Chevron’s $35 billion capital budget down 13% from last year

Chevron Corp. will allocate $35 billion in its capital and exploratory investment program for 2015, including $4 billion of planned expenditures by affiliates that do not require cash outlays by Chevron.

Total upstream spending is expected to reach $31.6 billion, of which $23.4 billion will be spent outside the US. Of the $2.8 billion purposed for downstream, $2 billion will be spent in the US.

The company will direct $12 billion of planned upstream capital spending at existing base producing assets, including $3.5 billion for shale and tight resource investments.

Roughly $14 billion is related to the construction of major capital projects already under way, primarily LNG, receiving $8.5 billion (OGJ Online, Jan. 21, 2014); and deepwater developments, receiving $3.5 billion (OGJ Online, Nov. 17, 2014; Dec. 2, 2014).

Chevron, along with BP PLC and ConocoPhillips Co., agreed on Jan. 28 to work together to explore and appraise 24 jointly-held offshore leases in the northwest portion of Keathley Canyon in the deepwater Gulf of Mexico (OGJ Online, Jan. 28, 2014).

Global exploration funding accounts for $3 billion.

Three fourths of affiliate expenditures are associated with investments by Tengizchevroil LLP in Kazakhstan (OGJ Online, Oct. 28, 2014); and Chevron Phillips Chemical Co. LLC in the US (OGJ Online Nov. 7, 2014).

“Although commodity prices have fallen recently, we believe long-term market fundamentals remain attractive,” said John Watson, Chevron chairman and chief executive officer. “We will continue to monitor and be responsive to market conditions, and to actively pursue cost reductions throughout our supply chain in order to lower overall outlays,” he said.

“We anticipate growing flexibility in our spend as projects under construction are completed and as supplier contracts are renewed. We are testing our short-cycle investments, particularly base business and unconventional assets, at current prices and are selecting only the most attractive opportunities to move forward,” Watson explained.

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