At a meeting with financial analysts in New York, U.S. energy behemoth Chevron Corp. (CVX) unveiled its business strategy. In particular, the company outlined plans to advance its upstream long-term growth on the back of huge natural gas projects in Australia, while continuing to streamline its downstream (refinery, marketing and transportation) operations that has been struggling with weak demand. Chevron will now focus on growth in Asia-Pacific markets and in its gas business.
The super major sees overall 2012 production of about 2.68 million oil-equivalent barrels per day (MMBOE/d), up marginally (by 0.26%) year-over-year. Chevron also confirmed its 2012 capital expenditure budget of $32.7 billion, some 13% more than a year ago.
Of the total, a large percentage of funds, or roughly 87%, will go towards oil and gas exploration projects worldwide – mainly on liquefied natural gas (LNG) mega-projects in Australia and Angola – while 11% has been allocated for downstream businesses.
The San Ramon, California-based firm stressed that it will go on with the restructuring of some refining and marketing properties as part of the streamlining program that started in 2010. In recent times, Chevron’s downstream results have been sharply lower, adversely affected by depressed refining margins.
However, despite the bearish downstream environment (sluggish demand and surplus capacity), the company plans to retain its West Coast units at a time when other operators – including rival BP Plc (BP) – are exiting.
While continuing with its portfolio optimization in the refining business, Chevron will focus more on the upstream business, which boasts of a strong portfolio of pipeline projects.
Specifically, Chevron has decided to concentrate on natural gas and Asia Pacific assets. The second-largest U.S. oil company by market value after ExxonMobil Corp. (XOM) also said that it expects its oil and gas production to increase 20% by 2017 – more than twice the rate of growth from 2003 to 2010 – mainly driven by the big Australian gas projects (Gorgon and Wheatstone).
Between 2012 and 2014, the integrated major is looking to start 11 new upstream projects with an investment of at least $1 billion.
Like its rivals, Chevron sees natural gas playing an important part in its future. More importantly, the company – which currently retains a Zacks #3 Rank (short-term Hold rating) – plans to intensify drilling for unconventional gas and oil reserves in the U.S. and elsewhere.
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