CHEVRON Corp., the second-largest U.S. oil company, said on Thursday it will increase spending 20 percent to $26 billion next year, with 85 percent of the budget allocated to oil and gas exploration and production.
Rising demand for crude oil from emerging and developed countries and stable output from the Organisation of the Petroleum Exporting Countries, OPEC, are helping to reduce a surplus in global oil markets, factors that provide oil and gas companies with the confidence to raise spending.
“We are moving into a period of higher capital spending as we fund new legacy projects, including sizable investment in our Liquefied Natural Gas, LNG mega projects,” George Kirkland, Chevron vice chairman, said in a statement.
Last year, Chevron budgeted $21.6 billion for 2010.
Exploration spending in 2011 is estimated at $22.6 billion, while the San Ramon, California company’s refining budget is seen at $2.9 billion, it said. Expenditures of approximately $0.5 billion in 2011 are budgeted for technology, power generation and other corporate activities.
Nigerian expenditureDespite the budget increase, there was no mention of spending for Nigeria, Africa’s biggest producer or Africa in general.
According to Chevron sources, the picture would become clearer in the weeks ahead when further breakdowns are made,
Although Chevron already has a number of ongoing oil and gas projects in Nigeria, but the operating environment has impacted on the delivery of these projects.
The Federal Government is planning to introduce a new fiscal oil and gas regime in a much-awaited, Petroleum Industry Bill, PIB, even as it expects oil companies to boost crude reserves and production, to the chagrin of the oil majors .
Generally oil companies anticipate further lull in investments in Nigeria’s petroleum industry, because of the delay in the passage of the petroleum bill.
Furthermore, almost every activity is now concentrated on the forthcoming general elections, and as such, economic activities are envisioned to beef up from around the third quarter of the year, when election fallouts would have been resolved, especially with regard to the leadership of the country.
Areas of concentration
Major exploration and production projects include development of Chevron’s Gorgon and Wheatstone natural gas resources and LNG facilities in Western Australia.
Included in the next year’s refining budget is spending on projects at the company’s refineries in Mississippi and California, which are aimed at improving returns, Chevron said.Shares of Chevron rose almost 1 percent, or 73 cents, to $86.87 in early trading on the New York Stock Exchange.