Houston, Texas, June 30, 1998-Tennessee Gas Pipeline Company, a business unit of El Paso Energy Corporation (NYSE:EPG), announced today an agreement in principle with Pemex Gas Y Petroquímica Básica (Pemex), a subsidiary of Petróleos Mexicanos, the national oil company of Mexico, for interconnecting facilities between the companies' pipelines. The new facilities will be constructed from the end of Tennessee Gas Pipeline's Donna lateral located in Hidalgo County, Texas, cross the International border, and connect to Pemex's existing facilities in Reynosa, Mexico.

The interconnect will enable Tennessee Gas Pipeline and Pemex to transport gas between the two countries creating additional supply and market opportunities for customers on the Tennessee Gas Pipeline system. The interconnect is expected to be in service by January 1999.

"This agreement strengthens Tennessee Gas Pipeline's commitment to providing its customers with access to superior supplies and premier markets," said John W. Somerhalder II, president of Tennessee Gas Pipeline Company. "This interconnect is an historic milestone that provides Tennessee Gas Pipeline customers with transportation options from the US-Mexican border to the US-Canadian border. We look forward to the opportunities it will provide both Tennessee Gas Pipeline and Pemex in the near term and in the future."

Pemex has entered into a 10-year commitment for 185,000 dekatherms per day (dth/d) of firm capacity on Tennessee Gas Pipeline. The companies expect to execute final agreements in the next few weeks and begin construction of the facilities later this year after receiving all regulatory approvals.

In 1995, Mexico opened the door to competition for the transmission, distribution and sale of natural gas within its borders. With several of its markets now open to private participation, Pemex faces both new business opportunities and challenges in serving the needs of its most important customers. The interconnect with Tennessee Gas Pipeline will provide Pemex with additional pipeline flexibility to meet these challenges.

With over $9 billion in assets, El Paso Energy Corporation provides energy solutions through five business units: Tennessee Gas Pipeline Company, El Paso Natural Gas Company, El Paso Field Services Company, El Paso Energy Marketing Company, and El Paso Energy International Company. The company owns the nation's only integrated coast-to-coast natural gas pipeline system and has operations in interstate natural gas transmission, gas gathering and processing, energy marketing, and international infrastructure development. Visit El Paso Energy's web site at www.epenergy.com.

Pemex Gas Y Petroquímica Básica, one of the four subsidiaries of Petróleos Mexicanos, had 1997 Net Operating Income of US$222 million. The company actively participates in the process of change in the gas industry within Mexico, and is currently making investments to modernize its transportation and marketing systems.

This release includes forward-looking statements and projections, made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The companies have made every reasonable effort to ensure that the information and assumptions on which these statements and projections are based are current, reasonable, and complete. However, a variety of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this release. While the companies make these statements and projections in good faith, neither the companies nor their managements can guarantee that the anticipated future results will be achieved. Reference should be made to the companies' (and their affiliates') Securities and Exchange Commission filings for additional important factors that may affect actual results.