HOUSTON, TEXAS, March 8, 2001—El Paso Corporation (NYSE:EPG) announced today it has signed a letter of intent with a subsidiary of Phillips Petroleum Company that contemplates an agreement for the purchase of liquefied natural gas (LNG) from a new LNG production facility to be built by Phillips near Darwin, Australia. By mid-year, the parties expect to have negotiated and executed a definitive agreement that would provide for purchases of approximately 4.8 million tons of LNG at market sensitive prices beginning in 2005.

The LNG would be shipped to North America, where it would be re-gasified and sold as approximately 680 million cubic feet per day of natural gas. This supply would provide an important, potential new source of natural gas for growing California markets, and emerging markets in Mexico's Baja California. To support the project, El Paso has commenced discussions with numerous customers on long-term sales arrangements from the proposed facilities.

El Paso and Phillips are working jointly to develop new LNG receiving facilities on the Pacific coast of North America, which would receive, store, and re-gasify the LNG purchased from Phillips. These new facilities would begin service in 2005.

"El Paso is committed to being the leader in providing new sources of gas to both California and Mexico", said William A. Smith, executive vice president of El Paso Corporation. "This important project will use our marketing and risk management skills to create attractive long term energy solutions for California and Mexico customers, and for the owners of Australian gas reserves. In addition, our proven project financing skills will minimize El Paso's capital exposure and generate significant new earnings for our shareholders."

The project is part of El Paso's announced goal of becoming a leading LNG merchant. The Company holds long-term terminal capacity at the Elba Island and Cove Point LNG terminals, which are being reactivated, and is importing LNG at the Lake Charles terminal. In addition, negotiations are underway for long-term LNG supplies for these and other terminals under development.

El Paso Corporation, the largest and most broadly based natural gas company in the world, spans the energy value chain from wellhead to electron. With an enterprise value in excess of $50 billion, El Paso is a leader in every phase of the natural gas industry. The company owns and operates a significant portion of the North American natural gas delivery grid, operates the fastest growing, most sophisticated energy merchant group, and is the nation's third largest natural gas producer. El Paso, a leader in risk management techniques, is focused on maximizing shareholder value, transforming existing markets, and speeding the development of new markets. Visit El Paso at www.elpaso.com.

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 company has 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 company makes these statements and projections in good faith, neither the company nor its management can guarantee that the anticipated future results will be achieved. Reference should be made to the company's (and its affiliates') Securities and Exchange Commission filings for additional important factors that may affect actual results.