upgrades also included facilities to improve long-term reliability.

Running efficient, reliable operations also means anticipating the forces of nature. Last summer, Hurricanes Dolly, Gustav and Ike forced evacuations of our Gulf of Mexico operations three times. Securing and starting up opera- tions is complex; our people did it, maintaining perfect safety. They also provided needed fuel to emergency responders and the public. They are a dedicated team. 

Looking ahead, we’re investing for the future. Our plans focus on increas- ing reserves, boosting crude oil and natural gas production, and improving reliability and efficiency. 

In exploration, we’re focused on large and aggregated energy resources in key basins of the world. Discoveries eventually become long-term energy producers, and this year, three will begin production. Frade, offshore Brazil, is forecasted to start up in the first half of the year. The Gulf of 

Mexico’s Tahiti Field and Angola’s off- shore Tombua-Landana development should reach first oil in the second half of 2009. In the downstream, we plan to launch four new refinery proj- ects to further improve reliability and refining flexibility. 

Meeting the Energy Challenge 

These are just some of our efforts at Delivering Energy Now — Developing Energy for the Future, the theme of this Annual Report. 

As economies around the world search for solid ground, certain outcomes are inevitable: Worldwide demand for energy will rise over the long term. Population growth, industrialization, urbanization and the developing world’s demand for rising living standards all but ensure that. 

Energy is not a luxury — it’s the foundation for economic growth. By investing in the future, we’re creating value not only for our stakeholders, but also we’re building economic prosperity around the globe. 

While times are challenging, the peo- ple of Chevron have their eyes fixed on the horizon. That’s where growth will take hold. And when it does, the world will need all the energy it can get. Human energy and ingenuity will deliver it — two resources the people of Chevron have in abundant supply. 

Thank you for investing in our company. 

 Business Environment and Outlook

Chevron is a global energy company with significant business activities in the following countries: Angola, Argentina, Australia, Azerbaijan, Bangladesh, Brazil, Cambodia, Canada, Chad, China, Colombia, Democratic Republic of the Congo, Denmark, France, India, Indonesia, Kazakhstan, Myanmar, the Netherlands, Nigeria, Norway, the Partitioned Neutral Zone between Saudi Arabia and Kuwait, the Philippines, Qatar, Republic of the Congo, Singapore, South Africa, South Korea, Thailand, Trinidad and Tobago, the United Kingdom, the United States, Venezuela, and Vietnam.

     Earnings of the company depend largely on the profitability of its upstream (exploration and production) and downstream (refining, marketing and transportation) business segments. The single biggest factor that affects the results of operations for both segments is movement in the price of crude oil. In the downstream business, crude oil is the largest cost component of refined products. The overall