Chevron likely to see its 2020 capex fall by 25%

Oil&Gas Materials 22 January 2021 09:58 (UTC +04:00)
Chevron likely to see its 2020 capex fall by 25%

BAKU, Azerbaijan, Jan.22

By Leman Zeynalova – Trend:

The US-based Chevron will likely see its 2020 capex fall to USD14.5bn from an initial 2020 budget of USD20bn, a shortfall of nearly 25 percent, Trend reports citing Fitch Solutions.

The company has issued guidance for a similar capex spend in 2021 at USD14bn as of late 2020, with about USD11bn earmarked for upstream with the bulk expected to be spent on maintaining production.

“The focus on the reduced capex will see short-cycle investment deferred and expenditure made to support to reducing costs and increasing operational efficiency. In addition, capital will be spent where it is can be used to improve or preserve long-term value, such as at the Tengiz project,” the Fitch Solutions believes.

The company said the capex will also be directed towards completing projects already underway and maintaining capex levels at existing projects to ensure safety and reliability.

“Efforts to reduce costs will see continued exploration efforts in the key proven basins and keeping Permian assets in a ready state to ramp up quickly should market conditions improve. Chevron also states that they will ‘pace’ pre-FID projects which will likely include delays and deferment of appraisal and FEED studies to move cost further out in subsequent annual budgets. Capex commitments as a result of the acquisition of Noble Energy appear less than USD1bn given Noble’s mix of producing assets over long-cycle project development and near-term pipeline of short-cycle investment which can be deferred,” reads a report released by Fitch Solutions.

Chevron Corporation has announced a 2021 organic capital and exploratory spending program of $14 billion and lowered its longer-term guidance to $14 to $16 billion annually through 2025. This capital outlook will continue to prioritize investments that are expected to grow long-term value and deliver higher returns and lower carbon, including over $300 million in 2021 for investments to advance the energy transition.

Chevron’s capital guidance of $14 to $16 billion annually from 2022 to 2025 is significantly lower than its previous guidance of $19 to $22 billion, which excluded Noble Energy. During this time period, as capital is expected to decrease for a major expansion in Kazakhstan, the company expects to increase investments in a number of Chevron’s advantaged assets, including its world class position in the Permian, other unconventional basins, and the Gulf of Mexico.


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