Chevron Corp. CEO Michael Wirth on March 1 expressed concern over the “tragic situation” unfolding in Ukraine, forcing oil companies to make “very difficult decisions” on continued operations in Russia.

Wirth touched on the growing awareness of the need for additional oil and gas supplies, worries over cyberattacks against the oil industry and rapidly rising fuel prices in remarks to Wall Street analysts and reporters.

The company’s annual investor outlook came as oil markets were rattled by Russia’s attacks on Ukraine and rivals BP Plc, Shell Plc and Equinor halting or abandoning Russian business ventures and investments.

Chevron is one of the “least exposed” among the oil majors to Russia risk, according to Allen Good, an analyst with Morningstar equity research firm.

A globally coordinated release of oil reserves could help ease supply concerns and cool crude price hikes, Wirth said.

Major oil-consuming nations on March 1 agreed to release 60 million barrels of oil from strategic reserves as oil futures jumped more than 9% to trade near $107/bbl.

Long-term Energy Security

The U.S. is revisiting its stance on new domestic oil production, the Chevron CEO signaled, referring to recent talks with the U.S. government that had focused on climate concerns and limiting carbon emissions.

“We have a lot of common ground,” Wirth said, declining to discuss specific conversations. “In the early months, I wish there had been more dialogue.”

Achieving long-term energy security for the U.S. would include an “attitude to support investment” in oil production growth, Wirth said.

“Nobody knows how long the situation will endure,” he said.

Chevron on March 1 reiterated plans to raise output in the U.S. Permian shale basin by 10% in 2022 and expand production there to more than 1 million bbl/d in the coming years, from 681,000 bbl/d in the fourth quarter.

Its Permian Basin production could grow to between 1.2 million and 1.5 million bbl/d, the company said at a corporate presentation, without specifying a timeframe to achieve it.

While the company has “a lot of running room in the Permian,” a decision to further expand production will be based on profitability, Wirth said.

Cybersecurity Costs

The oil major has been increasing spending on cybersecurity as the industry faces increased threats of hacker attacks to operations.

“We are in a high-risk environment right now from a cyber standpoint,” Wirth said. “We are an industry that is a high-profiled, high-value target for bad actors.”

Wirth said Chevron is less exposed to sanctions on Russia than many of its rivals.

“A number of other companies had to take very difficult decisions. We have very little exposure to Russia as a company, but these are very difficult decisions to be made,” he told CNBC.

He stressed the importance for world oil supply of the Caspian Pipeline Consortium (CPC), operator of a oil line that moves crude from Russia and Kazakhstan and in which Chevron holds a 15% interest.

Chevron is relying on added production from Kazakhstan and the Permian Basin to raise its output by more than 3% per year through 2026.

The pipeline exported 1.1 million bbl/d of crude from Kazakhstan and 200,000 bbl/d from Russia in 2021.

“It is an important source supply” the world “really needs” right now, Wirth said.

But buyers have been avoiding its oil in recent days due to sanctions over Russia, Reuters reported. Read full story

Chevron also has a 50% stake in Tengizchevroil (TCO), which is developing the Tengiz and Korolev crude oil fields in western Kazakhstan.

“We have had no indications from any government that operations of the Caspian pipeline consortium are likely to be interrupted,” Wirth said. “Beyond the Caspian Pipeline, we really have no other exposure to Russia and none to Ukraine.”

Comments