Chevron plans to pull back the reins on its aggressive capital spending in the coming year, reducing its budget to $39.8 billion from the $42 billion it expects to spend this year.
This year’s expenditures include $4 billion for resource acquisitions that weren’t included in the original 2013 capital budget the company announced a year ago.
“We expect 2013 will be a relative peak year for investments, as we completed several attractive resource acquisitions,” Chevron CEO John Watson said in a written statement.
But he said spending on liquefied natural gas projects in Australia will peak next year, as the projects move closer to their first production.
Expanding: Oil and gas spending to hit record in 2014
One of Chevron’s most ambitious and capital-intensive projects there, the Gorgon liquefied natural gas project, is nearing completion after four years and $54 billion, with startup expected in 2015. The plant is projected to yield 400,000 barrels a day of net LNG production at its peak, and Chevron officials say that the investment soon will be a money maker.
“Gorgon project economics are attractive,” said George Kirkland, Chevron vice chairman, in a written statement, noting that more than 75 percent of expected production has already been contracted out in long-term contracts, and that both Gorgon and a neighboring project, Wheatstone, will more than pay off their high price tags in the resulting production.
“They will be substantial contributors to our cash flow for decades to come.”
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The company plans to focus about 90 percent of its 2014 spending upstream, as it continues to invest in high-profile exploration and production projects in Australia, Nigeria, the deep-water Gulf of Mexico, the Permian Basin of West Texas, Kazakhstan, Angola, and the Republic of the Congo. It also plans to invest in technologies to improve recovery techniques and reduce production declines in its producing fields.
The company plans $3 billion in downstream investment, aimed at increasing its feedstock options and making its refining business more reliable.
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