Chevron cuts 2016 capital budget by 24% to $26.6 billion

Chevron Corp. plans a $26.6-billion capital and exploratory investment program for 2016, including $4.5 billion of planned expenditures by affiliates. The budget is 24% lower than total expected investments for 2015.

For upstream expenditures, the company is allotting $24 billion, of which $18.6 billion will be directed internationally and $5.4 billion in the US.

Existing base producing assets will receive $9 billion of planned capital spending, including shale and tight resource investments. Roughly $11 billion is related to major capital projects currently under way, and $3 billion relates to projects yet to be sanctioned. Global exploration funding accounts for $1 billion.

Downstream expenditures will total $2.2 billion, of which $1.6 billion is for the US and $600 million is for international use.

About 80% of the $4.5 billion in planned affiliate expenditures are associated with investments by Tengizchevroil LLP in Kazakhstan and Chevron Phillips Chemical Co. LLC in the US.

“Our capital budget will enable us to complete and ramp-up projects under construction, fund high-return, short-cycle investments, preserve options for viable long-cycle projects, and ensure safe, reliable operations,” said John Watson, Chevron chairman and chief executive officer.

“We gain significant flexibility in our capital program as we complete projects under construction,” Watson said, adding, “Given the near-term price outlook, we are exercising discretion in pacing projects that have not reached final investment decision.”

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