000 barrels of oil equivalent during 2001.

Venezuela: The company operates the onshore Boscan Field, located near the city of Maracaibo, under an Operating Services Agreement and receives operating expense reimbursement and capital recovery, plus interest and an incentive fee. Development drilling continued in 2001. Boscan crude oil production, subject to Venezuela’s OPEC production restrictions, averaged 104,800 barrels per day during 2001. The company is also the operator and has a 27 percent interest in the LL-652 Field in Lake Maracaibo. Net production from LL-652 during 2001 averaged 4,900 barrels of oil per day, up from 4,000 barrels of oil per day in 2000. Field performance during 2001 indicated slower than anticipated re-pressurization of the reservoir by water injection and a reduction in the projected volumes of crude oil recoverable during the company’s remaining contract period of operations. As a result the company wrote down proved crude oil reserve quantities at LL-652 in 2001.

Argentina: ChevronTexaco operates in Argentina as Chevron San Jorge S.R.L. Chevron San Jorge holds more than 6.1 million exploration and production acres in the Neuquén and Austral basins of Argentina, with working interest shares ranging from 18 to 100 percent in operated license areas. In addition, the company holds a 14 percent interest in Oleoductos del Valle S.A. (Oldeval), a major oil export pipeline from the Neuquén producing area to the Atlantic coast. Daily net production during 2001 in the Neuquén and Austral areas averaged over 66,000 net barrels of oil-equivalent, an increase of over 11 percent from 2000 production levels.

Brazil: ChevronTexaco holds working interests ranging from 20 to 50 percent in nine deepwater blocks offshore Brazil totaling approximately 9.2 million acres. Deepwater exploration is concentrated in the Campos, Santos, and Espirito Santo basins. During 2001, the company drilled two successful appraisal wells in the Frade Field in Block BC-4 of the Campos Basin. ChevronTexaco’s interest in the Frade Block is approximately 43 percent. In the non-operated Block BS-4, where ChevronTexaco holds a 20 percent interest, two exploratory wells were drilled during 2001. One well resulted in a discovery.

Caspian Region: The Tengizchevroil (TCO) partnership, formed in 1993, includes the Tengiz and Korolev oil fields located in western Kazakhstan. In January 2001, the company acquired an additional

5 percent stake in TCO, increasing its ownership interest to 50 percent. In 2001, total crude oil production from TCO increased for the eighth consecutive year, averaging 268,000 barrels of oil per day. Engineering for TCO’s next major expansion, expected to come on-line during 2005, is under way. Production at Korolev, located near Tengiz, began in November 2001. Crude oil from the field is very similar to crude produced from Tengiz and is routed to existing facilities at TCO through an extension of an existing gathering system.

Venezuela: ChevronTexaco has a 30 percent interest in the Hamaca integrated oil production and upgrading project located in Venezuela’s Orinoco Belt. Development drilling and major facility construction at Hamaca continued throughout 2001. Early production was established in October 2001, at a net rate of 9,000 barrels of crude oil per day. At the completion of the crude oil upgrading facilities in the first half of 2004, field production will increase to 190,000 barrels of crude oil per day and will be lighter, high-value crude.

The company sells natural gas liquids from its producing operations under a variety of contractual arrangements. In the United States, the majority of sales are to the company’s affiliate, Dynegy. Dynegy and ChevronTexaco have entered into long-term strategic alliances whereby Dynegy purchases substantially all natural gas and natural gas liquids produced by legacy Chevron in the United States, excluding Alaska, and supplies natural gas and natural gas liquids feedstocks to the company’s U.S. refineries and chemical plants. In March 2002, the company reached agreement with Dynegy to expand those contracts to include substantially all of legacy Texaco’s U.S. natural gas and natural gas liquids production. Outside the United States, natural gas liquids sales take place in the company’s Canadian upstream operations, with lower sales levels in Africa, Australia and Europe.

Refer to “Selected Operating Data” on page FS-7 of this Annual Report on Form 10-K in Management’s Discussion and Analysis of Financial Condition and Results of Operations for further information on the company’s natural gas liquids sales volumes.

Distillation operating capacity utilization in 2001, adjusted for sales and closures, averaged 88 percent in the United States (including asphalt plants) and 87 percent worldwide (including affiliates), compared with 88 percent in the United States and worldwide in the prior year. ChevronTexaco’s capacity utilization at its U.S. fuels refineries averaged 90 percent in 2001, compared with 91 percent in 2000. ChevronTexaco’s capacity utilization of its wholly-owned U.S. cracking and coking facilities, which are the primary facilities used to convert heavier products to gasoline and other light products, averaged 84 percent in 2001, up from 80 percent in the year earlier. The company processed imported and domestic crude oil in its U.S. refining operations. Imported crude oil accounted for 68 percent of ChevronTexaco’s U.S. refinery inputs in 2001.

Prior to October 2001, the company had interests in eight U.S. refineries with a combined capacity of about 1.3 million barrels per day through its investments in the Equilon and Motiva affiliates. These investments were placed in trust in October 2001, and sold, as required by the U.S. Federal Trade Commission, in February 2002.

The daily refinery inputs over the last three years for the company and affiliate refineries are shown in the following table:


¹	Capacity and input amounts for El Paso represent ChevronTexaco’s share.

²	Refineries in Perth Amboy, New Jersey and Portland, Oregon, which are primarily asphalt plants.

³	Represents ChevronTexaco interests in Equilon and Motiva refineries, which were placed in trust on October 9, 2001, as required by the US Federal Trade Commission, prior to disposition in February 2002.

⁴	ChevronTexaco is negotiating with the Panamanian government in order to cease refining operations and convert these facilities to terminal operations in 2002.

⁵	1999 inputs include Koa Oil Co. Ltd. refineries. Interests sold in 1999.

Product Sales: The company markets petroleum products throughout much of the world. The principal brands for identifying these products are “Chevron,” “Texaco” and “Caltex.”

The following table shows the company’s and its affiliates’ refined product sales volumes, excluding intercompany sales, over the past three years.

In the United States, the company supplies, directly or through dealers and jobbers, more than 8,200 motor vehicle retail outlets, of which about 1,300 are company-owned or -leased stations. The company’s gasoline market area is concentrated in the southern, southwestern and western states. According to the Lundberg Share of Market Report, ChevronTexaco ranks among the top three gasoline marketers in 16 states. The company’s former affiliates, Equilon and Motiva, operated through approximately 22,000 retail outlets in the United States. ChevronTexaco sold its investments in Equilon and Motiva in February 2002.

In Canada – primarily British Columbia – the company’s branded products are sold in approximately 170 stations (mainly owned or leased).

ChevronTexaco operates a network of over 8,000 service stations and 650 convenience stores in more than 30 countries that cover the Asia-Pacific region, Southern and East Africa, and the Middle East. ChevronTexaco will continue to use the Caltex brand name in these areas.

In Europe, the company has marketing operations in the United Kingdom, Ireland, Netherlands, Belgium, Luxembourg and the Scandinavian countries. In West Africa, the company operates in Cameroon, the

ChevronTexaco operates in approximately 40 countries across the Caribbean, Central America, and South America, with a significant presence in Brazil. In this region, the company uses the Texaco brand name.

In addition to the above activities, the company manages other marketing businesses globally. In global aviation fuel marketing, the company markets more than 400,000 barrels per day of aviation fuel in about 75 countries, representing a worldwide market share of about 12 percent. The company is the leading marketer of jet fuels in North America and ranks third in the Asia-Pacific region, Latin America, and the Caribbean. ChevronTexaco markets residual fuel oils and marine lubricants in over 100 countries, and motor lubricants in nearly 200 countries.

Pipelines: ChevronTexaco owns and operates an extensive system of crude oil, refined products, chemicals, natural gas liquids and natural gas pipelines in the United States. The company also has direct or indirect interests in other U.S. and international pipelines. The company’s ownership interests in pipelines are summarized in the following table:

The Caspian Pipeline Consortium (CPC) was formed to build a crude oil export pipeline from the Tengiz Field to the Russian Black Sea port of Novorossiysk. The company has a 15 percent ownership interest in CPC. The first delivery of Tengizchevroil crude oil from the CPC terminal occurred in October 2001. When the construction project, including the pipeline, pump stations and terminal, is essentially complete, by the second quarter of 2002, the CPC system capacity will be 600,000 barrels of oil per day. Additional capacity will be possible with additional pump stations and tankage.

Tankers: ChevronTexaco’s controlled seagoing fleet at December 31, 2001, is summarized in the following table. All controlled tankers were utilized in 2001. In addition, at any given time, the company has 30 to 40 vessels under charter on a term or voyage basis.

Federal law requires that cargo transported between U.S. ports be carried in ships built and registered in the United States, owned and operated by U.S. entities and manned by U.S. crews. At year-end 2001, the company’s U.S. flag fleet was engaged primarily in transporting crude oil from Alaska to refineries on the West Coast and Hawaii, refined products between the Gulf Coast and East Coast, and refined products from California refineries to terminals on the West Coast, Alaska and Hawaii.

The Federal Oil Pollution Act of 1990 requires the scheduled phase-out, by year-end 2010, of all single hull tankers trading to U.S. ports or transferring cargo in waters within the U.S. Exclusive Economic Zone. This has resulted in the utilization of more costly double-hull tankers. By the end of 2001, ChevronTexaco was operating a total of 16 double-hull tankers. ChevronTexaco expects to take delivery of two additional double-hull tankers in 2003, also to be operated under long-term bareboat charters. The company is a member of many oil-spill response cooperatives in areas in which it operates around the world.

At year-end 2001, two of the company’s controlled international flag vessels continued to be used as floating storage vessels in its upstream operations offshore Cabinda Province, Angola. The remaining international flag vessels were engaged primarily in transporting crude oil from the Middle East, Indonesia, Mexico and West Africa to ports in the United States, Europe, and Asia. Refined products also were transported by tanker worldwide.

ChevronTexaco owns an approximate 26 percent equity share of Dynegy Inc. (Dynegy), which is one of the world’s leading energy merchants. Dynegy reported record net income of $648 million in 2001, a 29 percent increase compared with 2000. ChevronTexaco invested a total of $1.7 billion in Dynegy in 2001 and January 2002. Dynegy’s equity market value at December 31, 2001, was $8.6 billion. Through a global physical network of assets and marketing, logistics and risk management capabilities, Dynegy provides energy and communications solutions to customers in North America, the United Kingdom and continental Europe. Dynegy’s activity extends across the entire convergence value chain, from power generation, wholesale and direct commercial and industrial marketing and trading of power, natural gas, coal, emission allowances, weather derivatives, and broadband to transportation, gathering and processing of natural gas liquids.

Dynegy is one of the leading natural gas marketers in North America, with sales of more than 13 billion cubic feet per day, and a leading natural gas liquids marketer, with worldwide sales in excess of 557,000 barrels per day. Dynegy is also one of the largest processors of natural gas in North America, with production of more than 84,000 barrels of natural gas liquids per day. As of January 1, 2002, Dynegy

Dynegy and ChevronTexaco formed a long-term strategic alliance in 1996 whereby Dynegy purchases essentially all natural gas and natural gas liquids produced or controlled by the legacy Chevron operations in the United States (excluding Alaska) and supplies natural gas and natural gas liquids feedstocks to most of ChevronTexaco’s U.S. refineries and chemical plants. In March 2002, the company reached agreement with Dynegy to expand those contracts to include substantially all of legacy Texaco’s undedicated U.S. natural gas and natural gas liquids production.

Chevron Phillips Chemical Company (CPChem) is a 50-50 joint venture with Phillips Petroleum Company formed in July 2000, when both companies combined most of their petrochemicals operations. CPChem owns or has joint venture interests in 34 manufacturing facilities and five research and technical centers in the United States, Puerto Rico, Belgium, China, Mexico, Saudi Arabia, Singapore, and South Korea.

In December 2001, commercial production of K-Resin resumed with the completion of Phase I of the rebuild at the Houston Chemical Complex, shut down since an explosion and fire that occurred in March 2000. Restoration of the remaining K-Resin capacity will be completed in 2002, bringing annual production capacity to 335 million pounds.

An olefins and polyolefins complex in Qatar is under construction and expected to start production in late 2002. Annual production capabilities at the complex include 1.1 billion pounds of ethylene, 1 billion pounds of polyethylene, and 100 million pounds of hexene-1. The complex is owned and will be operated by Qatar Chemical Company, Ltd. a joint venture between CPChem, with a 49 percent interest, and Qatar General Petroleum, which owns the remaining 51 percent.

A 50-50 joint venture with BP Solvay to build a new high-density polyethylene (HDPE) facility at a CPChem site in the Houston area is on track for start-up in late 2002. The jointly owned 700-million-pounds-per-year HDPE facility will be the largest of its kind in the world and will use CPChem proprietary manufacturing technology.

ChevronTexaco retained its “Oronite” fuel and lubricant additives business. Oronite is a leading developer, manufacturer and marketer of performance additives for fuels and lubricating oils. The company owns and operates five manufacturing facilities in the United States, France, Singapore, Japan and Brazil and has equity interests in facilities in India and Mexico.

The company’s coal mining and marketing subsidiary, The Pittsburg & Midway Coal Mining Co. (P&M), owned and operated two surface mines and one underground mine at year-end 2001. P&M also owns an approximate 30 percent interest in Inter-American Coal Holding N.V., which has interests in mining operations in Venezuela.

Sales and other operating revenues in 2001 were $353 million, an increase of 19 percent from 2000. Sales of coal from P&M’s wholly owned mines and from its affiliates were 16.2 million tons, an increase of 17 percent from 2000. At year-end 2001, P&M controlled approximately 196 million tons of developed and undeveloped coal reserves, including significant reserves of environmentally desirable low-sulfur fuel.

In Canada, ChevronTexaco has a 20 percent interest in the Athabasca Oil Sands Project. The project is expected to begin bitumen production in late 2002 and reach 155,000 barrels of bitumen per day at peak production. The bitumen will be upgraded into high quality synthetic oil using hydroprocessing technology at a synthetic crude unit, which will start up by late 2002 or early 2003.

ChevronTexaco participates in its power and gasification business through ownership, equity investments with others and licensing of proprietary technology. The company’s electrical power business includes conventional power generation projects, as well as cogeneration facilities. Cogeneration produces thermal energy, such as steam, and electric power. ChevronTexaco has used steam produced in cogeneration in its upstream operations in onshore California and Indonesia. ChevronTexaco uses its proprietary gasification technology to convert a wide variety of hydrocarbon feedstocks into a clean synthesis gas. The synthetic gas can be used to generate electricity in low-emission power plants. ChevronTexaco licenses this technology, operates owned gasification facilities and invests in projects using the technology. With licenses and partners, the company has interests in over 70 gasification facilities operating or being developed worldwide.

The company’s core hydrocarbon technology efforts support the upstream, downstream and power and gasification businesses, aimed at developing and applying these technologies to create increased value. These activities include heavy oil recovery and upgrading, deepwater exploration and production, shallow water production operations, gas-to-liquids processing, hydrocarbon gasification to power, and new and improved refinery processes.

Additionally, ChevronTexaco’s Technology Ventures Company focuses upon the identification, growth, and commercialization of emerging technologies for new energy applications. The range of business spans early-stage venture capital investing in emerging technologies to developing joint venture companies in new energy systems such as advanced batteries for distributed power and transportation systems, fuel cells and hydrogen fuel storage.

The company is building an information technology infrastructure encompassing computing, data management, security, and connectivity of partners, suppliers, and employees. The architecture, known as “Net Ready,” is designed to provide the foundation for the company to rapidly integrate advances in computing and network-based technology.

ChevronTexaco’s research and development expenses were $209 million, $211 million and $226 million for the years 2001, 2000 and 1999, respectively.

Because some of the investments the company makes in the areas described above are in new or unproven technologies and business processes, ultimate success is not always certain. Although not all initiatives may prove to be economically viable, the company’s overall investment in this area is not significant to the company’s consolidated financial position.

Virtually all aspects of the company’s businesses are subject to various federal, state and local environmental, health and safety laws and regulations. These regulatory requirements continue to change and increase in both number and complexity, and govern not only the manner in which the company conducts its operations, but also the products it sells. ChevronTexaco expects more environmental-related regulations in the countries where it has operations. Most of the costs of complying with the myriad laws and regulations pertaining to its operations are embedded in the normal costs of conducting its business.

In 2001, the company’s U.S. capitalized environmental expenditures were $220 million, representing approximately 4 percent of the company’s total consolidated U.S. capital and exploratory expenditures. These environmental expenditures include capital outlays to retrofit existing facilities, as well as those associated with new facilities. The expenditures are predominantly in the petroleum segment and relate mostly to air and water quality projects and activities at the company’s refineries, oil and gas producing facilities and marketing facilities. For 2002, the company estimates U.S. capital expenditures for environmental control facilities will be $370 million. The future annual capital costs of fulfilling this

Further information on environmental matters and their impact on ChevronTexaco, and the company’s 2001 environmental expenditures, remediation provisions and year-end environmental reserves are contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations on pages FS-10 and FS-11 of this Annual Report on Form 10-K.

The location and character of the company’s oil, natural gas and coal properties and its refining, marketing, transportation and chemicals facilities are described above under Item 1. Business. Information required by the Securities Exchange Act Industry Guide No. 2 (“Disclosure of Oil and Gas Operations”) is also contained in Item 1 and in Tables I through VII on pages FS-45 to FS-51 of this Annual Report on Form 10-K. Note 15, “Properties, Plant and Equipment,” to the company’s financial statements is on page FS-33 of this Annual Report on Form 10-K.


A.	Texaco Exploration and Production Inc. – Aneth Producing Unit and Gas Plant – Clean Air Act Enforcement Action

Texaco Exploration and Production Inc. (“TEPI”) has agreed to pay a civil penalty of $243,725 to settle an enforcement action brought by the United States Environmental Protection Agency involving alleged Clean Air Act violations at TEPI’s Aneth Producing Unit and Gas Plant, located on the Navajo Nation in Utah. In addition, TEPI has agreed to a supplemental environmental project wherein it will provide a local fire department in Montezuma Creek, Utah with $51,275 in emergency response equipment and hazardous materials training. The alleged violations include: 1) a claim that TEPI’s Aneth Producing Unit failed to provide notice to emergency response authorities of releases of sulfur dioxide in December 1997 as required by section 304 of the Emergency Planning and Community Right-to-Know Act; and 2) non-compliance with Clean Air Act regulations at the Aneth Gas Plant near Montezuma Creek, Utah, resulting from a 1991 renovation of the facility and the cleanup of asbestos-containing materials following a 1997 explosion.


B.	Texaco Exploration and Production Inc. – Aneth Producing Unit – Clean Water Act Enforcement Action

Texaco Exploration and Production Inc. (“TEPI”) has agreed to a civil penalty of $370,000 to settle an enforcement action brought by the United States Environmental Protection Agency involving alleged Clean Water Act violations at TEPI’s Aneth Producing Unit located on the Navajo Nation in Utah. In addition to the civil penalty, TEPI agreed to fund a $479,000 supplemental environmental project. The alleged violations include: 1) a claim that TEPI did not report releases of pollutants as required by law and 2) unlawful releases of pollutants into Waters of the United States.

Texaco Chemical Company (“TCC”) has agreed to pay a $300,000 civil penalty to settle an administrative enforcement action initiated by the United States Environmental Protection Agency. This enforcement action, which involved two separate proceedings initiated in 1992 and subsequently consolidated, alleged violations of the Texas State Implementation Plan; hazardous waste laws; Polychlorinated Biphenyl (PCB) regulations; and release notification and requirements at the TCC facility located in Port Neches, Texas. The stock of TCC was sold to Huntsman in 1994 and ChevronTexaco has no current relationship with the Port Neches facility.

The following matters were submitted to a vote of Chevron Corporation stockholders at a special meeting on October 9, 2001.

Voters approved the issuance of common stock to Texaco Inc. stockholders at a ratio of 0.77 shares of ChevronTexaco common stock for each share of Texaco common stock, by a vote of 442,294,614 votes (98.9 percent) for and 4,754,183 (1.1 percent) against. There were 4,926,109 abstentions.

Voters approved the amendment of the Restated Certificate of Incorporation to change the name of Chevron Corporation to “ChevronTexaco Corporation,” by a vote of 438,925,583 votes (97.9 percent) for and 9,456,781 (2.1 percent) against. There were 3,594,154 abstentions.

The Executive Officers of the Corporation consist of the Chairman of the Board, the Vice-Chairman of the Board, and such other officers of the Corporation who are either Directors or members of the Executive Committee, or who are chief executive officers of principal business units. Except as noted below, all of the Corporation’s Executive Officers have held one or more of such positions for more than five years.

Item 5. Market for the Registrant’s Common Equity and Related Stockholder Matters

The information on ChevronTexaco’s common stock market prices, dividends, principal exchanges on which the stock is traded and number of stockholders of record is contained in the Quarterly Results and Stock Market Data tabulations, on page FS-43 of this Annual Report on Form 10-K.

The selected financial data for years 1997 through 2001 are presented on page FS-44 of this Annual Report on Form 10-K.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The index to Management’s Discussion and Analysis, Consolidated Financial Statements and Supplementary Data is presented on page FS-1 of this Annual Report on Form 10-K.

The company’s discussion of interest rate, foreign currency and commodity price market risk is contained on pages FS-9 and FS-10. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “Financial Instruments” and Note 10 to the Consolidated Financial Statements – “Financial and Derivative Instruments” beginning on page FS-27.

The index to Management’s Discussion and Analysis, Consolidated Financial Statements and Supplementary Data is presented on page FS-1 of this Annual Report on Form 10-K.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

The information on Directors appearing under the heading “Nominees For Directors” in the Notice of the 2002 Annual Meeting of Stockholders and 2002 Proxy Statement, to be filed pursuant to Rule 14a-6(b) under the Securities Exchange Act of 1934, as amended, in connection with the company’s 2002 Annual Meeting of Stockholders, is incorporated herein by reference in this Annual Report on Form 10-K. See Executive Officers of the Registrant on pages 22 and 23 of this Annual Report on Form 10-K for information about Executive Officers of the company.

The information contained under the heading “Section 16(a) Beneficial Ownership Reporting Compliance” in the Notice of the 2002 Annual Meeting of Stockholders and 2002 Proxy Statement, to be filed pursuant to Rule 14a-6(b) under the Securities Exchange Act of 1934, as amended, in connection with the company’s 2002 Annual Meeting of Stockholders, is incorporated herein by reference in this Annual Report on Form 10-K. ChevronTexaco believes all filing requirements were complied with during 2001.

The information appearing under the heading “Executive Compensation,” including the subheadings “Summary Compensation Table,” “Long-Term Incentive Plan – 2001 Performance Units Awards Table,” “Option Grants in Last Fiscal Year Table,” “G. F. Tilton’s Option Grants in Last Fiscal Year Table,” “Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-end Option Values Table,” “Pension Plan Table,” “Termination of Employment and Change-in-Control Arrangements” and “Summary of Glenn F. Tilton’s Employment Agreement” and in the Notice of the 2002 Annual Meeting of Stockholders and 2002 Proxy Statement, to be filed pursuant to Rule 14a-6(b) under the Securities Exchange Act of 1934, as amended, in connection with the company’s 2002 Annual Meeting of Stockholders, is incorporated herein by reference in this Annual Report on Form 10-K.

The information appearing under the heading “Directors’ and Executive Officers’ Stock Ownership” in the Notice of the 2002 Annual Meeting of Stockholders and 2002 Proxy Statement, to be filed pursuant to Rule 14a-6(b) under the Securities Exchange Act of 1934, as amended, in connection with the company’s 2002 Annual Meeting of Stockholders, is incorporated herein by reference in this Annual Report on Form 10-K.

The information appearing under the heading “Transactions with Directors and Officers” in the Notice of the 2002 Annual Meeting of Stockholders and 2002 Proxy Statement, to be filed pursuant to Rule 14a-6(b) under the Securities Exchange Act of 1934, as amended, in connection with the company’s 2002 Annual Meeting of Stockholders, is incorporated herein by reference in this Annual Report on Form 10-K.


	We have included on page 26 of this Annual report on Form 10-K, Financial Statement Schedule II – Valuation and Qualifying Accounts.


	The Exhibit Index on pages E-1 and E-2 of this Annual Report on Form 10-K lists the exhibits that are filed as part of this report.


	(1)	A Current Report on Form 8-K was filed by the company on November 19, 2001. In this report, ChevronTexaco filed the following financial information:


	•	Review of Operations 1998-2000

	•	Audited Supplemental Combined Financial Statements 1998-2000

	•	Supplemental Information on Oil and Gas Producing Activities 1998-2000

	•	Financial Summary 1996-2000

	•	Audited Schedule II – Valuation and Qualifying Accounts

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 27th day of March 2002.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on the 27th day of March 2002.

Management’s Discussion and Analysis of Financial Condition
and Results of Operations

TEXACO MERGER TRANSACTION
On October 9, 2001, Texaco Inc. (Texaco) became a wholly owned subsidiary of Chevron Corporation (Chevron) pursuant to a merger transaction, and Chevron changed its name to ChevronTexaco Corporation. The combination was accounted for as a pooling of interests, and each share of Texaco common stock was converted on a tax-free basis into the right to receive 0.77 shares of ChevronTexaco common stock. In the merger, ChevronTexaco issued approximately 425 million shares of common stock, representing about 40 percent of the outstanding ChevronTexaco common stock after the merger.

In accordance with pooling-of-interests accounting, the accompanying audited consolidated financial statements give retroactive effect to the merger, with all periods presented as if Chevron and Texaco had always been combined.

As a result of the merger, the accounts of certain operations that were jointly owned by the combining companies are consolidated in the accompanying financial statements. These operations are primarily those of the Caltex Group of Companies, which was previously owned 50 percent each by Chevron and Texaco.

ChevronTexaco’s net income of $3.288 billion was down significantly from 2000 but was slightly higher than 1999. Net income for 2001 included net charges of $1.743 billion for special items and $1.779 billion for merger effects, for a combined total of $3.522 billion. Special items included asset write-downs of $1.709 billion, primarily for exploration and production (upstream) properties as a result of downward revisions in estimated proved crude oil reserves. Merger effects represented merger-related expenses of $1.136 billion and net losses on merger-related asset dispositions of $643 million. In 2000 and 1999, net special charges were $378 million and $191 million, respectively.

Net income and special items for the individual business segments are discussed in the Results of Operations section beginning on page FS-4.

BUSINESS ENVIRONMENT AND OUTLOOK
ChevronTexaco’s overall operating earnings depend largely on the profitability of its upstream – exploration and production – and downstream – refining, marketing and transportation – businesses.

Upstream operating earnings align most closely with industry price levels for crude oil and natural gas. The decline in the company’s upstream operating earnings during 2001 tracked the downward slide in prices for these commodities. The price trend for crude oil was largely caused by reduced demand in weakened economies worldwide and the relative oversupply by OPEC and certain other oil-producing countries.

The average spot price during 2001 for West Texas Intermediate (WTI), a benchmark crude oil, was about $26 per barrel – down from an average of about $30 in 2000 – and ended the year under $20. A similar trend existed for certain natural gas prices, which are more sensitive to regional supply-demand balances. In the United States, the company’s average natural gas sales realization started 2001 at about $10.00 per thousand cubic feet. By the end of the year, the average realization had dropped below $3.00. Into early 2002, the WTI crude oil price moved above $20 per barrel, but the company’s U.S. average natural gas realization remained below $3.00 per thousand cubic feet. Earnings during 2001 were also dampened by slightly lower oil-equivalent production – down less than 2 percent from 2000 levels. However, the company anticipates an oil-equivalent production growth rate over the next five years of 2.5 to 3 percent annually, although 2002 production is expected to increase only about 1 percent because of OPEC-related constraints.

Downstream operating earnings are most closely tied to refining and marketing margins, which can vary among the geographic areas in which the company operates. Although world-wide demand for refined products weakened overall during 2001,margins fluctuated on regional supply-demand balances. For example, margins improved in North America over the prior year and sales volumes increased for all higher-value products. Margins also improved in most of the Asia, Middle East and eastern Africa operating areas. However, in Europe, Latin America and certain western African countries, changes in product prices were not able to keep pace with feedstock costs, and margins suffered. Early in 2002, profitability was weak in all geographic areas and is not expected to rebound in earnest until the world economies and product demand improve.

The company’s chemical segment was not profitable during 2001, and significant improvement for certain commodity chemicals is not expected until demand more closely matches industry capacity.

MERGER EFFECTS
Within 18 months of the merger, ChevronTexaco expects to realize pre-tax savings of approximately $1.8 billion annually through operating efficiencies and the elimination of redundant facilities and operations.

Significant one-time expenses are being incurred in connection with the merger. Total before-tax merger-related expenses, from the time of the merger announcement in October 2000 through the end of 2003, are estimated at $2 billion. Major expenses include employee severance payments; incremental pension and medical plan costs associated with work-force reductions; legal, accounting, SEC filing and investment banker fees; employee and office relocations; and costs for the elimination of redundant facilities and operations. During 2001, $1.563 billion of before-tax ($1.136 billion after tax) merger-related expenses were recorded. Included were accruals of $891 million for employee termination benefits for approximately 4,500 employees, and other merger-related expenses that will not benefit future operations. Payments against the accruals were $105 million. Approximately 1,400 employees were terminated after the merger during 2001. The year-end 2001 accrual balance of $786 million is expected to be nearly extinguished by early 2003, as certain terminating employees are eligible to delay separation payments for one year or more.

As a condition of approving the merger, the U.S. Federal Trade Commission (FTC) required the disposition of certain Texaco assets, including investments in Equilon and Motiva – joint ventures engaged in U.S. refining, marketing and transportation businesses. The interests in these joint ventures were placed in trust at the time of the merger, and ChevronTexaco no longer exercised control over the joint ventures. Accordingly, the method of accounting for these investments was changed in the fourth quarter 2001 from equity to cost basis. Based on the terms of the sale that closed in February 2002, the company recorded an after-tax charge of $564 million in 2001 for the anticipated loss. Cash proceeds from the sale received in 2002 were $2.2 billion. Indemnification by ChevronTexaco against certain Equilon and Motiva contingent liabilities at the date of sale are discussed in the “On- and off-balance-sheet arrangements” section on page FS-8.

Additional after-tax charges of $79 million were recorded in 2001 for other merger-related asset dispositions, which are expected to result in proceeds of approximately $75 million. Including the loss for the Equilon and Motiva sale, total charges for merger-related asset dispositions of $643 million were recorded in 2001 and classified as an “Extraordinary item” on the Consolidated Statement of Income in accordance with pooling-of-interests reporting requirements of Accounting Principles Board (APB) Opinion No. 16, “Business Combinations.” The net book value of these asset sales that were not completed at year-end 2001 was $2.181 billion and was classified as “Assets held for sale – merger related” in the “Current Assets” section of the Consolidated Balance Sheet. Net income during 2001 for all merger-related assets that are being sold was approximately $375 million.

OPERATING HIGHLIGHTS AND DEVELOPMENTS
Key operating highlights and events during 2001 and early 2002 included:

Worldwide oil and gas reserves The company added approximately 1.2 billion barrels of oil-equivalent reserves during 2001. These additions equated to 127 percent of production for the year. Included were slightly more than 100 million barrels each for the Tengiz Field in Kazakhstan and the Hamaca project in Venezuela as a result of drilling activities. Almost 200 million oil-equivalent barrels were added for natural gas reserves for several fields in Nigeria. About 160 million barrels of the additions during the year were the result of successful discoveries in areas that included Latin America, the North Sea and West Africa. Also, approximately 175 million equivalent-barrels were acquired early in 2001 through the purchase of an additional 5 percent interest in Tengizchevroil, the company’s 50 percent-owned affiliate in Kazakhstan that operates the Tengiz and Korolev fields.

Angola Approximately 30,000 barrels per day of total crude oil production began at the company-operated Phase 1C development in the deepwater Kuito Field in Block 14, where the company holds a 31 percent interest. In Block 0, the North Nemba production and gas injection platform was installed in March 2001. At year-end, total oil production exceeded 30,000 barrels per day. Continuation of the North Nemba development program in 2002 will result in average production of about 40,000 barrels per day. The company is the operator and holds a 39 percent interest.

Nigeria The Escravos Gas Project successfully completed Phase 2 development in 2001, increasing processing capacity to 285 million cubic feet of gas per day. Upon completion of Phase 3 in 2005,capacity is expected to increase to 680 million cubic feet per day. The company holds a 40 percent working interest in the Escravos project. Front-end engineering and design started in March 2001 on the gas-to-liquids project at Escravos. This is the first project to use the Sasol Chevron Global Joint Venture technologies. The company holds a 38 percent interest in the project.

Chad-Cameroon The Doba oil field development — a $3.5 billion project, including a 650-mile pipeline — reached one-third completion at the end of 2001. Initial total production of 225,000 barrels of crude oil per day is expected in 2004. The company holds a 25 percent interest in the project.

Kazakhstan Tengizchevroil (TCO) increased its total production for the eighth straight year, averaging 268,000 barrels per day of crude oil. Engineering for the next major expansion is under way and it is expected to come on line in 2005. The company holds a 50 percent interest in TCO. In October, the first tankers were loaded with crude oil from the Caspian Pipeline Consortium (CPC) facilities near the Black Sea port of Novorossiysk. CPC’s pipeline connects the Tengiz Field in western Kazakhstan to Novorossiysk, enabling full access to world market prices for Tengiz oil, and greatly reduces transportation costs. CPC is owned 15 percent by ChevronTexaco.

U.K. North Sea In December 2001, ChevronTexaco received government approval to develop the company-operated Alba Extreme South and Caledonia projects in the North Sea. Both are located in the company’s central North Sea core area, which includes the producing Alba and Britannia fields. frFirst oil production from the Alba Extreme South project is scheduled for the fourth quarter 2002 and will help maintain Alba’s total field production at about 80,000 barrels of crude oil per day. Chevron-Texaco operates the field and holds a 21 percent ownership. First oil from Caledonia is expected late in the third quarter of 2002, and peak field production is anticipated at about 13,000 barrels per day. The company holds a 27 percent interest.

Philippines Gas production commenced in October from the Malampaya Field offshore the Philippine island of Palawan. ChevronTexaco has a 45 percent interest in the landmark gas-to-power project – the largest single foreign investment and the first-ever offshore production of natural gas in the Philippines.

Australia The company made two significant natural gas discoveries offshore Western Australia. Both are located in permit area WA-267-P, where the company operates and holds a 50 percent interest. During 2001, the company approved development of the $1.6 billion LNG expansion project by the North West Shelf venture. A mid-2004 start-up will increase gross liquefied natural gas capacity by about 50 percent. The company holds a one-sixth interest.

China During 2001, an average of about 18,000 barrels per day total of low-sulfur crude oil is being produced after an October start-up at the QHD 32-6 Field in China’s Bohai Bay where ChevronTexaco holds a 24.5 percent interest.

Bangladesh In April 2001, ChevronTexaco was awarded a 60 percent interest in the 1.7 million-acre onshore tract, Block 9, in Bangladesh, east of Dhaka. Block 9 surrounds the Bakhrabad gas field and is adjacent to other major gas-producing areas. Seismic studies are planned in 2002 with initial drilling to commence in late 2002 or early 2003.

Venezuela The company holds a 30 percent interest in the Hamaca integrated oil project, located in Venezuela’s Orinoco Belt. Early production was established during October 2001.After completion of crude oil upgrading facilities in 2004, Hamaca total production is expected to increase to 190,000 barrels per day.

U.S. Gulf of Mexico Typhoon, a deepwater development project, was completed below budget and production commenced in July 2001, two months ahead of schedule. Daily total production averaged about 39,000 oil-equivalent barrels through the end of the year. ChevronTexaco is the operator with a 50 percent interest.

U.S. Refining In December, the company approved a $150 million project at its Pascagoula, Mississippi, refinery to produce low-sulfur gasoline that meets anticipated new U.S. Environmental Protection Agency standards. Regulatory permits have been secured and the activities will commence during 2002. The project is expected to take a year to complete.

Chevron Phillips Chemical Company (CPChem) The company’s 50 percent-owned CPChem affiliate is engaged in a joint venture with BP Solvay to build a new high-density polyethylene (HDPE) facility at CPChem’s Cedar Bayou, Texas, facility that is on track for a start-up in late 2002. The 700 million pounds-per-year HDPE facility will be the largest of its kind in the world. A world-scale olefins and polyolefins complex in Qatar also is expected to start production in late 2002. The facility will be owned and operated by Qatar Chemical Company, a joint venture between CPChem, with a 49 percent interest, and Qatar General Petroleum.

Dynegy Inc. In November 2001, ChevronTexaco acquired $1.5 billion in redeemable, convertible preferred shares of its Dynegy affiliate. In early 2002, ChevronTexaco purchased approximately $200 million of additional Dynegy common shares to maintain its 26.5 percent ownership interest following Dynegy’s public equity offering in December 2001.

RESULTS OF OPERATIONS
Sales and other operating revenues were $104 billion in 2001, compared with $117 billion in 2000 and $84 billion in 1999. Revenues in 2001 declined on lower average realizations for crude oil and refined products. The increase in 2000 from 1999 was primarily the result of sharply higher prices for crude oil, natural gas and refined products. The effect of higher prices in 2000 was partially offset by the absence of chemicals revenues in the second half of the year due to the July 1, 2000, formation of CPChem, which is accounted for under the equity method.

Income from equity affiliates totaled $1.1 billion in 2001, $1.1 billion in 2000 and $0.9 billion in 1999. Equity income increased marginally in 2001 on the strength of improved earnings for Equilon, Motiva and Dynegy, partially offset by lower earnings for Tengizchevroil and LG-Caltex and by larger losses from CPChem. In 2000, increases in earnings from Tengiz-chevroil and Motiva were partially offset by lower earnings from Equilon and LG-Caltex and losses from CPChem.

Other income totaled $0.7 billion in 2001, $1.0 billion in 2000 and $0.8 billion in 1999. The fluctuations between years were the result of changes in net gains and losses from asset sales and interest income from investments.

Purchased crude oil and products costs of $60.5 billion in 2001 were lower than the $69.8 billion in 2000 – primarily due to lower crude oil prices – but about 30 percent higher than the $46.3 billion in 1999 when average crude oil prices were recovering from 20-year lows that occurred in 1998. Offsetting some of the effect of higher prices since 1999 was the absence of such costs associated with the chemicals operations contributed to CPChem in July 2000.

Operating, selling, general and administrative expenses, excluding the effects of special items, were about the same at $11.5 billion in 2001 and 2000. Similar expenses in 1999 were $10.8 billion, reflecting mainly higher fuel costs for the company’s plants and facilities. Mitigating this effect since mid-2000 was the absence of expenses associated with the chemicals operations contributed to CPChem.

Exploration expenses were $1.0 billion in 2001, compared with $0.9 billion in 2000 and $1.1 billion in 1999. In 2001, well write-offs were $184 million higher compared with 2000 – which more than offset declines in other exploration expenses. The increased write-offs reflected, in part, a reprioritization of development opportunities post-merger.

Depreciation, depletion and amortization expense was $7.1 billion in 2001, compared with $5.3 billion in 2000 and $4.9 billion in 1999. Depreciation expense associated with asset impairments was $2.3 billion in 2001, compared with $0.7 billion in 2000 and $0.4 billion in 1999. After adjusting for the effect of impairments, the expense amounts were $4.8 billion in 2001, $4.6 billion in 2000 and $4.5 billion in 1999. Higher expense in 2001 on this adjusted basis resulted from higher capital spending, reserve revisions and additional abandonment provisions, while 2000 was higher than 1999 because production between years increased. The expense in 2000 also reflected lower depreciation in chemicals, resulting from the CPChem joint venture formation.

Income tax expenses were $4.4 billion in 2001, $6.3 billion in 2000 and $2.6 billion in 1999, reflecting effective income tax rates of 53 percent, 45 percent and 44 percent for each of the three years, respectively.

The increase in the 2001 effective tax rate was primarily due to U.S. before-tax income (generally subject to a lower tax rate) being a significantly smaller percentage of overall before-tax income in 2001 compared with 2000. The decline in the U.S. before-tax income arose primarily because substantially all of the 2001 merger-related expenses were associated with operations in the United States.

Foreign currency gains in 2001 were $191 million, compared with gains of $182 million in 2000 and losses of $15 million in 1999. Approximately $150 million of the gains in 2001 were attributable to the devaluation of the Argentine peso late in the year. Excluding this impact, currency gains were lower than in 2000 primarily due to fluctuations of the Netherlands and Australian currencies. The losses in 1999 were primarily in Australia.

U.S. exploration and production earnings, excluding special items, declined in 2001 primarily because of significantly lower crude oil prices. Oil-equivalent production was also down 8 percent. Higher earnings in 2000, compared with 1999, were mainly the result of increased prices for crude oil and natural gas. Partially offsetting the benefit of higher prices was a decline in oil-equivalent production of 7 percent between years.

The company’s average 2001 U.S. crude oil realization was $21.70 per barrel, compared with $26.69 in 2000 and $15.50 in 1999. The average U.S. natural gas realization was $4.38 per thousand cubic feet in 2001, compared with $3.87 and $2.12 in 2000 and 1999, respectively.

Net liquids production for 2001 averaged 614,000 barrels per day, down 8 percent from 2000 and 14 percent from 1999. Net natural gas production averaged 2.7 billion cubic feet per day in 2000,down 7 percent from 2000 and 14 percent from 1999. The lower oil-equivalent production reflected normal field declines and asset sales, partially offset by new and enhanced production in the deep water and other areas of the Gulf of Mexico.

Special items in 2001 included a $1.0 billion impairment of the Midway Sunset Field in California’s San Joaquin Valley. The impairment was a result of the write-down in proved crude oil reserve quantities, upon determination of lower-than-projected oil recovery from the field’s steam injection process.

International exploration and production earnings, excluding special items, declined in 2001 primarily on lower average crude oil prices. Partially offsetting this effect was an increase of about 3 percent in oil-equivalent production and higher natural gas prices. Earnings in 2000 improved from 1999 on significantly higher crude oil and natural gas prices; oil-equivalent production between years was flat.

The average liquids realization, including equity affiliates, was $22.17 per barrel in 2001, compared with $26.04 in 2000 and $16.57 in 1999. The average natural gas realization was $2.36 per thousand cubic feet in 2001, compared with $2.09 in 2000 and $1.66 in 1999.

Daily net liquids production of 1.345 million barrels in 2001 increased about 1 percent from 1.330 million barrels in 2000 and 1.337 million barrels in 1999. Production increases in Kazakhstan during 2001 more than offset lower volumes from Indonesia. In 2000, increases in Argentina, Kazakhstan, Kuwait and Thailand did not offset declines in Indonesia and the United Kingdom.

Net natural gas production of 1.711 billion cubic feet per day in 2001 was up 10 percent from 2000 and more than 13 percent from 1999. Most notable among the geographic areas with production increases were Kazakhstan, Trinidad and Canada. In 2000, production increases were primarily in Argentina, Colombia, Kazakhstan and Thailand, partially offset by lower production from normal declines in mature fields in Canada and the United Kingdom.

Special items in 2001 included a $247 million impairment of the LL-652 Field in Venezuela – as slower-than-expected reservoir repressurization resulted in a reduction in the projected volumes of oil recoverable during the company’s remaining contract period of operation.

U.S. refining, marketing and transportation earnings in 2001, excluding special items, increased 37 percent to $1.332 billion and more than doubled 1999 earnings of $638 million. Amounts included the company’s share of equity income for the Equilon and Motiva joint ventures until the October 2001 merger, when these interests were placed in trust. Post-merger, the investments were accounted for on the cost basis, and earnings included dividend income, a component of other income, rather than the equity income as was recognized pre-merger.

Earnings increases in 2001 reflected significantly higher gasoline sales margins – especially early in the year – partially offset by weaker distillate sales margins and higher operating expense. Higher sales volumes across all major product lines also contributed to the improvement. Earnings in 2000 improved from 1999, particularly on the East and Gulf coasts. Earnings in 1999 suffered from lower sales margins and operational problems at the company’s California refineries.

Refined products sales volumes of 2.577 million barrels per day in 2001 decreased about 3 percent from 2000 and 2 percent from 1999. The 2001 sales volumes reflected pre-merger sales only for Equilon and Motiva. Sales in 2000 suffered from the effect of 1999 year-end stockpiling by customers in anticipation of possible Year 2000-related interruptions. The average U.S. refined products sales realization of $30.45 per barrel in 2001 was down 25 percent from the 2000 average of $40.75, but up 19 percent from depressed levels in 1999.

International refining, marketing and transportation earnings include results of the company’s consolidated refining and marketing businesses, international marine operations, international supply and trading activities, and equity earnings of primarily Asia-Pacific affiliates. Excluding special items, 2001 earnings of $598 million were up 14 percent from 2000, but about 3 percent lower than in 1999.

Earnings in most of Asia, the Middle East and eastern Africa and South Africa operating areas improved significantly in 2001 because of improved marketing margins, particularly early in the year. Partially offsetting the marketing improvement were higher costs and somewhat lower refining margins. Earnings decreased in 2000, compared with 1999, on lower marketing margins and refined products sales volumes. The region suffered from a very competitive operating environment, including excess refinery capacity.

European operations suffered from low marketing and refining margins and lower sales volumes in 2001 compared with prior years, primarily due to weaker economic conditions. Latin American earnings were nearly level with 2000,with improved refining margins almost offsetting the declining sales volumes and marketing margins. In 2000, weaker margins in Latin America and West Africa resulted in lower earnings compared with 1999. These were partially offset by increased earnings in Europe, driven by higher margins in the United Kingdom and the Netherlands.

International refined products sales volumes were 2.495 million barrels per day in 2001, down about 1 percent from 2.521 million in 2000 and about 5 percent lower than 2.621 million in 1999. Weaker economic conditions, particularly in Europe, dampened demand in 2001. Lower trading volumes and the third quarter 1999 sale of the company’s equity interest in Koa Oil Company Limited in Japan were responsible for the decline in sales volumes in 2000.

Chemicals earnings include results from the company’s Oronite division, the company’s petrochemicals business prior to its contribution to CPChem in July 2000, and equity earnings in CPChem from that date. After excluding the effect of special items, the segment recorded a loss of $32 million in 2001, compared with earnings of $130 million in 2000 and $174 million in 1999. Results for all years reflected a protracted period of generally weak demand for commodity chemicals and industry over-capacity.

Special items in 2001 and 2000 include write-downs in the CPChem operations in Puerto Rico.


Title of Each Class		Name of Each Exchange on Which Registered

Common stock par value $.75 per share		New York Stock Exchange, Inc.
Preferred stock purchase rights		Pacific Exchange


PART I
	Item 1. Business
	Item 2. Properties
	Item 3. Legal Proceedings
	Item 4. Submission of Matters to a Vote of Security Holders
PART II
	Item 5. Market for the Registrant’s Common Equity and Related Stockholder Matters
	Item 6. Selected Financial Data
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 7A. Quantitative and Qualitative Disclosures About Market Risk
	Item 8. Financial Statements and Supplementary Data
	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
PART III
	Item 10. Directors and Executive Officers of the Registrant
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management
	Item 13. Certain Relationships and Related Transactions
PART IV
	Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
SIGNATURES
EXHIBIT INDEX
EXHIBIT 3.1
EXHIBIT 10.12
EXHIBIT 10.13
EXHIBIT 10.14
EXHIBIT 10.15
EXHIBIT 10.126
EXHIBIT 12.1
EXHIBIT 21.1
EXHIBIT 23.1
EXHIBIT 23.2
EXHIBIT 24.1
EXHIBIT 24.2
EXHIBIT 24.3
EXHIBIT 24.4
EXHIBIT 24.5
EXHIBIT 24.6
EXHIBIT 24.7
EXHIBIT 24.8
EXHIBIT 24.9
EXHIBIT 24.10
EXHIBIT 24.11
EXHIBIT 24.12
EXHIBIT 24.13
EXHIBIT 24.14
EXHIBIT 24.15
EXHIBIT 24.16
EXHIBIT 24.17
EXHIBIT 99.1
EXHIBIT 99.3



									Developed
									and
	Undeveloped²				Developed²				Undeveloped

	Gross		Net		Gross		Net		Gross		Net

United States		10,457		7,462		8,508		4,152		18,965		11,614

Africa		25,556		8,751		411		116		25,967		8,867
Asia-Pacific		53,619		25,384		1,683		590		55,302		25,974
Other International		51,545		27,132		2,400		859		53,945		27,991

Total International		130,720		61,267		4,494		1,565		135,214		62,832

Total Consolidated Companies		141,177		68,729		13,002		5,717		154,179		74,446
Equity in Affiliates		927		464		57		28		984		492

Total Including Affiliates		142,104		69,193		13,059		5,745		155,163		74,938



	Productive¹				Productive¹
	Oil Wells				Gas Wells

	Gross²		Net²		Gross²		Net²

United States		43,368		26,868		11,075		5,533

Africa		1,386		544		5		2
Asia-Pacific		8,396		7,537		269		141
Other International		2,248		1,400		382		171

Total International		12,030		9,481		656		314

Total Consolidated Companies		55,398		36,349		11,731		5,847
Equity in Affiliates		106		43		—		—

Total Including Affiliates		55,504		36,392		11,731		5,847

Multiple completion wells included above:		617		338		350		218



	Additions to					Net							Memo:
	Reserves					Production				BOE			Replacement %
										Reserves			Including
	Liquids			Gas		Liquids		Gas		Replacement			Sales and
	(mmbbls)¹			(bcf)²		(mmbbls)¹		(bcf)²		%			Acquisitions

United States		(89	)		452		224		988		5	%		(3	)%
Africa		168			1,116		129		16		268	%		268	%
Asia-Pacific		216			511		204		194		126	%		127	%
Other international³		424			1,100		157		415		190	%		269	%

Total Worldwide		719			3,179		714		1,613		112	%		127	%

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Delaware (State or other jurisdiction of incorporation or organization)		94-0890210 (I.R.S. Employer Identification Number)		575 Market Street, San Francisco, California 94105 --------------------------------------------------- (Address of principal executive offices) (Zip Code)


Item			Page No.

PART I
	1.	Business		1
		(a) General Development of Business		1
		(b) Description of Business and Properties		2
		Capital and Exploratory Expenditures		3
		Petroleum – Exploration and Production		4
		Liquids and Natural Gas Production		4
		Acreage		5
		Reserves and Contract Obligations		6
		Development Activities		7
		Exploration Activities		9
		Review of Ongoing Exploration and Production Activities In Key Areas		9
		Petroleum – Natural Gas Liquids		14
		Petroleum – Refining		14
		Petroleum – Refined Products Marketing		16
		Petroleum – Transportation		17
		Energy Marketing and Services – Dynegy		18
		Chemicals		19
		Coal		19
		Other Activities – Synthetic Crude Oil		19
		Power and Gasification		20
		Research and Technology		20
		Environmental Protection		20
	2.	Properties		21
	3.	Legal Proceedings		21
	4.	Submission of Matters to a Vote of Security Holders		22
		Executive Officers of the Registrant		22
PART II
	5.	Market for the Registrant’s Common Equity and Related Stockholder Matters		23
	6.	Selected Financial Data		24
	7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
	7A.	Quantitative and Qualitative Disclosures About Market Risk		24
	8.	Financial Statements		24
	8.	Supplementary Data – Quarterly Results		24
		– Oil and Gas Producing Activities		24
	9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		24
PART III
	10.	Directors and Executive Officers of the Registrant		24
	11.	Executive Compensation		24
	12.	Security Ownership of Certain Beneficial Owners and Management		25
	13.	Certain Relationships and Related Transactions		25
PART IV
	14.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K		25
		Schedule II – Valuation and Qualifying Accounts		26



		Crude Oil &
		Natural Gas Liquids				Natural Gas
		(Thousands of				(Millions of
		Barrels per Day)				Cubic Feet per Day)

		2001		2000		2001		2000

United States:
	California		249		266		116		118
	Gulf of Mexico		187		179		1,023		1,130
	Texas		87		110		598		660
	Wyoming		11		15		220		225
	Other States		80		97		749		777

Total United States			614		667		2,706		2,910

Africa:
Angola			168		169		1		1
Nigeria			158		155		43		47
Republic of Congo			20		25		—		—
Democratic Republic of Congo			9		8		—		—
Asia-Pacific:
Indonesia			304		319		134		133
Partitioned Neutral Zone (PNZ)²			144		139		10		11
Australia			45		48		235		225
Kazakhstan			17		17		67		83
Thailand			16		14		75		70
Papua New Guinea			7		11		—		—
Philippines			1		—		9		—
China			24		28		—		—
Other International:
United Kingdom (North Sea)			115		117		350		342
Canada			64		66		167		146
Argentina			57		51		56		51
Denmark			39		39		100		98
Norway			17		15		4		1
Venezuela			4		4		4		—
Colombia			—		1		203		194
Trinidad			—		8		100		65
Netherlands			—		—		1		1

Total International			1,209		1,234		1,559		1,468

Total Consolidated Operations			1,823		1,901		4,265		4,378
Equity in Affiliates			136		96		152		88

Total Including Affiliates			1,959		1,997		4,417		4,466



					Net Wells Completed¹
	Wells
	Drilling
	At 12/31/01				2001				2000				1999

	Gross²		Net²		Prod.		Dry		Prod.		Dry		Prod.		Dry

United States		373		137		866		21		919		14		857		14

Africa		33		13		22		—		39		—		19		—
Asia-Pacific		16		11		555		—		501		1		530		1
Other International		32		19		109		2		113		—		30		—

Total International		81		43		686		2		653		1		579		1

Total Consolidated Companies		454		180		1,552		23		1,572		15		1,436		15
Equity in Affiliates		37		18		17		—		33		—		1		—

Total Including Affiliates		491		198		1,569		23		1,605		15		1,437		15



		December 31,
		2001
						Refinery Inputs
				Operable
Locations		Number		Capacity		2001		2000		1999


Pascagoula	Mississippi		1		295		332		313		328
El Segundo	California		1		260		213		219		211
Richmond	California		1		225		229		203		207
El Paso¹	Texas		1		65		61		60		65
Honolulu	Hawaii		1		54		54		51		51
Salt Lake City	Utah		1		45		44		44		43
Other²			2		96		50		53		50

Total Consolidated Companies – United States			8		1,040		983		943		955

Equity in Affiliates³	Various Locations		—		—		353		447		579

Total Including Affiliates – United States			8		1,040		1,336		1,390		1,534

Pembroke	United Kingdom		1		210		202		215		195
Cape Town	South Africa		1		112		71		65		73
Batangas	Philippines		1		76		65		65		70
Colón⁴	Panama		1		60		54		44		49
Burnaby, B.C.,	Canada		1		52		52		51		52
Escuintla	Guatemala		1		17		16		16		17

Total Consolidated Companies – International			6		527		460		456		456

Equity in Affiliates⁵	Various Locations		11		781		676		694		779

Total Including Affiliates – International			17		1,308		1,136		1,150		1,235

Total Including Affiliates – Worldwide			25		2,348		2,472		2,540		2,769


		Wholly		Partially
		Owned		Owned¹		Total

United States:
	Crude oil²		1,876		458		2,334
	Natural gas		1,403		1,872		3,275
	Petroleum products		3,624		1,869		5,493

	Total United States		6,903		4,199		11,102

International:
	Crude oil²		—		694		694
	Natural gas		—		184		184
	Petroleum products		4		547		551

	Total International		4		1,425		1,429

Worldwide			6,907		5,624		12,531


¹	Reflects equity interest in pipelines, except for those owned by Dynegy Inc.

²	Includes gathering lines related to the transportation function. Excludes gathering lines related to the U.S. and international production activities.



		U.S. Flag				Foreign Flag

				Cargo Capacity				Cargo Capacity
		Number		(Millions of Barrels)		Number		(Millions of Barrels)

Owned			3		0.8		8		10.4
Bareboat Charter			—		—		15		21.2
Time-Charter			—		—		4		2.2

	Total		3		0.8		27		33.8


C.	Texaco Chemical Company – Clean Water Act Enforcement Action


Name and Age		Executive Office Held	Major Area of Responsibility

D. J. O’Reilly	55	Chairman of the Board since 2000 Director since 1998 Vice-Chairman from 1998 to 2000 President of Chevron Products Company from 1994 to 1998 Executive Committee Member since 1994		Chief Executive Officer

P. J. Robertson	55	Vice-Chairman of the Board since 2002 Vice-President since 1994 President of Chevron Overseas Petroleum Inc. from 2000 to 2002 Executive Committee Member since 1997	Office of the Chairman Worldwide Exploration and Production Activities

G. F. Tilton	53	Vice-Chairman of the Board since 2001 Director since 2001 Chairman of the Board and Chief Executive Officer, Texaco Inc., 2001 President of Global Business Unit, Texaco Inc. from 1997 to 2001 Executive Committee Member since 2001		Office of the Chairman

D. W. Callahan	59	Executive Vice-President since 2000 Vice-President since 1999 President of Chevron Chemical Company from 1999 to 2000 Executive Committee Member since 1999	Chemicals, Coal, Human Resources, Technology

H. D. Hinman	61	Vice-President and General Counsel since 1993 Executive Committee Member since 1993		Law

G. L. Kirkland	51	President of ChevronTexaco Overseas Petroleum Inc. since 2002 Vice-President since 2002 President of Chevron U.S.A. Production Company from 2000 to 2002 Executive Committee Member from 2000 to 2001	Overseas Exploration and Production

J. S. Watson	45	Vice-President and Chief Financial Officer since 2000 Vice-President since 1998 Executive Committee Member since 2000		Finance


		2001		2000		1999

United States
	Gasolines		1,246		1,320		1,266
	Jet Fuel		481		481		451
	Gas Oils and Kerosene		419		419		410
	Residual Fuel Oil		228		179		227
	Other Petroleum Products³		203		268		269

	Total United States		2,577		2,667		2,623

International
	Gasolines		410		455		481
	Jet Fuel		136		156		145
	Gas Oils and Kerosene		925		629		647
	Residual Fuel Oil		475		573		567
	Other Petroleum Products³		549		708		781

	Total International		2,495		2,521		2,621

Total Worldwide			5,072		5,188		5,244


	Petroleum – Transportation


	Coal


	Power and Gasification


D. W. Callahan		- Senior Vice President, Chevron Chemical Company – 1991 - President, Chevron Chemical Company – 1999

G. L. Kirkland		- General Manager, Asset Management, Chevron Nigeria Limited – 1996 - Chairman and Managing Director, Chevron Nigeria Limited – 1996 - President, Chevron USA Production Company – 2000

P. J. Robertson		- Executive Vice-President of Chevron U.S.A. Production Company – 1996 - Vice-President, Chevron Corporation and President of Chevron U.S.A. Production Company – 1997 - President of Chevron Overseas Petroleum Inc. since 2000

G. F. Tilton		- President of Texaco USA – 1995 - President of Global Businesses, Texaco Inc. – 1997

J. S. Watson		- President, Chevron Canada Limited – 1996 - Vice-President, Strategic Planning, Chevron Corporation – 1998 - Vice-President and Chief Financial Officer, Chevron Corporation – 2000

R. I. Wilcox		- Vice President and General Manager, Marine Transportation, Chevron Shipping Company – 1996 - General Manager, Asset Management, Chevron Nigeria Limited – 1999 - Chairman and Managing Director, Chevron Nigeria Limited – 2000 - Corporate Vice President and President, North America Exploration and Production – 2002

P. A. Woertz		- President, Chevron International Oil Company – 1996 - Vice President, Logistics and Trading, Chevron Products Company – 1996 - President, Chevron Products Company – 1998


	Page(s)

Report of Independent Accountants – PricewaterhouseCoopers LLP		FS-15
Report of Independent Public Accountants – Arthur Andersen LLP		FS-15
Consolidated Statement of Income for the three years ended December 31, 2001		FS-16
Consolidated Statement of Comprehensive Income for the three years ended December 31, 2001		FS-17
Consolidated Balance Sheet at December 31, 2001 and 2000		FS-18
Consolidated Statement of Cash Flows for the three years ended December 31, 2001		FS-19
Consolidated Statement of Stockholders’ Equity for the three years ended December 31, 2001		FS-20 to FS-21
Notes to Consolidated Financial Statements		FS-22 to FS-42



	Year ended December 31,

	2001			2000			1999

Employee Termination Benefits:
Balance at January 1	$	1		$	130		$	156
Additions charged to expense		763			15			291
Payments		(105	)		(144	)		(317	)

Balance at December 31*	$	659		$	1		$	130

*$275 is reported as “Deferred Credits and Other Noncurrent Obligations” on the Consolidated Balance Sheet

Other Merger-related Expenses:
Balance at January 1	$	—		$	—		$	—
Additions charged to expense		128			—			—
Payments		(1	)		—			—

Balance at December 31	$	127		$	—		$	—

Allowance for Doubtful Accounts:
Balance at January 1	$	136		$	113		$	90
Additions charged to expense		116			74			97
Bad debt write-offs		(69	)		(51	)		(74	)

Balance at December 31	$	183		$	136		$	113

Deferred Income Tax Valuation Allowance:*
Balance at January 1	$	1,574		$	1,588		$	1,295
Additions charged to deferred income tax expense		258			326			381
Deductions credited to deferred income tax expense		(401	)		(340	)		(88	)

Balance at December 31	$	1,431		$	1,574		$	1,588

*See also Note 16 to the consolidated financial statements on page FS-34

Inventory Valuation Allowance:
Balance at January 1	$	4		$	—		$	170
Additions		—			4			—
Deductions		(4	)		—			(170	)

Balance at December 31	$	—		$	4		$	—


Principal Executive Officers (And Directors)		Directors
DAVID J. O’REILLY* David J. O’Reilly, Chairman of the Board		SAMUEL H. ARMACOST* Samuel H. Armacost
PETER J. ROBERTSON* Peter J. Robertson, Vice-Chairman of the Board		ROBERT J. EATON* Robert J. Eaton
GLENN F. TILTON* Glenn F. Tilton, Vice-Chairman of the Board		SAM GINN* Sam Ginn
		CARLA A. HILLS* Carla A. Hills

Principal Financial Officer		FRANKLYN G. JENIFER* Franklyn G. Jenifer

JOHN S. WATSON* John S. Watson, Vice-President, Finance and Chief Financial Officer		J. BENNETT JOHNSTON* J. Bennett Johnston

Principal Accounting Officer		SAM NUNN* Sam Nunn
STEPHEN J. CROWE* Stephen J. Crowe, Vice-President and Comptroller		CHARLES R. SHOEMATE* Charles R. Shoemate
		FRANK A. SHRONTZ* Frank A. Shrontz
*By: /s/ LYDIA I. BEEBE Lydia I. Beebe, Attorney-in-Fact		THOMAS A. VANDERSLICE* Thomas A. Vanderslice
		CARL WARE* Carl Ware
		JOHN A. YOUNG* John A. Young


	Page(s)

Management’s Discussion and Analysis		FS-2 to FS-14
Report of Independent Accountants		FS-15
Report of Independent Public Accountants		FS-15
Consolidated Statement of Income		FS-16
Report of Management		FS-16
Consolidated Statement of Comprehensive Income		FS-17
Consolidated Balance Sheet		FS-18
Consolidated Statement of Cash Flows		FS-19
Consolidated Statement of Stockholders’ Equity		FS-20 to FS-21
Notes to Consolidated Financial Statements		FS-22 to FS-42
Quarterly Results and Stock Market Data		FS-43
Five-Year Financial Summary		FS-44
Supplemental Information on Oil and Gas Producing Activities		FS-44 to FS-51


Millions of dollars, except per-share amounts				2001			2000			1999

Net Income				$	3,288		$	7,727		$	3,247




Special Items and Merger Effects Included in Net Income					(3,522	)		(378	)		(191	)

Earnings Excluding Special Items and Merger Effects				$	6,810		$	8,105		$	3,438

Per Share:




	Net Income – Basic			$	3.10		$	7.23		$	3.01




		– Diluted		$	3.09		$	7.21		$	3.00




	Earnings Excluding Special Items and Merger Effects – Basic			$	6.42		$	7.58		$	3.19




			– Diluted	$	6.41		$	7.57		$	3.18




	Dividends*			$	2.65		$	2.60		$	2.48




Sales and Other Operating Revenues				$	104,409		$	117,095		$	84,004




Return on:




	Average Capital Employed				7.8	%		17.3	%		8.5	%




	Average Stockholders’ Equity				9.8	%		24.5	%		11.1	%


Millions of dollars		2001			2000			1999

Exploration and Production




	United States	$	1,779		$	3,453		$	1,133




	International		2,533			3,702			1,450

Total Exploration and Production			4,312			7,155			2,583

Refining, Marketing and Transportation




	United States		1,254			721			551




	International		560			414			546

Total Refining, Marketing and Transportation			1,814			1,135			1,097

Chemicals			(128	)		40			109




All Other			(2,710	)		(603	)		(542	)

Net Income²		$	3,288		$	7,727		$	3,247






¹ 1999 and 2000 conformed to the 2001 presentation




² Includes Foreign Currency Gains (Losses):		$	191		$	182		$	(15	)