The primary focus is to be on the deepwater Gulf of Mexico and Indonesia although exploration spending on the deep shelf program in the GOM only represents about 10% of the overall spending plan and will be less than one-half of the 2003 level.

Nearly 50% of the estimated spending, or $930 million, is earmarked principally for large international crude oil and natural gas development projects that are expected to bring on new production in 2004 and 2005.

Major international projects include Thailand oil and gas development, Indonesia deepwater development, Bangladesh gas field development, Caspian Sea oil development (including the export pipeline), and China's Xihu Trough natural gas development.

In the U.S., Unocal will be completing development of the Mad Dog field (BHP Billiton 23.9% working interest) and beginning development of the K2 field in the deepwater Gulf of Mexico.

Worldwide annual average production for 2004 is expected to be nearly flat with 2003, or about 450,000 barrels-of-oil equivalent per day, since a significant number of the major development projects are expected to come online in 2005.