CHEVRON WILL REDUCE $26.6 BLN
Chevron Corp. projected capital spending plans for 2016 of $26.6 billion, which the oil giant said is 24% below expected capital and exploratory spending this year.
Chevron, the second-largest energy company in the U.S. by revenue, and other major oil companies have been cutting costs and capital spending plans in response to an extended downturn in prices for crude.
In October, Chevron said it would cut up to 10% of its workforce and, as Exxon Mobil Corp. did, it cut its future capital spending further. At the time, Chevron was trying to dial back its capital spending next year to between $25 billion and $28 billion.
Chairman and CEO John Watson said in prepared remarks on Wednesday that the 2016 capital spending plan will allow the company to complete and step up projects that are under construction and "fund high return, short-cycle investments" while preserving options for long-cycle programs.
"Given the near-term price outlook, we are exercising discretion in pacing projects that haven't reached final investment decision," he said.
The 2016 capital spending budget includes $24 billion for exploration-and-production projects, with the bulk targeted for its international upstream business. The company said about $9 billion of the spending plan is targeted for existing base producing assets, which includes shale investments. An additional $11 billion is earmarked for major projects currently under way while global exploration represents roughly $1 billion of the spending plan.
The capital program also includes $4.5 billion of spending by affiliated companies, with about 80% related to investments by Tengizchevroil LLP in Kazakhstan and Chevron's chemical joint-venture with Phillips 66 in the U.S.
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REUTERS - Brent crude futures LCOc1 were down 72 cents at $61.49 per barrel at 1020 GMT, having fallen by 1.5 percent on Tuesday, its largest one-day drop in a month. U.S. West Texas Intermediate (WTI) crude CLc1 was at $55.12 per barrel, down 58 cents.
BLOOMBERG - Prices dropped during the session as the International Energy Agency said the recent recovery in oil prices, coupled with milder-than-normal winter weather, is slowing demand growth. The worsening outlook for consumption dampened some of the enthusiasm that OPEC and its allies will extend supply curbs.
Global energy needs rise more slowly than in the past but still expand by 30% between today and 2040. This is the equivalent of adding another China and India to today’s global demand.
Product exports have grown significantly over the past several years and are expected to continue to grow as Russian refineries add capacity to produce more high-quality products.