Exxon And Chevron Abandon The Global Market And Focus On The Americas
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The two fossil fuel giants plan to spend most of their annual budgets in the both Americas this year.
Focus on Noth and South America
For much of their modern history, Chevron and Exxon have scoured the world for oil to add to their reserved reserves.
Chevron saying it will pour 70% of the capital allocated for production into oil fields in the U.S., Argentina and Canada, and Exxon saying it will spend a similar portion of its budget in the Permian Basin of New Mexico and West Texas, Guyana, Brazil and liquefied natural-gas projects.
Their focus on the Western Hemisphere is expected to continue for years as they give priority to growing shareholder returns and cut costly frontier drilling projects.
The Chevron planned to sell off at least $15 billion in assets as of 2018, reducing its global reach and focusing on its most valuable assets. Last year, Irving, Texas-based Exxon sold or proposed to sell assets in Chad, Cameroon, Egypt, Iraq and Nigeria.
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Exxon and Chevron Situation
The company's oil and gas production is down nearly 18% in 2021 from its annual peak in 2011.
Around this time, Exxon had dozens of projects around the world and made most of its money outside the United States. Meanwhile, Chevron's international production fell 3% last year after concessions in Thailand and Indonesia expired. Last year, she promised to leave Myanmar, citing human rights violations.
Chevron has kept some international assets close to home. The US re-granted it a new license to pump oil in Venezuela after years of sanctions. So far it has said it will not make new investments in the country, but will only hold existing assets while it collects debt from its state-owned joint venture partner.
The involvement of Venezuela
In October last year, information appeared about the possibility of easing the sanctions imposed by the US on Vezeuela. The Biden administration has taken steps to reduce the sanctions imposed on the regime in Venezuela, provided authoritarian President Nicolás Maduro agrees to negotiate with the US-backed opposition to hold a free and fair presidential election in 2024 on the matter.
Venezuela was once a major oil producer, pumping more than 3.2 million barrels a day in the 1990s, but the state-owned industry has collapsed over the past decade due to underinvestment, corruption and mismanagement. The sanctions imposed by the Trump administration have further curtailed production and forced Western companies out of the country.
Chevron wrote off its Venezuelan assets in 2020, charging a $2.6 billion fee, just months after the Trump administration tightened sanctions that barred U.S. companies from drilling, transporting or selling Venezuelan oil.
The speed at which Chevron can resume operations in Venezuela, mainly in the Orinoco belt to the east, will depend largely on how quickly modifications to the Trump-era sanctions can be implemented.
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Chevron will have to deal with everything from fuel shortages to an accident-prone oil infrastructure to security threats and corruption that could hamper its efforts to revitalize the country's gutted oil industry.
The involvement of Venezuela, which sits on top of some of the world's largest oil reserves, could serve as a long-term strategy for the United States and European countries trying to secure new energy sources as Russia's war in Ukraine drags on and overturns commodity markets.
Chevron share price
The war in Ukraine has mainly hit the goods market, which has made energy companies gain. Chervron gained over 40% last year. The share price last year was mostly above 150, and this year it started the year with levels above 170.
Exxon share price
Exxon's stock didn't do as well as Chevron's, but it was on the rise and in 2022 it was trading above 85. Currently, the company's stock is above 100.
Source: wsj.com, finance.yahoo.com
