Chevron Corp. CVX-N is working with the Kazakhstan government to assure oil flows from the landlocked country’s fields can be sustained in the event of halts to Black Sea loadings, Chief Executive Michael Wirth said at an energy conference on Wednesday.
Oil from Kazakhstan’s vast Tengiz Field flows across Russia via a pipeline to the Black Sea port of Novorossiisk, where two of three loading buoys are undergoing repairs. The pipeline is flowing about 1 million barrels per day (bpd), below its 1.5 million bpd capacity.
“There are no constraints right now on loading,” because of the repairs to the port’s loading buoys and maintenance on the pipeline, he said. Rail transit could be an alternative to a loss of the loading port or pipeline, he said.
Tengiz producers “have shipped a lot of oil via rail out of that area” over the years, Wirth said. “But the reality is in the near term, the primary and the large-scale option remains this pipeline.”
That pipeline exported some 1.2 million barrels per day, of Kazakhstan’s main crude grade, last year. It also carries some Russian oil from Russia that is added before reaching the port.
In other remarks at the Barclays CEO Energy-Power Conference, Wirth said oil demand growth will be “pretty good,” but in the near term there are questions about demand in Europe and China.
Investors also want Chevron and other oil producers to restrain spending on new oil and gas production. Its cash reserves have risen beyond that needed to sustain its business and will be allocated to shareholder returns over time, he said.
The company will only do deals “that make us stronger,” said Wirth. Its goals are to protect its dividend, grow its business, maintain a strong balance sheet, and return cash to shareholders through share buybacks, he said.
Chevron did not pursue a stake in Qatar’s liquefied natural gas (LNG) expansion project “because we felt like we had higher return opportunities,” he said.
The company recently struck deals for U.S. LNG projects now in development. Its LNG business has focused on markets along the Pacific Ocean, and expects Europe to become an important LNG market, he said.
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