A Review of the Nigerian Energy Industry

Chevron plans $35.8bn upstream spending for Nigeria, others

Chevron logo24 December 2013, Lagos – United States oil giant, Chevron Corporation has planned $35.8billion upstream spending in 2014 for major capital projects in Nigeria, Angola, Canada, Argentina, United Kingdom and the Republic of Congo.

The $35.8billion is part of the $39.8 billion capital and exploratory budget for 2014, which includes $4.8 billion of planned expenditures by affiliates, which do not require cash outlays by Chevron.

The projects earmarked in Nigeria include a further development of the Usan and Agbami deepwater fields.

The 2014 budget is approximately $2 billion lower than expected total investments for 2013. For the current year, total investments are estimated at $42 billion, including expenditures of approximately $4 billion for major resource acquisitions not included in the original budget.

The Chairman and Chief Executive Officer of Chevron Corporation, Mr. John Watson said the company expected that 2013 would be a relative peak year for investments, as it completed several attractive resource acquisitions.

“We also anticipate 2014 will represent the peak year for spending on our Australian LNG projects as we move them closer to first production. Overall, we have an attractive portfolio of investment opportunities which we will continue to fund in a disciplined fashion to grow value and shareholder distributions,” Watson said.

Approximately 90 percent of the 2014 spending programme is budgeted for upstream crude oil and natural gas exploration and production projects. Another eight percent is associated with the company’s downstream businesses that manufacture, transport and sell gasoline, diesel fuel and other refined products, fuel and lubricant additives, and petrochemicals.

Highlights of the company’s statement showed that investment of $35.8 billion was planned for exploration and production activities.
Notable major capital investments include developments in Australia , Nigeria , the United States deepwater Gulf of Mexico , the United States Permian Basin , Kazakhstan , Angola , and the Republic of the Congo.

Planned capital spending is also directed toward improving crude oil and natural gas recovery and reducing natural field declines from existing producing assets throughout the world. About 30 percent of the upstream capital programme is allocated to highly profitable development wells and other projects associated with current producing assets.

The 2014 base programme includes an increase in activity across several producing regions of North America as well as in Thailand and Indonesia.

In Australia , the Gorgon project has been under construction for four years and is almost 75 percent complete.
The current estimate for the cost of the foundation project is $54 billion ($55 billion), with plant startup and first gas planned for mid-2015.
The Vice Chairman of Chevron, Mr. George Kirkland said the Gorgon project economics were attractive.

“We continue to make steady progress against key project milestones and are applying lessons learned to our Wheatstone development which is almost 25 percent complete. Approximately 75 percent of our combined LNG offtake from the two projects is committed under firm, long-term sales and purchase agreements.

These LNG developments are two of our most important future legacy assets, representing approximately 400,000 barrels a day of net production at full capacity. They will be substantial contributors to our cash flow for decades to come,” he said.
“Our focus is on developing resource projects that grow shareholder value. For instance, we are steadily increasing activity levels to develop shale and other tight resources in Canada’s Duvernay , the Vaca Muerta in Argentina and the Permian Basin of the United States . We are very pleased with our global unconventional acreage position,” Kirkland added.

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