2nd Trimester Business Review (May – August, 2007) Supply Chain Management

1. 2nd Trimester Business Review(May – August, 2007) Supply Chain Management August, 2007 AHQ Conference room 836F TCO Confidential

2. Performance versus Targets – Be a Leader in Safety and Environmental Updates in progress TCO Confidential

3. Performance versus Targets – Be Respected in Kazakhstan Community updated TCO Confidential

4. Performance versus Targets – Develop our Workforce • SCM employees attended various training courses (eProcurement) • SCM employees currently enrolled in the ASU SCM certificate program: Sholpan Makmetova, Alex Okolelov, Azhar Kalysheva, Zhanna Salakpaeva, Natasha Zolenkova • SCM employees currently enrolled in the IACCM online program from Contracts & Strategic Procurement: Gulmira Murunova, Natalie Tsoi • SCM employees, C&SP, completed IACCM program: Nazgul Bisembaeva, Aliya Mektepova • International Assignments : Venera Medeubaeva, Satzhan Khasanov, Nurlan Dzhasakbayev • ASU MBA attendees: Eraly Mukhametzhanov, Chuck Crockett began July’07 TCO Confidential

5. Performance versus Targets – Develop our Workforce • 2007 and projected 2008 budget constraints have removed the Training Budgets for C&SP staff – training limited to HR’s National training budget. No targeted SCM skills training to fill gaps identified in Petroskills assessment. TCO Confidential

6. Performance versus Targets – Achieve Superior Performance OK OK OK OK TCO Confidential

7. Performance versus Key Objectives – Superior Operational Performance • Contracts and Strategic Procurement • Implementing Category Management – business management of categories of spend • D&C • Major Capital Projects / FE • Operations / Equipment • Services / IT • Category Plans in development • Category Plans developed & submitted to CVX Corp CM for review & endorsement • Classify spend and suppliers • Develop Advanced Supplier Relationship teams – cross-functional, multi-company team to improve operations (GE, Wilson, ESS, AREVA, Honeywell, Bertling, Aral Parker, Schlumberger) • Develop Blanket Purchase Agreements (BPAs) to streamline operations TCO Confidential

8. Performance versus Key Objectives – Superior Operational Performance • Contracts and Strategic Procurement • Major Sourcing Projects in Progress • Site Services – Catering • Site Services – Transportation • Freight Forwarding • Well Construction Services • CRA Tubulars • Security • 3D Seismic • Aviation • Maintenance Services TCO Confidential

9. Performance versus Key Objectives – Superior Operational Performance • Contracts and Strategic Procurement • Other Initiatives -- Be Respected in Kazakhstan • Minimum Remuneration • Minimum net remuneration to certain Tengiz-based personnel – Response to Oct 20 incident – adjust new minimum 90,000 KZT/rotation • Simple goal but extremely complicated – significant time and effort to implement • Foreign Worker Licenses (FWLs) • Develop and maintain relationship with Akimat (local govt) to ensure approval of FWLs – impacts base business and projects • CHESM and Industrial Relations • TCO starting to deploy Q3 2007 • Other Initiatives – Operational Excellence -- 2008 Contracting Plan • Commences Sept/Oct 2007 – approval in December TCO Confidential

10. Top Issues • CHESM and Industrial Relations, Minimum Remuneration, Foreign Worker Licenses, Security Services reorganization, LCD re-org (?) • Resources and organizational capability constraints: • Budget • Career development opportunities /skill competencies /staffing levels /retention • SCM initiatives / enhancements must have a sound business case to ensure that resourcesare not taken away from key TCO projects, ie SGP • SCM agreed with M&T to start managing export Customs relationships with TCO in conjunction with import Customs business • SCM discussion with M&T to transition Contracting Group to C&SP TCO Confidential

11. Focus Areas:Next Reporting Period • Career enrichment & development plans (using Petroskills) • Accelerated nationalization development, driven by OPEX reductions • Procurement Transitioning outcome • Warehouse Restructure • SGI/SGP Surplus Strategy Update • Edit ESS draft Transportation Study for final publication and implementation • Increase usage of CVX IMAs and Preferred Suppliers • CHESM / IR implementation and plan 2007 Contractor Safety Forum • Implementation of eProcurement Buyer • Reorganization of Security function • Increased focus on Logistics optimization and customs clearance processes • Strategic sourcing initiatives • Well Construction Services • Security • Logistics Freight Forwarding TCO Confidential

12. Focus Areas: Next Reporting Period • OCI update • Continue expanding eSourcing usage • Train employees and deploy Ariba Contracts 3.0 and Workbench modules when available • Transition contract formulators’ roles to include analytical functions in support of Category Management • Site Infrastructure Assets Program [SIAP] • South Tengiz: • validation of siting of existing infrastructure using results from Risk Management (QRA); • validation of personnel categories; • projects for relocation of infrastructure/personnel from zones of intolerable risk • risk/cost analyses for infrastructure/personnel outside zones of intolerable risk but within the OPZ TCO Confidential