HOUSTON—Energy markets faced extreme volatility during the first year of Russia’s invasion of Ukraine, but the war will have long-lasting effects on natural gas markets, in particular, Chevron Corp. Chairman and CEO Mike Wirth on March 6. 

“Gas markets, I think, are structurally changed for the longest,” Wirth said during an onstage discussion at CERAWeek by S&P Global. “I don’t think Europeans intend to go back to their reliance on Russian gas.” 

Chevron CEO Mike Wirth on Structural Changes to Gas Markets, Permian ‘Challenges’
Chevron Chairman and CEO Mike Wirth. (Source: CERAWeek by S&P Global)

Wirth also said Chevron still intends to hit its ambitious Permian Basin production goals but acknowledged that supplies and labor challenges remain a challenge.

Competition between European and Asian buyers for liquefied natural gas in the past year and new LNG export projects coming online in the U.S. also have wide-reaching impacts on global gas markets, he said.

“It changes trade flows, it changes pricing mechanisms, it changes product economics globally,” Wirth said.

As European nations search for reliable, long-term gas supply, gas resources in the eastern Mediterranean, including Chevron’s footprint in the Leviathan gas field offshore of Israel, could grow in importance, Wirth said. 

The Leviathan Field could serve as a major gas resource for Europe, but investment in new infrastructure will be needed to transport gas from the eastern Mediterranean to European markets.

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The global oil markets have also seen its price structure change since Russia’s war in Ukraine started last year. But as Russian crude continues to find its way to buyers, oil markets have been impacted less drastically than gas markets, Wirth said. 

Markets for refined products should also come back into a more balanced equilibrium this year, he said.

Permian conditions are ‘challenging’

Domestically, Wirth reiterated Chevron’s goals to scale oil and gas production in the Permian Basin up to 1 MMboe/d by 2025. Last year, Chevron’s average production in the Permian was over 700,000 boe/d. 

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However, rampant inflation and supply chain constraints continue to present issues to oil and gas operators in the Permian, Wirth said.

“Access to both equipment and people is challenging, but we’re progressing our plan,” Wirth said.