A few months ago, US President Joe Biden urged energy companies to stop the “war profiteers” and even threatened to slap them with a windfall tax if they didn’t invest their profits in reducing costs for Americans and increasing production. The calls came at a time when Big Oil was posting record profits amid high commodity and energy prices.
The majority of energy companies avoided spending big on expanding production in the aftermath of the 2020 oil crisis, prioritizing returning more cash to shareholders in the form of dividends and share buybacks. Well, Biden might not fully get his wish, but there are signs companies are ready to spend more in the coming years, even as a slew of energy companies have announced big spending and capex increases.
American oil supermajor Chevron Corp. (NYSE: CVX) announced on Wednesday that FY2023 capital expenditure budget will be $17 billionat the upper end of its mid-term range of $15-17 billion and up more than 25% from planned spending in 2022.
The company said that upstream capital expenditures include more than $4 billion for Permian Basin development; ~$2 billion for other shale and tight assets and ~$2 billion to invest in projects that reduce carbon emissions or increase renewable fuels production capacity, more than double the 2022 budget Although Chevron’s expenditures for 2023 are significantly higher than capital expenditures for pandemic years 2020-21, they are still well below the 30 billion dollars on annual average of the period 2012-19.
“Our capital budgets remain in line with previous forecasts despite inflation“said Chairman and CEO Mike Wirth.
pair of chevron ExxonMobil Corp.. (NYSE: XOM) did not announce a drastic increase in spending, but said Wednesday that its capital spending for 2023 will be closer to the upper limit of its annual target of $20 billion to $25 billion, a level that ‘ it plans to maintain through 2027. The company said more than 70% of its capital investments will be deployed in the US Permian Basin, Guyana, Brazil and LNG projects around the world.
Related: Trafigura: Europe will need to import huge volumes of LNG in 2023
These investments will help increase the company’s upstream production from 500,000 boe/day to 4.2 million boe/day by 2027. extends its share buyback plan to $50 billion until 2024, including $15 billion this year. So where will all this money come from? Exxon says to expect “double profit and cash flow potentialby 2027 versus 2019, and also expects to achieve ~$9 billion in structural savings by year-end 2023 versus 2019 levels.
Tuesday, Canada’s third largest producer of crude oil and natural gas Cenovus Energy (NYSE: CVE) said so expects to spend C$4 billion of C$4.5 billion in fiscal year 2023, above C$3.3B and C$3.7B estimates for 2022, including ~C$2.8B in sustaining capital to maintain base production and support operations. Cenovus said it plans to allocate C$1.2 billion to C$1.7 billion for optimization and growth, including construction of the West White Rose project in Atlantic Canada.
Cenovus (CVE) also guided production of 800,000 to 840,000 boe/day next year, an increase of more than 3% year-on-year, including oil sands production of 582,000 to 642,000 boe/day and conventional production of 125,000 to 140,000 boe/day. Meanwhile, the company expects total downstream crude throughput to be between 610,000 and 660,000 bbl/day, up nearly 28% year-on-year.
Last week, Brazil’s oil and gas supermajor Petroleo Brasileiro SA or Petrobras (NYSE: PBR) announced that it will increase 2023-2027 capital expenditures by approximately 15% to $78 billion over the company’s planned spending for 2022-2026. Of the $78 billion planned for investments, 83% or $64 billion is for E&P activities, while 67% of the E&P investment budget will go to pre-salt activities. The company also plans to increase spending to reduce carbon emissions to around 6% of the total, up from 4% in the previous plan, and will see its decarbonization fund more than double from the current $248 million.
Meanwhile, the Brazilian mining giant Vale S.A. (NYSE:VALE) Wednesday announced plans to increase capital spending to $6 billion next year from $5.5 billion this year, while exploration spending will hit $350 million. dollars in 2026, compared to $180 million for 2022. Vale also said it expects iron production to increase slightly to 320 million tonnes in 2023 from 310 million tonnes in the current year, but expects production to exceed 360 million tons by 2030. Meanwhile, copper production is expected to increase to 335,000-370,000 tons in 2023 from around 260,000 tons this year while the Nickel production is expected to exceed 300,000 tons compared to around 180,000 tons in 2022.
By Alex Kimani for Oilprice.com
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