MOSCOW (MRC) -- Chevron outlined a plan to expand oil and gas production through 2025, but without spending significantly more, and pledged to limit the pace of growth of its carbon emissions, reported Reuters.
Falling energy demand due to pandemic-driven lockdowns sent the industry into a tailspin in 2020 and led Chevron to a USD5.54 billion annual loss, its first since 2016.
Investors have been pressuring Chevron and other oil companies to hold spending flat and reduce emissions that contribute to climate change. Competitors Royal Dutch Shell , BP Plc and Exxon Mobil have vowed to hold output flat or allow it to decline to meet climate or financial goals.
Chief Executive Officer Michael Wirth told analysts in a presentation on Tuesday that Chevron can achieve its output and carbon goals regardless of oil price fluctuations.
"We're not betting on higher prices to bail us out," he said in an apparent dig at Exxon and others counting on oil's rebound to cover dividends and debt repayments. By 2025, Chevron can more than double its return on capital employed, a measure of how efficiently a company invests, to more than 10%.
Still, some analysts were unimpressed with the climate and emissions goals, viewing them as too modest. Shares dipped a fraction from a one-year high to USD109.50.
A forecast of USD25 billion in free cash flow through 2025 after dividends and project outlays is "underwhelming," said Biraj Borkhataria, an analyst with RBC Capital Markets.
The carbon intensity goals "lag the industry average" and "focus on its controllable elements" rather than building new business lines," that could contribute to profits, he added.
The goal of investing about 2% of overall project spending on lower carbon emissions, indicates Chevron is not pivoting its underlying operations, said Pavel Molchanov, analyst at Raymond James.
"Others have longer-dated goals," Chevron Chief Financial Officer Pierre Breber said in an interview. Chevron's climate targets for this decade are "going to be very competitive with anybody," he said.
Other oil majors have outlined plans to invest in renewable energy and carbon capture and storage.
Still, Chevron said through 2025 it would fix annual capital outlays at around USD14 billion and increase oil and gas output by about 3.5% on a compound annual basis.
It plans to beef up investments through 2025 in the Permian basin of Texas and New Mexico, the top US shale field, as costs of a major expansion in Kazakhstan decrease.
Overall, it aims to boost output to around 3.5 million barrels of oil and gas per day (mbpd) by 2025, from about 2.98 mbpd last year. Permian production could reach 1 million barrels per day.
Chevron will be the largest player in the Permian basin with a "wide margin on production volumes over ExxonMobil, roughly 40% greater," said Peter McNally, analyst at Third Bridge.
Its climate focus includes a 35% reduction in its carbon emissions rate per unit of production by 2028. Routine flaring of natural gas, a contributor to climate warming, will halt by 2030, officials said.
The intensity target is less ambitious than rivals that look to reduce absolute emissions of carbon gases. Releases overall can increase if production rises, and Chevron failed to set a net zero emissions target like European and some US peers.
Chevron is on a "pathway toward net zero" emissions, Wirth said on Tuesday, but added that technology breakthroughs, carbon markets and policy changes are needed.
"We'll make more specific commitments as time unfolds," he said.
Chevron, which acquired Noble Energy during last year's market lows, raised to USD600 million its expected cost savings from the deal, helping lower operating expenses 10% this year compared with 2019.
As MRC informed earlier, in March 2018, Chevron Phillips Chemical, part of Chevron Corp, successfully introduced feedstock and commenced operations of a new ethane cracker at its Cedar Bayou facility in Baytown, Texas. At peak production, the unit will produce 1.5 million metric tons/3.3 billion lbs. per year. This unit is one of the largest and most energy efficient crackers in the world. In September 2017, the company announced the successful commissioning and start-up of two new Marlex polyethylene (PE) units in Old Ocean, Texas, based on the company’s proprietary MarTech technologies. Together, these assets form the bulk of the company’s US Gulf Coast Petrochemicals Project (USGCPP), which was first announced in 2011.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.
Headquartered in San Ramon, California, Chevron Corporation is the the second-largest integrated energy company in the United States and among the largest corporations in the world. Chevron is involved in upstream activities including exploration and production, downstream activities including refining, marketing and transportation, and advanced energy technology. Chevron is also invested in power generation and gasification processes.