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                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON D.C. 20549


                                   ----------


                                    FORM 8-K



                                 CURRENT REPORT
                       Pursuant to Section 13 or 15 (d) of
                       the Securities Exchange Act of 1934



                Date of Report (Date of earliest event reported):
                                January 15, 1998

                                   ----------

                                   TEXACO INC.
             (Exact name of registrant as specified in its charter)



              Delaware                     1-27                74-1383447
   (State or other jurisdiction of    (Commission File       (I.R.S. Employer
           incorporation)                  Number)        Identification Number)



      2000 Westchester Avenue,                                    10650
        White Plains, New York                                  (Zip Code)
(Address of principal executive offices)

                                 (914) 253-4000

              (Registrant's telephone number, including area code)



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Item 2. Acquisition or Disposition of Assets
- --------------------------------------------

         On January 15, 1998,  subsidiaries of Texaco Inc. and Shell Oil Company
         reached  agreement on the formation and operational start up of Equilon
         Enterprises LLC (Equilon),  a newly formed Delaware  limited  liability
         company.  Equilon is a joint venture which  combines  major elements of
         the  companies'  western and  midwestern  U.S.  refining and  marketing
         businesses and their nationwide trading,  transportation and lubricants
         businesses.  Shell  owns 56  percent  and  Texaco  owns 44  percent  of
         Equilon.

         Equilon will continue to use these assets in the  refining,  marketing,
         trading,  transportation  and  lubricants  businesses  and will  market
         petroleum  and  other   products   directly  and  through   independent
         wholesalers  and retailers.  Equilon will have exclusive  rights to use
         both the Shell and Texaco  brands on refined oil product sales in those
         areas of the United  States where  Equilon is authorized to conduct its
         respective businesses.

         Under the terms of a consent  agreement  accepted by the Federal  Trade
         Commission (FTC) and similar  agreements with the attorneys  general of
         California,  Hawaii,  Oregon and  Washington,  certain  assets  will be
         divested,  including Shell's Anacortes,  Washington  refinery,  certain
         Texaco and Shell  marketing  assets in southern  California and Hawaii,
         and certain pipeline interests.

         Texaco, Shell and Saudi Refining,  Inc. (a corporate affiliate of Saudi
         Aramco)  are  finalizing   agreements  for  a  separate  joint  venture
         involving   their  eastern  and  Gulf  Coast   refining  and  marketing
         businesses in the United States.  The parties are optimistic  that this
         second  transaction will be concluded early in 1998. This joint venture
         will be initially owned 35 percent by Shell, 32.5 percent by Texaco and
         32.5 percent by Saudi Refining, Inc.

         Texaco's and Shell's  exploration,  production and chemical  businesses
         are not included in the joint ventures.

         A copy of the Asset Transfer and Liability  Assumption  Agreement dated
         as of January 15, 1998, among the companies is attached as Exhibit 2.1.

                                     - 1 -






Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
- --------------------------------------------------------------------------

(b)      Pro Forma Financial Information

         Basis of Presentation

         The following unaudited pro forma statements of consolidated income for
         the nine months ended  September  30, 1997 and the year ended  December
         31, 1996 and the unaudited  pro forma  condensed  consolidated  balance
         sheet as of September 30, 1997  (collectively  the "Pro Forma Financial
         Statements")   have  been  prepared  from  the   historical   financial
         statements  of Texaco Inc.  and  subsidiary  companies,  as adjusted to
         reflect the January 15, 1998  formation  of Equilon.  For  presentation
         purposes,  the  transaction  has been  reflected as an  acquisition  by
         Texaco  of a 44%  equity  interest  in  Equilon,  and the  simultaneous
         disposition of substantially  all the businesses of Texaco Refining and
         Marketing  Inc. and Texaco Trading and  Transportation  Inc., and their
         subsidiaries.

         The unaudited pro forma  statements  of  consolidated  income have been
         prepared as if the  foregoing  transactions  had occurred on January 1,
         1996. The unaudited pro forma condensed  consolidated balance sheet has
         been prepared as if the  transactions  had occurred as of September 30,
         1997.

         The Pro Forma Financial Statements are shown for illustrative  purposes
         only  and are not  necessarily  indicative  of the  current  or  future
         financial position or results of operations of Texaco. These statements
         should be read in conjunction with the historical  financial statements
         included in Texaco's Form 10-K for the year ended December 31, 1996 and
         Form 10-Q for the quarterly  period ended  September 30, 1997.  The pro
         forma adjustments, by necessity, use estimates and assumptions based on
         currently available information. Management believes that the estimates
         and assumptions are reasonable and that the significant  effects of the
         transactions  are  properly   reflected  in  the  Pro  Forma  Financial
         Statements.

         These  Pro  Forma  Financial  Statements  do  not  include  anticipated
         benefits  from  operating   efficiencies  which  may  result  from  the
         formation of Equilon.  These statements do not include estimated losses
         or gains that might result from selling assets to comply with the terms
         of the FTC  consent  agreement  and  other  agreements.  Under  the FTC
         consent agreement, results from Shell's Anacortes refinery must be kept
         separate from the results of  operations of Equilon,  and therefore are
         excluded from Texaco's  equity in the pre-tax  income of Equilon in the
         following  Unaudited Pro Forma Statements of Consolidated  Income.  The
         parties to the joint  venture  have agreed that  Equilon is entitled to
         the  net  proceeds  and any  gain or loss  that  may  result  from  the
         disposition  of  the  Anacortes  refinery.   The  Unaudited  Pro  Forma
         Condensed Consolidated Balance Sheet includes Texaco's share of the net
         book value of the Anacortes refining assets.

                                     - 2 -




                      TEXACO INC. AND SUBSIDIARY COMPANIES
              UNAUDITED PRO FORMA STATEMENT OF CONSOLIDATED INCOME
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
              ----------------------------------------------------
                 (Millions of dollars, except per share amounts)





                                                                                          Unaudited
                                                                   -------------------------------------------------------
                                                                                    Pro Forma Adjustments
                                                                               ------------------------------
                                                                   Historical                                    Pro Forma
                                                                     Texaco    Disposition(1)     Acquisition     Texaco
                                                                     ------    --------------     -----------     ------
                                                                                                           
        REVENUES
              Sales and services                                       $33,630       $ 8,314        $    --        $25,316
              Equity in income of affiliates, interest,
                  asset sales and other                                    988            40            212(2)       1,160
                                                                       -------       -------        -------        -------
                                                                        34,618         8,354            212         26,476
                                                                       -------       -------        -------        -------
         DEDUCTIONS
              Purchases and other costs                                 26,324         6,820             --         19,504
              Operating expenses                                         2,184           451             --          1,733
              Selling, general and administrative expenses               1,219           495             --            724
              Maintenance and repairs                                      260           131             --            129
              Exploratory expenses                                         306            --             --            306
              Depreciation, depletion and amortization                   1,145           137             --          1,008
              Interest expense                                             309            11            (22)(3)        276
              Taxes other than income taxes                                365            64             --            301
              Minority interest                                             54             2             --             52
                                                                       -------       -------        -------        -------
                                                                        32,166         8,111            (22)        24,033
                                                                       -------       -------        -------        -------
         Income before income taxes                                      2,452           243            234          2,443

         Provision for income taxes                                        411            85             82(4)         408
                                                                       -------       -------        -------        -------

         NET INCOME                                                    $ 2,041       $   158        $   152        $ 2,035
                                                                       =======       =======        =======        =======
 
         Net income per common share (dollars)(a)
              Basic                                                    $  3.85                                     $  3.84
              Diluted                                                  $  3.75                                     $  3.74

         Average number of common shares outstanding
           for computation of earnings per share
           (thousands)(a)
              Basic                                                    519,553                                     519,553
              Diluted                                                  540,040                                     540,040


(a) Reflects  two-for-one  stock split,  effective  September 29, 1997,  and the adoption of Statement of Financial Accounting
    Standards No. 128, Earnings Per Share.





The  accompanying  notes to the  Unaudited Pro Forma  Statement of  Consolidated
Income are an integral part of this statement.

                                     - 3 -




                      TEXACO INC. AND SUBSIDIARY COMPANIES
              UNAUDITED PRO FORMA STATEMENT OF CONSOLIDATED INCOME
                      FOR THE YEAR ENDED DECEMBER 31, 1996
              ----------------------------------------------------
                 (Millions of dollars, except per share amounts)





                                                                                             Unaudited
                                                                               -------------------------------------------
                                                                                    Pro Forma Adjustments
                                                                               ------------------------------
                                                                   Historical                                    Pro Forma
                                                                     Texaco    Disposition(1)     Acquisition     Texaco
                                                                     ------    --------------     -----------     ------
                                                                                                           
        REVENUES
              Sales and services                                       $44,561       $11,381        $    --        $33,180
              Equity in income of affiliates, interest,
                  asset sales and other                                    939            59            245(2)       1,125
                                                                       -------       -------        -------        -------
                                                                        45,500        11,440            245         34,305
                                                                       -------       -------        -------        -------
         DEDUCTIONS
              Purchases and other costs                                 34,643         9,378             --         25,265
              Operating expenses                                         2,978           571             --          2,407
              Selling, general and administrative expenses               1,693           659             --          1,034
              Maintenance and repairs                                      367           177             --            190
              Exploratory expenses                                         379            --             --            379
              Depreciation, depletion and amortization                   1,455           177             --          1,278
              Interest expense                                             434            14            (30)(3)        390
              Taxes other than income taxes                                496            79             --            417
              Minority interest                                             72             2             --             70
                                                                       -------       -------        -------        -------
                                                                        42,517        11,057            (30)        31,430
                                                                       -------       -------        -------        -------
         Income before income taxes                                      2,983           383            275          2,875

         Provision for income taxes                                        965           134             97(4)         928
                                                                       -------       -------        -------        -------

         NET INCOME                                                    $ 2,018       $   249        $   178        $ 1,947
                                                                       =======       =======        =======        =======

         Net income per common share (dollars)(a)
              Basic                                                    $  3.77                                     $  3.63
              Diluted                                                  $  3.68                                     $  3.55

         Average number of common shares outstanding
           for computation of earnings per share
           (thousands)(a)
              Basic                                                    520,392                                     520,392
              Diluted                                                  541,824                                     541,824



(a) Reflects  two-for-one  stock split,  effective  September 29, 1997,  and the adoption of Statement of Financial Accounting
Standards No. 128, Earnings Per Share.





The  accompanying  notes to the  Unaudited Pro Forma  Statement of  Consolidated
Income are an integral part of this statement.

                                     - 4 -




                      TEXACO INC. AND SUBSIDIARY COMPANIES
            UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
                            AS OF SEPTEMBER 30, 1997
            --------------------------------------------------------
                              (Millions of dollars)





                                                                                          Unaudited
                                                                   -------------------------------------------------------
                                                                                    Pro Forma Adjustments
                                                                               ------------------------------
                                                                   Historical                                    Pro Forma
                                                                     Texaco    Disposition(1)     Acquisition     Texaco
                                                                     ------    --------------     -----------     ------
                                                                                                           
ASSETS
   Current Assets
      Cash and cash equivalents                                        $   451       $    --        $    --        $   451
      Short-term investments - at fair value                                48            --             --             48
      Accounts and notes receivable                                      3,999           649             --          3,350
      Inventories                                                        1,537           429             --          1,108
      Deferred income taxes and other current assets                       283             4             --            279
                                                                       -------       -------        -------        -------
           Total current assets                                          6,318         1,082             --          5,236

   Investments and Advances                                              5,439            43          2,379(2)       7,775

   Net Properties, Plant and Equipment                                  14,093         2,730             --         11,363

   Deferred Charges                                                        965           109             --            856
                                                                       -------       -------        -------        -------

              Total                                                    $26,815       $ 3,964        $ 2,379        $25,230
                                                                       =======       =======        =======        =======

LIABILITIES AND STOCKHOLDERS' EQUITY
   Current Liabilities
      Short-term debt                                                  $   521       $    15        $    --        $   506
      Accounts payable and accrued liabilities                           3,818           733             --          3,085
      Estimated income and other taxes                                   1,205            87             --          1,118
                                                                       -------       -------        -------        -------
           Total current liabilities                                     5,544           835             --          4,709

   Long-Term Debt and Capital Lease Obligations                          5,116           122           (474)(3)      4,520
   Deferred Income Taxes                                                   808             3             --            805
   Employee Retirement Benefits                                          1,208            --             --          1,208
   Deferred Credits and Other Noncurrent Liabilities                     1,873           144             --          1,729
   Minority Interest in Subsidiary Companies                               649             7             --            642
                                                                       -------       -------        -------        -------
           Total                                                        15,198         1,111          (474)         13,613
   Stockholders' Equity                                                 11,617         2,853          2,853         11,617
                                                                       -------       -------        -------        -------

           Total                                                       $26,815       $ 3,964        $ 2,379        $25,230
                                                                       =======       =======        =======        =======







The accompanying notes to the Unaudited Pro Forma Condensed Consolidated Balance
Sheet are an integral part of this statement.

                                     - 5 -





Notes to Unaudited Pro Forma Financial Statements
- -------------------------------------------------

Unaudited Pro Forma Statement of  Consolidated  Income for the Nine Months Ended
September 30, 1997 and Year Ended December 31, 1996

        (1) The  impact  on  revenues,  costs  and  expenses  of the  pro  forma
            disposition.

        (2) Texaco's equity in the pre-tax income of Equilon.

        (3) Assumed  reduction  in  interest  expense to reflect paydown of debt
            with proceeds of distribution from Equilon. (See Note 3 below.)

        (4) To reflect  income  taxes  on Texaco's  equity in Equilon's  pre-tax
            income and additional  taxes due  to  assumed  reduction in interest
            expense.


Unaudited Pro Forma  Condensed  Consolidated  Balance  Sheet as of September 30,
- --------------------------------------------------------------------------------
1997
- ----

        (1) The impact on assets and liabilities of the pro forma disposition.

        (2) Texaco's investment in Equilon,  reduced by assumed  distribution by
            Equilon of debt proceeds.

        (3) Upon  formation  of Equilon,  Texaco received a promissory note from
            Equilon.  It  is  anticipated that this note will be paid within the
            first  half  of  1998 upon the  issuance  of debt by  Equilon.  Such
            proceeds have been reflected as a reduction of Texaco debt.






(c)      Exhibits

            2.1   Copy of the Asset Transfer and Liability  Assumption Agreement
                  dated as of January 15, 1998,  among the parties,  is attached
                  hereto and made a part hereof.

           99.1   Copy of the Press Release issued by Texaco Inc. dated January
                  16, 1998,  entitled  "Texaco,  Shell  Announce  Completion  of
                  Western U.S. Downstream Alliance: Equilon Enterprises."


                                     - 6 -





                                   SIGNATURES




Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.










                                                                TEXACO INC.
                                                           ---------------------
                                                               (Registrant)





                                                     By:       R. E. Koch
                                                           ---------------------
                                                           (Assistant Secretary)





Date:  January 30, 1998
       ----------------




                                                                     EXHIBIT 2.1


                                 ASSET TRANSFER

                                       AND

                         LIABILITY ASSUMPTION AGREEMENT

                                      among

                                  TEXACO INC.,

                       TEXACO REFINING AND MARKETING INC.,

                               TRMI HOLDINGS INC.,

                              TEXACO PIPELINE INC.,

                     TEXACO TRADING AND TRANSPORTATION INC.,

                          TEXACO CONVENT REFINING INC.,

                     TEXACO ANACORTES COGENERATION COMPANY,

                               SHELL OIL COMPANY,

                             SOPC HOLDINGS WEST LLC

                                       and

                             EQUILON ENTERPRISES LLC

                                   dated as of

                                January 15, 1998







                                TABLE OF CONTENTS

                                   ----------



                                                                                             PAGE
                                                                                             ----
                                    ARTICLE 1
                             DEFINITIONS AND USAGE


                                                                                          
SECTION 1.01.  Defined Terms.................................................................... 1






                                    ARTICLE 2
                          CONTRIBUTIONS TO THE COMPANY


                                                                                          
SECTION 2.01.  Contribution of Certain Assets................................................... 5
SECTION 2.02.  Transfer Subject to Permitted Exceptions and Agreement Terms....................  6
SECTION 2.03.  Excluded Assets.................................................................. 6
SECTION 2.04.  Assignment of Contracts and Rights; Equitable Ownership.......................... 6
SECTION 2.05.  Contribution of Pipeline Assets.................................................. 7
SECTION 2.06.  Treatment of Transactions....................................................... 12
SECTION 2.07.  Instruments of Transfer......................................................... 12






                                    ARTICLE 3
                           ASSUMPTION OF LIABILITIES


                                                                                          
SECTION 3.01.  Assumed Liabilities and Obligations; Exclusions................................. 13






                                    ARTICLE 4
                             SEPARATELY HELD ASSETS


                                                                                          
SECTION 4.01.   Separately Held Assets......................................................... 13






                                    ARTICLE 5
                          CERTAIN POST-CLOSING MATTERS


                                                                                          
SECTION 5.01.  Post-closing Recordings.........................................................
 15
SECTION 5.02.  Access to and Retention of Records.............................................. 16









                                                                                             PAGE
                                                                                             ----

                                                                                          
SECTION 5.03.  Availability of Personnel....................................................... 17
SECTION 5.04.  Mail; Payments.................................................................. 17
SECTION 5.05.  Existing Insurance Coverage..................................................... 18






                                    ARTICLE 6
                         REPRESENTATIONS AND WARRANTIES


                                                                                          
SECTION 6.01.  Representations and Warranties of Shell Newco................................... 19
SECTION 6.02.  Representations and Warranties Regarding the Texaco Principal Member Group...... 20






                                    ARTICLE 7
                                 MISCELLANEOUS


                                                                                          
SECTION 7.01.  Further Assurance............................................................... 22
SECTION 7.02.  Effectiveness................................................................... 23
SECTION 7.03.  Exclusivity..................................................................... 23








SCHEDULES
- ---------

                          
Schedule A                   Intentionally Omitted
Schedule B                   Intentionally Omitted
Schedule C                   Shell Shared Assets
Schedule D                   Shell Common Contracts
Schedule E                   Texaco Common Contracts
Schedule 2.01A               Shell Asset List
Schedule 2.01B               Texaco Asset List
Schedule 2.03A               Shell Excluded Assets
Schedule 2.03B               Texaco Excluded Assets
Schedule 3.01A               Shell Assumed Liabilities
Schedule 3.01B               Texaco Assumed Liabilities




                                       ii




         ASSET TRANSFER AND LIABILITY  ASSUMPTION AGREEMENT (the "Asset Transfer
Agreement"),  dated as of  January  15,  1998,  among  Texaco  Inc.,  a Delaware
corporation   ("Texaco"),   Texaco  Refining  and  Marketing  Inc.,  a  Delaware
corporation  ("TRMI"),   TRMI  Holdings  Inc.,  a  Delaware  corporation  ("TRMI
Holdings"),  Texaco Pipeline Inc., a Delaware  corporation  ("Texaco Pipeline"),
Texaco  Trading  and  Transportation   Inc.,  a  Delaware  corporation  ("Texaco
Trading"),  Texaco  Convent  Refining  Inc.,  a  Delaware  corporation  ("Texaco
Convent"),   Texaco  Anacortes  Cogeneration  Company,  a  Delaware  corporation
("Texaco Anacortes"),  Shell Oil Company, a Delaware corporation ("Shell"), SOPC
Holdings West LLC, a Delaware  limited  liability  company  ("Shell  Newco") and
Equilon Enterprises LLC, a Delaware limited liability company (the "Company").

                                R E C I T A L S :
                                - - - - - - - -

         WHEREAS,  Texaco and Shell have entered into a Master Agreement,  dated
as of January 15, 1998, whereby they have agreed, inter alia, to enter into, and
to cause the Company,  TRMI Holdings,  TRMI,  Texaco  Pipeline,  Texaco Trading,
Texaco  Convent,  Texaco  Anacortes  and Shell  Newco to enter  into this  Asset
Transfer  Agreement and certain  other  Equilon Joint Venture  Documents for the
purpose of organizing and operating the Company.

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants  and  agreements  herein  contained,  and for other good and  valuable
consideration, the receipt and adequacy of which are acknowledged by each of the
parties hereto, the parties hereby agree as follows:

                                    ARTICLE 1

                              DEFINITIONS AND USAGE

         SECTION  1.01.  Defined Terms.   Unless  the  context  shall  otherwise
require,  terms used and not defined  herein  shall have the  meanings  assigned
thereto  in  Schedule A to the  Master  Agreement  and all rules as to usage set
forth therein shall apply hereto.  Schedule B to the Master  Agreement  contains
provisions  regarding the Procedural  Conventions and Dispute  Resolution  which
shall govern this Asset  Transfer  Agreement.  Such Schedules A and B are hereby
incorporated




herein by reference. In addition, the following capitalized terms shall have the
respective meanings set forth below:

         "Amberjack"  means   Amberjack   Pipeline   Company,  a  Texas  general
partnership.

         "California  Pipeco" means  California  Pipeco LLC, a Delaware  limited
liability company.

         "Chase" means Chase  Transportation  Company,  a joint venture  between
Texaco Pipeline and Chase Pipe Line Company, a Kansas corporation.

         "Colonial" means Colonial Pipeline Company, a Delaware corporation.

         "Explorer" means Explorer Pipeline Company, a Delaware corporation.

         "FERC" means the Federal Energy Regulatory Commission.

         "Gaviota"   means   Gaviota  Terminal  Company,  a  California  general
partnership.

         "Inland" means Inland Corporation, an Ohio corporation.

         "Jolliet"   means  Jolliet  Pipe  Line  Company,  a   Delaware  general
partnership.

         "LOCAP" means LOCAP Inc., a Delaware corporation.

         "LOOP" means LOOP L.L.C., a Delaware limited liability company.

         "MARS" means Mars Oil Pipeline Company, a Texas general partnership.

         "Odyssey"  means  Odyssey Pipeline L.L.C., a Delaware limited liability
company.

         "Operating Expenses" means all Indebtedness,  liabilities and operating
expenses  incurred by or arising from the Separately Held Assets on or after the
Effective Date.

                                       2





         "Pearsall" means Pearsall Pipeline Company, a Texas general
partnership.

         "Plantation"  means  Plantation  Pipe  Line  Company,  a Delaware and a
Virginia corporation.

         "Poseidon"  means  Poseidon Oil Pipeline  Company,  L.L.C.,  a Delaware
limited liability company.

         "Ram/Powell"  means the 38% ownership interest in the 12-inch crude oil
pipeline from Viosca Knoll 956 to Main Pass 289C.

         "Seashell" means Seashell Pipeline Company, a Delaware corporation.

         "Shell  California"   means   Shell   California  Pipeline  Company,  a
California corporation.

         "Shell Joint Interest Stock Companies" means,  collectively,  (i) Butte
Pipe Line Company, a Delaware corporation,  (ii) Explorer,  (iii) West Shore and
(iv) Wolverine Pipe Line Company, a Delaware corporation.

         "Shell Pipe" means Shell Pipe Line Corporation, a Maryland corporation.

         "Shell Pipeline Assets"  means,  collectively,  the  Shell  Unregulated
Pipeline Assets and the Shell Regulated Pipeline Assets.

         "Shell  Pipe LLC" means  Shell Pipe LLC, a Delaware  limited  liability
company.

         "Shell Plantation Interest" means all of the interest of Shell and  its
Affiliates in Plantation.

         "Shell Regulated Pipeline Assets" means,  collectively,  (i) the equity
interest of Shell and its  Affiliates in each of the Shell Joint  Interest Stock
Companies,  Plantation, LOCAP, Shell California and Seashell, (ii) the ownership
interest of Shell and its Affiliates in each of MARS,  Amberjack and Ship Shoal,
(iii) the  prospective  ownership  interest of Shell in URSA, (iv) the ownership
interest of Shell and its Affiliates in each of the undivided interest regulated
pipelines  that are  included in Shell  Contributed  Assets,  and (v) the right,
title and  interest  of Shell  and its  Affiliates  in each of the  wholly-owned
regulated pipelines

                                       3



that are included in Shell Contributed  Assets (including all related equipment,
permits and rights of way).

         "Shell Unregulated Pipeline Assets" means, collectively, (i) the equity
interest of Shell and its Affiliates in Inland,  (ii) the ownership  interest of
Shell and its Affiliates in each of Odyssey, LOOP and Ram/Powell,  and (iii) the
right,  title  and  interest  of  Shell  and  its  Affiliates  in  each  of  the
wholly-owned unregulated pipelines that are included in Shell Contributed Assets
(including all related equipment, permits and rights of way).

         "Ship  Shoal"  means  Ship  Shoal  Pipeline  Company,  a Texas  general
partnership.

         "SPL Holdings" means SPL Holdings Inc., a Delaware corporation.

         "Texaco  California"   means   Texaco  California  Pipe  Line  Inc.,  a
California corporation.

         "Texaco  California  Pipeco"  means  Texaco  California  Pipeco  LLC, a
Delaware limited liability company.

         "Texaco CO2" means Texaco CO2 Pipeline Inc., a Delaware corporation.

         "Texaco Colonial Interest" means all of the interest of Texaco and  its
Affiliates in Colonial.

         "Texaco Joint Interest Stock Companies" means, collectively, (i) Badger
Pipe Line  Company,  a Delaware  corporation,  (ii) Butte Pipe Line  Company,  a
Delaware  corporation,  (iii) Explorer,  (iv) Kaw Pipe Line Company,  a Delaware
corporation,  (v) LOCAP, (vi) Olympic Pipe Line Company, a Delaware corporation,
(vii) Osage Pipe Line Company, a Delaware  corporation,  (viii) Paloma Pipe Line
Company,  (ix) Texas-New Mexico Pipe Line Company, a Delaware  corporation,  (x)
West Shore and (xi) Wolverine.

         "Texaco Pipeline Assets" means,  collectively,  the  Texaco Unregulated
Pipeline Assets and the Texaco Regulated Pipeline Assets.

         "Texaco Regulated Pipeline Assets" means, collectively,  (i) the equity
interest of Texaco and its Affiliates in each of the Texaco Joint Interest Stock

                                       4



Companies, Colonial and Texaco California, (ii) the ownership interest of Texaco
and its Affiliates in each of Chase,  Gaviota,  Jolliet and Pearsall,  (iii) the
ownership  interest  of  Texaco  and its  Affiliates  in  each of the  undivided
interest regulated pipelines that are included in Texaco Contributed Assets, and
(iv) the right,  title and interest of Texaco and its  Affiliates in each of the
wholly-owned  regulated pipelines that are included in Texaco Contributed Assets
(including all related equipment, permits and rights of way).

         "Texaco  Terminals"  means  Texaco  Terminals  LLC, a Delaware  limited
liability company.

         "Texaco  Unregulated  Pipeline  Assets"  means,  collectively,  (i) the
equity  interest of Texaco and its  Affiliates in Texaco CO2, (ii) the ownership
interest of Texaco and its  Affiliates  in each of LOOP,  Odyssey,  Poseidon and
Texaco  Terminals,  and (iii) the right,  title and  interest  of Texaco and its
Affiliates in each of the wholly-owned  unregulated  pipelines that are included
in Texaco  Contributed  Assets  (including  all related  equipment,  permits and
rights of way).

         "URSA" means the appropriate  ownership share (to be determined) in the
proposed 45 miles of 18-inch crude oil pipeline from  Mississippi  Canyon 810 to
West Delta 143.

         "West Shore" means West Shore Pipe Line Company, a Delaware 
corporation.

         "Wolverine" means Wolverine Pipe Line Company, a Delaware corporation.



                                    ARTICLE 2

                          CONTRIBUTIONS TO THE COMPANY

         SECTION 2.01. Contribution  of Certain Assets. (a) On the Closing Date,
effective  as of  the  Effective  Time,  Texaco,  TRMI,  TRMI  Holdings,  Texaco
Pipeline,  Texaco  Trading,  Texaco  Convent  and  Texaco  Anacortes  shall each
transfer or cause to be  transferred  directly to the Company all of its and its
Affiliates'  right,  title and interest in the Texaco  Contributed Assets (other
than the Texaco Separately Held Assets and the Texaco Pipeline Assets).

                                       5




          (b) On the Closing Date,  effective as of the Effective Time, Shell or
Shell Newco shall  transfer or cause to be  transferred  directly to the Company
all of  its  and  its  Affiliates'  right,  title  and  interest  in  the  Shell
Contributed  Assets (other than the Shell  Separately  Held Assets and the Shell
Pipeline Assets).

         SECTION 2.02. Transfer  Subject  to Permitted  Exceptions and Agreement
Terms.  The  Contributed  Assets shall be transferred to the Company  subject to
Permitted  Exceptions and in accordance  with, and subject to, all provisions of
the Master Agreement and this Asset Transfer Agreement whether or not any of the
Transfer Instruments contains a specific exception for or reference to Permitted
Exceptions, the Master Agreement or this Asset Transfer Agreement.

         SECTION  2.03.  Excluded  Assets.  No  party  to  this  Asset  Transfer
Agreement nor any of its Affiliates shall transfer any right,  title or interest
with respect to the Excluded Assets.

         SECTION 2.04. Assignment  of Contracts and Rights; Equitable Ownership.
(a)  Without  limitation  to any  representation,  warranty  or  indemnification
obligation  set forth in the Master  Agreement,  this Asset  Transfer  Agreement
shall not constitute an agreement to assign or assume any  Contributed  Contract
or any claim,  right,  benefit,  or liability  thereunder,  if such  assignment,
without the approval or consent of a Third Party  thereto,  would be ineffective
or would constitute a breach or other contravention  thereof or give rise to any
right of termination  thereof and such approval or consent is not obtained.  The
party required to contribute such Contributed  Contract shall use its reasonable
efforts (which shall not require any payment of money to any Third Party by such
party or any of its  Affiliates) to obtain the approval or consent of such Third
Party for the assignment to or assumption by the Company of any such Contributed
Contract,  claim, right,  benefit or liability arising thereunder.  If as of the
Effective  Time such  assignment or assumption  will be ineffective or will give
rise to any right of termination  thereof or relates to a Common  Contract,  the
parties will cooperate in arranging a mutually  agreeable  alternative to enable
the  Company  to obtain the  benefits  and  assume  the  obligations  under such
Contributed  Contract  as of  the  Effective  Time  or as  soon  as  practicable
thereafter     (including    through    a    sub-contracting,     sub-licensing,
sub-participation or sub-leasing arrangement,  or an arrangement under which the
Person  contributing  such Contributed  Contract would enforce such Contract for
the  benefit  of the  Company,  with the  Company,  to the  extent  permissible,
assuming  such  Person's  executory  obligations  and any and all rights of such
Person against the other party thereto). If the approval of

                                       6



the other party to such Contributed Contract is obtained, such approval will, as
between the Person  contributing  such  Contributed  Contract  and the  Company,
constitute  a  confirmation  (automatically  and without  further  action of the
parties)  that such  Contributed  Contract  is assigned to the Company as of the
Effective  Time, and  (automatically  and without further action of the parties)
that the liabilities with respect to such Contributed Contract are assumed as of
the Effective Time.

          (b) The parties  hereto agree that if any  Contributed  Assets  (other
than any  Separately  Held  Asset) or any claim,  right,  benefit  or  liability
thereunder  are not  transferred  as  provided  hereunder  to the Company at the
Effective  Time as a result  of any  restriction  under  any  Applicable  Law or
Contract that prohibits such transfer or makes such transfer unduly  burdensome,
the party required to contribute such Contributed Assets will use its reasonable
efforts (which shall not require any payment of money to any Third Party by such
party  or any  of  its  Affiliates)  to  obtain  such  Contractual  Consents  or
Governmental  Consents as might be required to consummate the  contributions  in
respect of such assets as soon as practicable  after the Effective Time.  During
the period between the Effective Time and the consummation of such contribution,
such party  shall  operate all such assets  pursuant  to  instructions  from the
Company  and all  benefits  of,  and risks  arising  out of or  related  to, the
ownership  and operation of such assets shall be for the account of the Company.
The parties  hereto  agree that,  at or as  promptly  as  practicable  after the
Effective  Time, they will enter (and will cause the Company and each applicable
Affiliate  and Specified  Subsidiary to enter) into such  agreements as might be
reasonably  required  to  carry  out the  intent  of the  immediately  preceding
sentence,  including  agreements (i) specifying,  to the extent  feasible,  such
assets,  (ii)  setting up separate  accounting  systems for such  assets,  (iii)
providing for  undertaking  by the Company of any indemnity  obligations  of the
contributing  party in respect of such assets (other than such  obligations  set
forth in the Equilon Joint Venture  Documents),  (iv)  providing  that until the
legal ownership is transferred to the Company, each party will treat such assets
in every  respect as being  equitably  owned by the Company as of the  Effective
Time and (v)  providing  such  further  specific  assurances  as the  Company or
another party may reasonably request.

         SECTION 2.05.  Contribution of Pipeline Assets.  (a) At or prior to the
Closing Date:

                                       7





                  (i) Formation of Pipeco.  The Company shall form and establish
         Pipeco  LLC as a  single-member  limited  liability  company  under the
         Delaware Act.

                 (ii)  Formation  of  California  Pipeco.  Shell shall cause SPL
         Holdings to form and establish California Pipeco LLC as a single-member
         limited liability company under the Delaware Act.

          (b) On the Closing Date, effective as of the Effective Time:

                  (i) Shell Pipeline Assets --  Assignments.  Shell shall assign
         or cause to be assigned (1) to the Company,  the Economic  Benefits and
         Detriments of Shell and its Affiliates in each of the Shell Unregulated
         Pipeline  Assets  other than  LOOP,  and (2) to  Pipeco,  the  Economic
         Benefits  and  Detriments  of Shell and its  Affiliates  in each of the
         Shell Regulated Pipeline Assets.

                 (ii) Texaco Pipeline Assets -- Assignments. Texaco shall assign
         or cause to be assigned,  (1) to the Company, the Economic Benefits and
         Detriments  of  Texaco  and  its  Affiliates  in  each  of  the  Texaco
         Unregulated  Pipeline  Assets other than LOOP,  and (2) to Pipeco,  the
         Economic  Benefits and  Detriments of Texaco and its Affiliates in each
         of the Texaco Regulated Pipeline Assets.

                (iii) Assumption by the Company and Pipeco of Economic  Benefits
         and Detriments.

                           (A) The Company  shall assume the  Economic  Benefits
                  and Detriments of the Shell  Unregulated  Pipeline  Assets and
                  the Texaco Unregulated Pipeline Assets assigned to it pursuant
                  to Sections 2.05(b)(i) and (ii). The assignment and assumption
                  of  such  Economic  Benefits  and  Detriments  shall  be  made
                  pursuant to the procedures described in Section 2.04(b); and

                           (B) Pipeco  shall  assume the  Economic  Benefits and
                  Detriments  of the Shell  Regulated  Pipeline  Assets  and the
                  Texaco  Regulated  Pipeline  Assets assigned to it pursuant to
                  Sections  2.05(a)(iii) and (iv). The assignment and assumption
                  of  such

                                       8




                  Economic  Benefits  and  Detriments  shall  be  made
                  pursuant to the procedures described in Section 2.04(b).

          (c) As promptly as practicable after the Closing Date, effective as of
the Effective Time, Shell shall transfer or cause to be transferred:

                  (i)    to the Company, its ownership interest in Odyssey,  its
         equity interest in Inland and its Ram/Powell interest;

                 (ii) to the Company, the right, title and interest of Shell and
         its Affiliates in each of the wholly-owned  unregulated  pipelines that
         are  included  in  Shell  Contributed  Assets  (including  all  related
         equipment, permits and rights of way), upon receipt of all the consents
         from applicable  Governmental  Entities and property owners required to
         transfer the rights of way  (including  land rights and  easements) for
         such pipeline to the Company; and

                (iii) to Pipeco,  (A) SPL  Holdings'  equity  interest in LOCAP,
         upon receipt of approval for such transfer from the other  shareholders
         of LOCAP,  and (B) the equity  interest of Shell and its  Affiliates in
         each of the Shell Joint Interest Stock Companies.

          (d) On the  first  day of the  month in  which  the  appropriate  FERC
adoption  notices and Pipeco's new tariffs become  effective and upon receipt of
permission from the Louisiana Public Service Commission to transfer the pipeline
assets it regulates:

                  (i)    Shell shall:

                           (A) cause Seashell to be liquidated into SPL Holdings
                  and shall thereupon cause SPL Holdings to transfer  Seashell's
                  assets to Pipeco;

                           (B)  form  and   establish   Shell   Pipe  LLC  as  a
                  single-member  limited  liability  company  under the Delaware
                  Act;

                           (C) cause  Shell  Pipe to be merged  into  Shell Pipe
                  LLC, transferring Shell Pipe's equity interest in SPL Holdings
                  to Shell; and

                                       9





                           (D) cause Shell Pipe LLC to be merged into Pipeco.

                 (ii) Texaco  Trading  shall cause Texaco  Pipeline to be merged
          into Pipeco.

          (e) Promptly upon receipt of  permission  from the  California  Public
Utilities  Commission  to  transfer  the Shell  Pipeline  Assets  or the  Texaco
Pipeline  Assets  regulated  by it and upon  receipt  of all the  consents  from
applicable  Governmental  Entities and property  owners required to transfer the
rights of way (including land rights and easements) for all of such pipelines:

                  (i)    Shell shall:

                           (A)  cause  Shell   California   to  be  merged  into
                 California Pipeco; and

                           (B) cause SPL Holdings to transfer  California Pipeco
                 to Pipeco.

                 (ii) Texaco Trading shall:

                           (A) form and establish Texaco  California Pipeco as a
                  single-member  limited  liability  company  under the Delaware
                  Act;

                           (B) cause Texaco  California to be merged into Texaco
                  California Pipeco; and

                           (C) cause Texaco  California Pipeco to be merged into
                  California  Pipeco following the transfer of California Pipeco
                  to Pipeco as set forth in Section 2.05(e)(i)(B).

          (f)  Promptly  upon  receipt  of  all  the  consents  from  applicable
Governmental Entities and property owners required to transfer the rights of way
(including  land rights and easements) for all of the  wholly-owned  unregulated
pipelines that are included in Texaco  Contributed  Assets and in no event prior
to December 31, 1998,

                                       10





                  (i)    Texaco Trading shall cause Texaco CO2 to be merged into
          the Company;

                 (ii) TRMI Holdings shall cause Texaco Trading to be merged into
         the Company,  transferring  to TRMI Holdings  Texaco  Trading's  equity
         interest  in  Texaco  Oilport  Holdings  II,  a  Delaware  corporation,
         Colonial,  Explorer,  West Shore,  Wolverine and any other Texaco Joint
         Interest Stock Company with respect to which rights of first refusal or
         governance issues remain outstanding; and

                (iii)  the  Company  shall  transfer  to  Pipeco  the  ownership
         interest  in  Gaviota  and the  equity  interest  in any  Texaco  Joint
         Interest  Stock  Company  that was  transferred  to it  pursuant to the
         merger of Texaco Trading into the Company.

          (g)   Thereafter,

                  (i) subject to the adoption of revised  governance  provisions
         for LOCAP  satisfactory  to the Company,  TRMI shall transfer to Pipeco
         its equity interest in LOCAP; and

                 (ii) subject to eliminating any rights of first refusal and any
         governance  issues  with  respect to any Texaco  Joint  Interest  Stock
         Company  remaining with TRMI Holdings,  TRMI Holdings shall transfer to
         Pipeco its equity interest in such Texaco Joint Interest Stock Company.

          (h) On or after the date which is more than 12 months  after any other
transfer of ownership interest in LOOP (by any member of LOOP) that would in the
aggregate  constitute a transfer of 50% or more of the total  interests in LOOP,
Shell  and  Texaco  shall  transfer  to the  Company  each of  their  respective
ownership  interest in LOOP or the  Economic  Benefits  and  Detriments  of such
ownership interest.

          (i) Colonial and Plantation.

                  (i) Shell shall transfer or cause to be transferred to Pipeco,
         the equity interest of Shell and its Affiliates in Plantation,  as soon
         as  practicable  after the Closing Date,  effective as of the Effective
         Time, subject to the provisions of Section 4.01.

                                       11



                 (ii) TRMI shall  transfer or cause to be transferred to Pipeco,
         the equity  interest of Texaco and its Affiliates in Colonial,  as soon
         as practicable  after the Effective Time,  subject to the provisions of
         Section 4.01.

          (j) Interim Provisions relating to LOOP.

                  (i) Shell, Texaco and the Company agree that the Company shall
         purchase   (on  a  dollar  for  dollar   basis)  all  of  the   advance
         transportation  credits  acquired by Shell or Texaco as a result of the
         September  1998 LOOP cash call which remain at the time of the transfer
         by Shell and Texaco of their respective LOOP ownership  interest to the
         Company.

                 (ii) The purchase of the advance  transportation credits by the
         Company shall take place within 30 days after the transfer by Texaco or
         Shell of its respective LOOP ownership interest to the Company.

         SECTION   2.06.  Treatment of Transactions.  For all purposes under the
Code and the Regulations, for purposes of maintaining the capital accounts under
Article 4 of the LLC Agreement and for purposes of calculating financial results
of the Company and its  Subsidiaries,  the  Separately  Held  Assets,  the Shell
Plantation  Interest,  the Texaco  Colonial  Interest  and all other assets with
respect to which Economic Benefits and Detriments were transferred in accordance
with this  Agreement  shall be deemed to be contributed to the Company as of the
Effective  Time.  After the Effective  Time, all items of income,  gain, loss or
deduction  relating  to such  assets  shall be  deemed  to be items  derived  or
incurred by the Company.  No adjustments to capital  accounts shall be made with
respect to any payments made pursuant to Section 4.01(c) or 4.01(d), as the case
may be.

         SECTION 2.07.  Instruments of Transfer.  (a) At the  Closing, Shell and
Shell Newco shall deliver such Shell Transfer  Instruments  (other than those to
be delivered at a later time  pursuant to Section 2.05 or Section  5.01(a)),  in
form and  substance  reasonably  satisfactory  to TRMI, as shall be necessary or
desirable to convey the Shell Contributed Assets to the Company.

          (b) At the Closing,  Texaco,  TRMI,  TRMI Holdings,  Texaco  Pipeline,
Texaco  Trading,  Texaco Convent and Texaco  Anacortes shall deliver such Texaco
Transfer  Instruments (other than those to be delivered at a later time pursuant
to
                                       12




Section  2.05  or  Section  5.01(a)),   in  form  and  substance  reasonably
satisfactory  to Shell  Newco,  as shall be necessary or desirable to convey the
Texaco Contributed Assets to the Company.



                                    ARTICLE 3

                            ASSUMPTION OF LIABILITIES

         SECTION 3.01.  Assumed Liabilities and Obligations; Exclusions.  (a) On
the Closing Date,  effective as of the Effective  Time, the Company shall assume
and  thereafter  pay,  perform  or  discharge  the  Assumed  Liabilities.   Such
assumption  may be effectuated by the Company making full payments in respect of
any Assumed  Liability at the time of the discharge of such Assumed Liability to
any Person which,  after the Effective Time,  remained liable in respect of such
Assumed Liability and thereafter discharged such Assumed Liability in accordance
with the terms of the agreement or instrument under which such Assumed Liability
arose (but only to the extent that such  discharge  was in  accordance  with the
terms of the relevant  agreement  or  instrument  as in effect at the  Effective
Time).

          (b) Upon  the  terms  and  subject  to the  conditions  hereof  and in
consideration  of the transfer of the  Contributed  Assets,  the Company  shall,
effective as of the Effective  Time,  perform and discharge all  obligations  of
Shell Newco,  TRMI, TRMI Holdings,  Texaco  Pipeline,  Texaco Convent and Texaco
Trading under the Contributed Contracts.



                                    ARTICLE 4

                             SEPARATELY HELD ASSETS


         SECTION  4.1.  Separately  Held  Assets.  (a) (i)  Promptly  upon   the
consummation  of any sale of the Shell Oahu  Distribution  Assets (as defined in
the  Consent  Decree),  Texaco  or its  Affiliates  shall  assign or cause to be
assigned to the Company  all of its and its  Affiliates'  interest in the Texaco
Oahu  Distribution  Assets (as defined in the Consent  Decree) or (ii)  promptly
upon the consummation of any sale of the Texaco Oahu Distribution  Assets, Shell
Newco

                                       13




shall  assign  or  cause  to be  assigned  to the  Company  all of its  and  its
Affiliates' interest in the Shell Oahu Distribution Assets.

          (b) (i)  Promptly  upon  the  consummation  of any  sale of the  Shell
Plantation  Interest,  Texaco  or its  Affiliates  shall  assign  or cause to be
assigned  to Pipeco the Texaco  Colonial  Interest,  or (ii)  promptly  upon the
consummation  of any sale of the Texaco  Colonial  Interest,  Shell  Newco shall
assign or cause to be assigned to Pipeco the Shell Plantation Interest, subject,
in each case, to the restrictions set forth in Section 2.05 of this Agreement.

          (c) (i) Promptly upon the  consummation  of any sale of any Separately
Held Assets, the Shell Plantation Interest or the Texaco Colonial Interest,  the
party  consummating  such sale shall  deliver to the Company the Net Proceeds of
such sale. With respect to the portion of the consideration which is received in
the form of other  assets,  (x) if the  business  conducted  with such assets is
within the scope of the Company  Business,  such assets shall be  contributed to
the  Company  or (y) if such  assets  are not  within  the scope of the  Company
Business,  the Fair Market  Value of such  assets  shall be  contributed  to the
Company.

           If  the  parties  cannot  agree  on  the  Fair  Market  Value  of the
securities or assets  included in the  consideration  received within 30 days of
the  acquisition  of such assets or  securities,  the Company shall select an IB
Firm to determine  the Fair Market Value of such assets or  securities.  Such IB
Firm shall, within 45 days of its retention,  determine the Fair Market Value of
such assets or securities,  and such determination  shall be final,  binding and
conclusive upon the parties hereto.  The fees and expenses of such IB Firm shall
be borne by the Company.

          (d) In  connection  with any sale  described in Section  4.01(c),  the
Company shall assume all of the liabilities,  obligations and indemnities of the
party that is selling  assets and which arise under any agreement  that provides
for the disposition of any Separately Held Assets. If the Operating  Expenses of
such asset in the period between the Effective Time and the  disposition  exceed
the gross  earnings  from such asset  during such  period,  the  Company  shall,
promptly upon the consummation of any disposition  described in Section 4.01(c),
pay to the party disposing of such asset the amount of such excess. If the gross
earnings  from such  asset in the  period  between  the  Effective  Time and the
disposition  exceed the  Operating  Expenses from such asset during such period,
the party  disposing  such asset shall,  promptly upon the  consummation  of any
disposition  described in Section 4.01(c), pay to the Company the amount of such
excess.

                                       14



                                    ARTICLE 5

                          CERTAIN POST-CLOSING MATTERS

         SECTION  5.01.  Post-closing  Recordings.   (a)  Shell  Newco  (or  the
applicable Affiliate of Shell Newco) will use its best efforts to (i) deliver or
cause to be  delivered  to the  Company  (x) deeds to be  recorded  for all real
property that is included in the Shell Contributed  Assets, (y) all transfer and
gains  tax  returns  required  by any  Governmental  Entity  in  respect  of the
properties  transferred  by such deeds,  and (z) subject to Section 2.04 hereof,
assignments  of lease to be recorded  with  respect to all leased real  property
that is included in the Shell  Contributed  Assets and (ii) cause such deeds and
such assignments of leases (with respect to recorded leases) to be recorded,  in
each case,  within 180 days after the later of (A) the  Closing  Date or (B) the
date on which the Contributed Asset is transferred. Promptly upon receipt of any
evidence of recordation  in connection  with the recording of deeds provided for
in this  Section  5.01(a),  Shell Newco (or the  applicable  Affiliate  of Shell
Newco) shall provide the Company with evidence of such recording. Costs of title
and survey documentation,  recordation, transfer taxes, deed stamps, sales taxes
and similar charges relating to Shell Transfer Instruments  delivered under this
Section 5.01(a) or otherwise arising out of the transfers  contemplated pursuant
to this  Asset  Transfer  Agreement  shall  be  borne  by  Shell  Newco  (or the
applicable Affiliate of Shell Newco).

          (b)  TRMI (or the  applicable  Affiliate  of  TRMI)  will use its best
efforts to (i) deliver or cause to be  delivered  to the Company (x) deeds to be
recorded for all real property included in the Texaco  Contributed  Assets,  (y)
all  transfer  and gains tax  returns  required  by any  Governmental  Entity in
respect of the properties  transferred by such deeds, and (z) subject to Section
2.04 hereof, assignments of lease to be recorded with respect to all leased real
property that is included in the Texaco  Contributed  Assets and (ii) cause such
deeds and such  assignments  of leases (with  respect to recorded  leases) to be
recorded,  in each case, within 180 days after the later of (A) the Closing Date
or (B) the date on which the  Contributed  Asset is  transferred.  Promptly upon
receipt of any evidence of recordation in connection with the recording of deeds
provided for in this Section 5.01(b), TRMI (or the applicable Affiliate of TRMI)
shall  provide the Company with evidence of such  recording.  Costs of title and
survey documentation,  recordation, transfer taxes, deed stamps, sales taxes and
similar  charges  relating to 

                                       15



Texaco  Transfer  Instruments  delivered under this Section 5.01(b) or otherwise
arising  out of the  transfers  contemplated  pursuant  to this  Asset  Transfer
Agreement shall be borne by TRMI (or the applicable Affiliate of TRMI).

          (c) Except with respect to  Contributed  Assets  covered under Section
2.04, all deeds and  assignments of lease shall be dated the Effective Time, and
notwithstanding  the date of recordation  thereof, as between the parties hereto
the  date of  transfer  with  respect  to the  Contributed  Assets  shall be the
Effective Time.  Notwithstanding the foregoing,  in the event that any penalties
or  interest  will be payable to any  Governmental  Entity  with  respect to any
recording or transfer tax or fee due to any  difference in the date of the deeds
and the recorded  assignments of lease and the date of actual  recordation,  the
party  submitting  such deed or assignment of lease may date such document as of
such later date as may be necessary to prevent the  incurrence of such penalties
or  interest,  it being  agreed  that  notwithstanding  the date of such deed or
assignment of lease,  as between the parties,  the date of transfer shall be the
Effective  Time.  During the period  between the Effective  Time and the date of
recordation of the deeds and any recorded  assignments of lease,  the transferor
of the relevant  Contributed Assets shall take no action adversely affecting the
Company's title thereto.







         SECTION  5.02. Access to and Retention of Records.  As of the Effective
Time,  the Company shall  acquire and take  possession of the Books and Records,
provided that if any part of such Books and Records cannot without  unreasonable
effort be  separated  from  books,  records,  files  and other  data that do not
constitute  Books and  Records  or  relate to  services  to be  provided  to the
Company,  then Shell Newco, TRMI or their relevant  Affiliates,  as the case may
be, shall retain such part of the Books and Records and make such part available
to the Company as provided  herein.  Each of the parties  hereto  agrees that it
shall,  and shall cause its  relevant  Affiliates  to, (i) preserve and keep the
Books and Records or the parts  thereof in its  possession,  as the case may be,
(A) in accordance with their respective records retention  programs,  or (B) for
any  longer  period as may be  required  by any  Governmental  Entity or ongoing
litigation or as required by any of the Equilon Joint Venture Documents and (ii)
during such period, subject to the Equilon Only Confidentiality Agreement or the
Confidentiality  Agreement,  shall  as  applicable,  allow  each  other  party's
counsel,  accountants,  officers,  employees and other representatives access to
such Books and Records  upon such other  party's  reasonable  request and during
normal business hours for the purpose of examining and, at the examining party's
expense,  copying  them,  to the  extent  reasonably  required  by such party in
connection  with (A) any  insurance  claims  by,

                                       16



legal proceedings against or governmental investigations of, such party, (B) the
preparation of any tax return required to be filed by such party, the defense of
any audit,  examination,  administrative appeal or litigation of any tax return,
or (C) any other reasonable  business purpose reasonably related to such party's
or its Affiliates' Ownership Interest.

         SECTION  5.03.  Availability of Personnel.  Each of the  parties hereto
shall afford,  and shall cause their  respective  Affiliates to afford,  to each
other on a reasonable  basis their  respective  personnel as necessary to permit
the Company, as the case may be, to provide background  information necessary to
(i) prepare tax returns,  (ii)  prosecute  Claims or (iii)  investigate,  defend
against,  or otherwise  oppose any pending or threatened Claim against any party
or any of such  party's  Affiliates,  as the  case  may be,  in  each  case,  in
connection  with  the  Contributed  Assets.  The  party  affording  its,  or its
Affiliates', personnel shall be reimbursed by the other party for its reasonable
incremental  out-of-pocket expenses of such personnel,  but shall not charge any
other fee to any other party hereto.

         SECTION  5.04. Mail;  Payments.  (a) Each  of  Shell  Newco, TRMI, TRMI
Holdings,  Texaco Pipeline,  Texaco Trading, Texaco Convent and Texaco Anacortes
authorizes and empowers the Company from and after the Effective Time to receive
and open all mail and other communications directed to any of Shell Newco, TRMI,
TRMI Holdings, Texaco Pipeline, Texaco Trading, Texaco Convent, Texaco Anacortes
or their  Affiliates and received by the Company,  and, except for matters as to
which Shell Newco or TRMI is providing  indemnification  under any Equilon Joint
Venture Document,  to act with respect to such  communications in such manner as
the Company may elect if such  communications  relate to the Contributed Assets.
If such  communications  do not  relate to the  Contributed  Assets or relate to
matters  as to which  Shell,  Texaco or any of their  respective  Affiliates  is
providing  indemnification under any Equilon Joint Venture Document, the Company
shall  forward  the same  promptly  to the party  (or  parties)  providing  such
indemnification  or to whom such  communications  relate.  Each of Shell  Newco,
TRMI, TRMI Holdings,  Texaco Pipeline, Texaco Trading, Texaco Convent and Texaco
Anacortes  shall,  and shall  cause their  respective  Affiliates  to,  promptly
deliver to the Company any cash, checks,  other instruments of payment and funds
to which the  Company  is  entitled  and shall  hold such  cash,  checks,  other
instruments  of payment and funds in trust for the Company until such  delivery.
The Company shall promptly deliver to Shell Newco,  TRMI, TRMI Holdings,  Texaco
Pipeline,  Texaco Trading, Texaco Convent, Texaco Anacortes or their Affiliates,
as applicable,  any cash,  checks or

                                       17



other  instruments  of payment to which such entity is  entitled  and shall hold
such cash, checks or other instruments of payment in trust for such entity until
such delivery.

          (b) The Company  authorizes  and  empowers  Shell  Newco,  TRMI,  TRMI
Holdings,  Texaco Pipeline,  Texaco Trading, Texaco Convent and Texaco Anacortes
and their  Affiliates  from and after the Effective Time to receive and open all
mail and other  communications  directed to the Company and received by any such
entity,  and to act with respect to such  communications  in such manner as such
entity may elect if such  communications do not relate to the Contributed Assets
or do relate to  matters  as to which such  entity or any of its  Affiliates  is
providing  indemnification  under any Equilon Joint Venture Document or, if such
communications  do relate to the Contributed  Assets and not to such indemnified
matters, to forward the same promptly to the Company.

         SECTION 5.05. Existing Insurance Coverage.  If, after December 1, 1997,
any of Shell Newco, TRMI, TRMI Holdings, Texaco Pipeline, Texaco Trading, Texaco
Convent, Texaco Anacortes or their Affiliates receives,  directly or indirectly,
from any insurer cash  proceeds  attributable  to (i) casualty and property (but
not liability or business  interruption for periods prior to the Effective Time)
insurance  coverage  applicable to any of the Contributed Assets with respect to
any occurrence or any series of related occurrences on or after December 1, 1997
or (ii) real  property  title  insurance  in respect  of any of the  Contributed
Assets,  which proceeds,  in either the case of clause (i) or (ii), aggregate in
excess of $1,000,000 for such occurrence or series of related occurrences,  then
such  recipient  shall pay over such cash  proceeds to the  Company  (net of any
deductible,  co-payment, retro fees, premiums, costs or other charges payable to
the insurance  carrier or  obligations  to reimburse  the insurance  carrier for
which it is liable and net of the cost of collection)  except to the extent that
(x) the  damage or loss  incurred  as a result of such  occurrence  or series of
occurrences  was  repaired,  restored  or  reimbursed  by or on  behalf  of such
recipient  prior to the Effective  Time or will be obligated to be reimbursed by
such recipient  pursuant to the Equilon Joint Venture Documents or (y) Shell and
Texaco have otherwise  expressly  agreed in writing that such proceeds shall not
be paid over to the Company.  Any such  payment  paid over to the Company  shall
reduce any amounts  payable by such recipient or its Affiliates  with respect to
such  occurrence  under Article 8 of the Master  Agreement.  Any other insurance
proceeds received by any of Shell Newco,  TRMI, TRMI Holdings,  Texaco Pipeline,
Texaco  Trading,  Texaco  Convent,  Texaco  Anacortes

                                       18



or their  Affiliates  with respect to any  occurrence  or series of  occurrences
prior to the Effective Time shall be retained by such recipient.



                                    ARTICLE 6

                         REPRESENTATIONS AND WARRANTIES

         SECTION 6.01.  Representations  and  Warranties of  Shell Newco.  Shell
Newco  represents  and warrants to each of the other parties  hereto as follows;
provided  that Shell Newco shall have no  liability to any other party hereto or
any other Person (including any Person indemnified under Article 8 of the Master
Agreement)  for the breach of any  representation  or warranty  hereunder to the
extent that the facts or circumstances that gave rise to such breach:

                  (i) were  actually  disclosed in writing in the Due  Diligence
         Process  to any of the Due  Diligence  Representatives  of  such  other
         party;

                 (ii) would  reasonably  be  expected to be  discovered  by such
         other party based on facts or  circumstances  so  disclosed  in writing
         during the Due Diligence Process; or

                (iii)  were  actually  known to such  other  party or such other
         party's Due Diligence Representatives on or prior to the Closing Date.

          (a) Good,  Indefeasible or Marketable  Title.  With such exceptions as
would not,  individually  and in the aggregate,  have a Company Material Adverse
Effect,  each entity  contributing Shell Contributed Assets has good (and in the
case of interests in real property,  indefeasible  or  marketable)  title to all
Shell Contributed  Assets so contributed  thereby,  free of all Liens other than
(x)  Permitted  Exceptions  and  (y)  provisions  in  contracts,   licenses  and
agreements  which  prohibit  or  otherwise  restrict  assignment  and,  upon the
granting of the deeds and other instruments of transfer provided for herein, the
Company  shall  receive  good (and in the case of  interests  in real  property,
indefeasible or marketable) title to the Shell  Contributed  Assets as described
above.

         For the  avoidance of doubt,  in the event that any  representation  or
warranty with respect to title to the Shell Contributed  Assets set forth in any
of  the  Shell  Transfer  Instruments  or  implied  by  Applicable  Law  may  be
interpreted to 

                                       19



create  representations or warranties other than those set forth in this Section
6.01(a), the representation and warranty set forth in this Section 6.01(a) shall
govern and such other  representations  and warranties shall be without force or
effect.

          (b) Pro Forma  Financial  Information.  With such  exceptions as would
not, individually and in the aggregate, have a Company Material Adverse Effect:

                  (i) the  Shell  Pro  Forma  Financial  Information  represents
         Shell's good faith  allocation  of the results of  operations  and cash
         flows  of  Shell  Oil  Products  Company's   refining,   marketing  and
         transportation  business,  for the periods indicated therein, among (A)
         the Shell  Valuated  Units,  (B) the  businesses  being  contributed to
         Eastco, (C) Shell's interest in the business conducted by DPRLP and (D)
         the Shell Excluded Assets;

                 (ii)  the  Shell  oil  products  business  segment  information
         referred  to in clause (i) was  included in Shell's  audited  financial
         statements for the periods indicated therein; and

                (iii)  the  Shell  Pro  Forma  Financial   Information  was  not
         necessarily prepared in accordance with GAAP, but was prepared with due
         care  after  reasonable  inquiry  and  is a  fair  presentation  of the
         financial  performance  of the Shell  Valuated  Units  for the  periods
         indicated therein.

          (c) Shell Contributed  Assets.  With  such  exceptions  as would  not,
individually  and in the  aggregate,  have a Company  Material  Adverse  Effect,
except for the Shell Excluded Assets and the Shell Intellectual Property Rights,
the Shell Contributed  Assets constitute all of the assets used for or necessary
to the operation of the Shell Valuated Units in the ordinary  course of business
and in substantially  the same manner as such Shell Valuated Units were operated
as of December 1, 1997.

         SECTION 6.02.  Representations  and  Warranties  Regarding  the  Texaco
Principal Member Group.  Each of TRMI, TRMI Holdings,  Texaco  Pipeline,  Texaco
Trading,  Texaco Convent and Texaco  Anacortes  represents and warrants to Shell
Newco as follows;  provided that TRMI, TRMI Holdings,  Texaco  Pipeline,  Texaco
Trading,  Texaco  Convent and Texaco  Anacortes  shall have no  liability to any
other party hereto or any other Person  (including any Person  indemnified under
Article 8 of the  Master  Agreement)  for the  breach of any  

                                       20



representation   or  warranty   hereunder  to  the  extent  that  the  facts  or
circumstances that gave rise to such breach:

                  (i) were actually disclosed  in  writing  in the Due Diligence
         Process  to  any  of  the  Due  Diligence Representatives of such other
         party;

                 (ii) would  reasonably  be  expected  to  be discovered by such
         other  party  based  on  facts or circumstances so disclosed in writing
         during the Due Diligence Process; or

                (iii) were  actually  known to such  other  party or such  other
         party's Due Diligence Representatives on or prior to the Closing Date.

          (a) Good,  Indefeasible or Marketable  Title.  With such exceptions as
would not,  individually  and in the aggregate,  have a Company Material Adverse
Effect,  each entity contributing Texaco Contributed Assets has good (and in the
case of interests in real property,  indefeasible  or  marketable)  title to all
Texaco Contributed Assets so contributed  thereby,  free of all Liens other than
(x)  Permitted  Exceptions  and  (y)  provisions  in  contracts,   licenses  and
agreements  which  prohibit  or  otherwise  restrict  assignment  and,  upon the
granting of the deeds and other instruments of transfer provided for herein, the
Company  shall  receive  good (and in the case of  interests  in real  property,
indefeasible or marketable) title to the Texaco  Contributed Assets as described
above.

         For the  avoidance of doubt,  in the event that any  representation  or
warranty with respect to title to the Texaco Contributed Assets set forth in any
of  the  Texaco  Transfer  Instruments  or  implied  by  Applicable  Law  may be
interpreted to create  representations  or warranties other than those set forth
in this  Section  6.02(a),  the  representation  and  warranty set forth in this
Section 6.02(a) shall govern and such other representations and warranties shall
be without force or effect.

          (b) Pro Forma Financial Information.  With  such  exceptions  as would
not, individually and in the aggregate, have a Company Material Adverse Effect:

                  (i) the  Texaco  Pro  Forma  Financial  Information represents
         Texaco's good faith  allocation  of the results of operations  and cash
         flows  of  TRMI's  and  Texaco   Trading's   refining,   marketing  and
         transportation

                                       21




         business,  for  the  periods  indicated therein, between (A) the Texaco
         Valuated Units and (B) the Excluded Assets;

                 (ii) the information referred to in clause  (i) was included in
         Texaco's  consolidated  audited  financial  statements  for the periods
         indicated therein; and

                (iii) the  Texaco  Pro  Forma  Financial   Information  was  not
         necessarily prepared in accordance with GAAP, but was prepared with due
         care  after  reasonable  inquiry  and  is a  fair  presentation  of the
         financial  performance  of the Texaco  Valuated  Units for the  periods
         indicated therein.

          (c) Texaco Contributed  Assets.  With such  exceptions  as would  not,
individually  and in the  aggregate,  have a Company  Material  Adverse  Effect,
except for the Texaco  Excluded  Assets  and the  Texaco  Intellectual  Property
Rights,  the Texaco  Contributed Assets constitute all of the assets used for or
necessary to the operation of the Texaco  Valuated Units in the ordinary  course
of business and in  substantially  the same manner as such Texaco Valuated Units
were operated as of December 1, 1997.



                                    ARTICLE 7

                                  MISCELLANEOUS



         SECTION 7.01. Further Assurance.  From and  after  the Effective  Time,
each of the  parties  hereto  shall,  at any time and from time to time,  at the
request of any other party hereto,  make,  execute and deliver,  or use its best
efforts  to  cause  to  be  made,  executed  and  delivered,  such  assignments,
conveyances,  deeds, bills of sale,  filings and other  instruments,  agreements
(including any agreements which may be necessary or desirable in connection with
the making of any filing or the obtaining of any approval in any  jurisdiction),
consents  and  assurances  and take or cause to be taken all such  action as the
parties hereto may  reasonably  request for the effectual  consummation  of this
Asset  Transfer  Agreement  and the Equilon Joint  Venture  Transactions.  It is
understood  that this Section 7.01 may be applied to require the  assignment  or
conveyance  (i) to the  Company  of  assets  owned or leased by any party or its
Affiliates that constitute Shell Contributed Assets or Texaco Contributed Assets
but by mistake  were not  assigned or

                                       22



conveyed to the Company at the Effective Time, or (ii) to any party or Affiliate
of a party of assets  transferred  to the  Company  that were not  listed on the
Asset  List (or was listed on the Asset  List but was an  Excluded  Asset or the
non-contributed  portion of a Shell  Common  Contract or Shell Shared Asset or a
Texaco  Common  Contract)  and  are  not  Shell  Contributed  Assets  or  Texaco
Contributed Assets, but were assigned or conveyed by mistake to the Company.

         SECTION 7.02. Effectiveness.  This  Asset  Transfer Agreement shall  be
effective as of the Effective Time.

         SECTION 7.03. Exclusivity. For avoidance of doubt,  Section 8.01 of the
Master Agreement shall constitute the exclusive remedy for any misrepresentation
or breach of  warranty  or  covenant  contained  in or arising  under this Asset
Transfer Agreement.

                                       23





         IN WITNESS WHEREOF,  the parties hereto have caused this Asset Transfer
Agreement to be duly executed as of the day and year first above written.


                                            TEXACO INC.


                                            By     G. F. Tilton
                                                --------------------------------


                                            TEXACO REFINING AND MARKETING INC.


                                            By     Wilson L. Berry, Jr.
                                                --------------------------------


                                            TRMI HOLDINGS INC.


                                            By     G. F. Tilton
                                                --------------------------------


                                            TEXACO PIPELINE INC.


                                            By     Arthur Nicoletti
                                                --------------------------------


                                            TEXACO TRADING AND
                                                TRANSPORTATION INC.


                                            By     Arthur Nicoletti
                                                --------------------------------


                                       23



                                            TEXACO CONVENT
                                                REFINING COMPANY


                                            By     T. P. Dougherty, Jr.
                                                --------------------------------
 

                                            TEXACO ANACORTES
                                                COGENERATION COMPANY


                                            By     Louise Nemanich
                                                --------------------------------


                                            SHELL OIL COMPANY


                                            By     J. M. Morgan
                                                --------------------------------
 

                                            SOPC HOLDINGS WEST LLC


                                            By     M. R. Williams
                                                --------------------------------


                                            EQUILON ENTERPRISES LLC


                                            By     J. M. Morgan
                                                --------------------------------


                                                                    EXHIBIT 99.1

                 TEXACO, SHELL ANNOUNCE COMPLETION OF WESTERN
                            U.S. DOWNSTREAM ALLIANCE:
                               EQUILON ENTERPRISES

FOR  IMMEDIATE  RELEASE:  FRIDAY,  JANUARY  16, 1998.
         WHITE PLAINS,  N.Y., Jan. 16, 1998 -- Texaco Inc. and Shell Oil Company
today  announced the formation and  operational  start up of their joint venture
combining  major  elements of their  western and  midwestern  U.S.  refining and
marketing businesses and their nationwide trading, transportation and lubricants
businesses. Shell will have 56 percent ownership and Texaco will hold 44 percent
of the company.
         The new company will operate as Equilon Enterprises LLC. Equilon is not
intended  to be used as a  product  or  brand  name.  The  location  of  Equilon
Enterprises' corporate center will be announced at a later date.
         James M. Morgan,  president  and chief  executive  officer of Shell Oil
Products  Company,  will be  president  and chief  executive  officer of Equilon
Enterprises.
         "This  combination  of  Texaco  and  Shell  assets  will  allow  us  to
accomplish a fundamental change in the way we operate our downstream businesses,
improve performance and create an environment to grow the business," said Texaco
Chairman and CEO Peter I. Bijur and Shell Oil Company  President  and CEO Philip
J. Carroll.
  "Ultimately,  this alliance will generate new opportunities for our
customers, employees, vendors and the communities where we work and live."
         "Equilon Enterprises will market gasoline and other products under both
the Shell and Texaco  brands,  which are key  recognizable  strengths of the new
company," said Morgan. "These quality brands and our highly talented, innovative
people promise to be a winning combination in every respect."
         Texaco, Shell and Saudi Refining,  Inc. are finalizing agreements for a
separate  joint  venture  involving  their  eastern and Gulf Coast  refining and
marketing  businesses.  All  three  parties  are  optimistic  that  this  second
transaction will be concluded early in 1998. The eastern operations company will
be owned 35 percent by Shell,  32.5  percent by Texaco and 32.5 percent by Saudi
Refining,  Inc. The  exploration,  production  and chemical  businesses of these
companies are not included in the alliance.
         Texaco Inc. is  based  in  White  Plains,  N.Y. Shell Oil Company is  a
Houston-based  affiliate  of the Royal  Dutch/Shell  Group of  Companies.  Saudi
Aramco is the  state-owned  oil  company  of the  kingdom of Saudi  Arabia.  The
company's U.S. corporate affiliate Saudi Refining, Inc. is based in Houston.


For more information contact:    Shell Oil Company
                                 Kitty Borah, Stacy Hutchinson     713-241-4544

                                 Texaco
                                 Chris Gidez (New York)            914-253-4042
                                 Kelly McAndrew (New York)         914-253-6295
                                 Paul Weeditz (Houston)            713-752-6475

                                 Saudi Refining, Inc.
                                 Henry Hayes                       713-432-4149
                                 Bill Tracy                        713-432-4645


NOTE TO EDITORS: Additional information on Equilon Enterprises' senior
                 leadership team is available on the World Wide Web at:

http://www.shellus.com
http://www.texaco.com