Chevron Corp. office building in Houston, TX. (Source: Shutterstock)
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.”
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.
RELATED
Cyprus, Chevron Press Ahead with Offshore Gas Field Development
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.
RELATED
Chevron Reiterates Permian’s 2025 Growth Target Despite Delaware ‘Falling Short’
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.
Recommended Reading
Emissions Management: The New ‘E’ for E&P
2023-01-24 - Emissions management strategies are having a greater influence on E&P profitability, according to Enverus.
Q&A: University of Houston’s Joe Powell Talks Energy Transition
2023-01-13 - Powell, former chief scientist of chemical engineering for Shell, shares insight on the energy transition, his new role, how the oil and gas industry fits in and the potential to bring stakeholders together.
Hydrogen Initiatives Expand Opportunities for Midstream, But How Will Operators Respond?
2023-01-05 - Midstream investments face an uphill battle over supply and demand dynamics, permitting headaches and a lack of direct CCS incentives.
The Economic and Political War Raging Over ESG
2023-01-18 - In the battle brewing around ESG disclosure, investors and regulators must be able to navigate both federal and state legislation, according to a recent report from Sustainable Fitch.
Canadian Oil Producers’ ESG Strategy: Made in Canada
2023-03-15 - As environmental concerns and human rights become top priorities, Canadian E&Ps producing from oil sands say their commodity should be the preferred barrel going forward.