Chevron eyes rail transport for Kazakhstan oil, says CEO

Chevron’s logo and business information is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 27, 2022. REUTERS/Brendan McDermid

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Sep 7 (Reuters) – Chevron Corp. (CVX.N) is working with the government of Kazakhstan to ensure that oil flows from fields in the landlocked country can be maintained in the event of a halt in loadings in the Black Sea, chief executive Michael Wirth told a conference Press. conference on Wednesday.

Oil from Kazakhstan’s vast Tengiz field crosses Russia via a pipeline to the Black Sea port of Novorossiysk, where two of the three loading buoys are being repaired. The pipeline is flowing about 1 million barrels per day (bpd), below its capacity of 1.5 million bpd. Read more

“There are no constraints at the moment on loading,” due to repairs to port loading buoys and pipeline maintenance, he said. Rail transportation could be an alternative to losing the loading port or the pipeline, he said.

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Tengiz producers “have shipped a lot of oil by rail from this area” over the years, Wirth said. “But the reality is that in the short term, the main and large-scale option remains this pipeline.”

This pipeline exported about 1.2 million barrels per day of Kazakhstan’s main grade of crude last year. It also carries Russian oil from Russia which is added before reaching the port.

In further remarks at the Barclays CEO’s Energy-Power conference, Wirth said oil demand growth will be “pretty good”, but in the short term there are questions about oil demand. Europe and China.

Investors also want Chevron and other oil producers to limit spending on new oil and gas production. Its cash reserves have grown beyond what is needed to support its business and will be allocated to shareholder returns over time, he said.

The company will only make deals “that will make us stronger,” Wirth said. Its goals are to protect its dividend, grow its business, maintain a strong balance sheet and return cash to shareholders through share buybacks, he said.

Chevron did not seek a stake in Qatar’s liquefied natural gas (LNG) expansion project “because we felt we had higher return opportunities,” he said.

The company recently entered into agreements for LNG projects in the United States currently under development. Its LNG business has focused on markets along the Pacific Ocean and expects Europe to become an important LNG market, he said.

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Reporting by Gary McWilliams; Editing by Chizu Nomiyama

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