FITCH ASSIGNS TENGIZCHEVROIL NOTES 'BBB-' RATING

/REUTERS, London, December 8, 04/ - Fitch Ratings-London-08 December 2004: Fitch Ratings, the international rating agency, has today assigned Tengizchevroil Finance Company S.ar.l's USD1.1 billion Series A notes due 2014 a 'BBB-' rating. The notes are guaranteed on a senior secured basis by Kazakhstan-based Tengizchevroil LLP ("TCO"). The notes rank pari passu with TCO's USD2.2bn Series B notes purchased by an affiliate of ChevronTexaco ("Chevtex") and USD1.1bn loan provided by an affiliate of Exxon Mobil Corp ("ExxonMobil"), with similar terms and conditions. The total USD4.4bn senior debt package is the first debt issue by TCO. TCO is a joint- venture between affiliates of Chevtex (50%), Exxonmobil (25%), KazmunayGas ("KMG") the Kazakh oil and gas upstream company (20%), and LUKARCO BV (5%). The proceeds of the USD4.4bn financing will be used to fund TCO's current expansion called second generation project/sour gas injection (SGP/SGI). The total cost of the project is USD4.5bn and has been equity-funded to date. TCO will use the proceeds to finance the remaining USD1.7bn cost and pay the rest to shareholders. TCO's production is expected to double after the project is completed by year end-2006. The rating reflects the abundant oil reserves available to TCO, the strength of its sponsors, and the solidity of its financial ratios, as well as the uncertainty regarding TCO's transport route for its increased production. In TCO's base case, the projected debt service coverage ratio over a 10-year period is expected to be 2.99x on average, with a minimum of 2.38x in 2008. The note holders also benefit from the structure of the transaction, under which TCO gives irrevocable payment instructions to crude-oil buyers to pay into an offshore collection account, from which debt service is repaid. However, Fitch notes that this account remains within the control of TCO rather than the security trustee, and that a cash waterfall is only instigated after an event of default has been declared. As such, the structure is viewed as providing only a small mitigation against country risk issues (The Republic of Kazakhstan ("RoK") is rated 'BBB-' (BBB minus)/ Stable Outlook). Note holders also benefit from a six-month debt service reserve account, as well as certain covenants regarding distribution to shareholders, and additional indebtedness among others. One of the key transaction risks is the ability of TCO to secure export routes for its increased crude production, as its current export route, the Caspian Pipeline Consortium (CPC) pipeline, is expected to be full by 2004. An expansion of the CPC pipeline is being considered but has not yet been approved. Alternative export routes are more costly and may not be sufficient to export all of TCO's base case production. Several scenarios have been tested to confirm that the company can service its debt with reasonable oil price assumptions even if CPC expansion is delayed by two years. TCO currently produces around 13 million tons per annum of oil out of the very large Tengiz field in Kazakhstan, under a production licence expiring in 2033. [2004-12-08]