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Q&A: Chevron sees global exploration revival

  • Spanish Market: Crude oil, Natural gas
  • 18/11/24

US major Chevron and its peers are taking a more prominent role in global frontier exploration as they push for scale and value in oil and gas output in the face of an uncertain energy transition. Chevron vice-president of global exploration Liz Schwarze spoke to Aydin Calik at the African Energy Week conference in Cape Town, South Africa, earlier this month, Edited highlights follow:

How much of a role do you think exploration will play for Chevron and the wider sector in the next 10 years?

We believe the future of energy is lower carbon, and we're leveraging our strengths to grow energy delivery to an energy-hungry world. We see oil and gas being part of the energy mix for longer, investing to reduce the carbon intensity of our existing operations. Growing our oil and gas for longer, because it's a declining business — as you produce it, you have to replace it.

We replace our resources to underpin our future in three ways. Exploration is one; M&A, buying other companies, is another; and then technology is the third. So think in terms of shale and tight development in the US, with drilling and completions technologies; and the Anchor technology, bringing on the world's first 20k [20,000 lb/inch², ultra-high pressure deepwater] production platform in the Gulf of Mexico. That's technology. It's a new development, but it will help in the long term.

For exploration, at Chevron, we invest in exploring in our existing assets — if we can find new oil and gas pools that we can tie into existing infrastructure, it's a win... it comes on faster, creates a lot of value, leverages existing infrastructure — but we're [also] increasing our investment in more frontier areas, where we can build big, material positions at scale, early and if successful, really build new businesses. That's what you see us doing in places we've added acreage recently, like Brazil and Uruguay. We have the block in Namibia, we're going to drill, and we're in Egypt and so forth. So exploration is a very important part of Chevron's future, and because it's a bit of a long-cycle game, yes, for exploration, 10 years is an easy horizon.

And do you think things might change in terms of what you're exploring for — more oil, more gas?

Oil is relatively straightforward to get to markets, because there's a global market for liquids. If we're going to explore for gas, it'll be in a place that has either an existing market or existing assets to market, for the most part. Sometimes you explore for oil and you find gas. Sometimes search for gas and you find oil — because it's model based particularly in these frontier areas. So, you know, whatever mix we find we have to look at the development scenario for that, so that we can bring as much of that product to market with the highest returns possible for our shareholders.

What are the biggest challenges for explorers today?

We'll focus on the frontier first. Chevron looks at entering a new country or a new basin for exploration, really looking for four things to be there. First, of course, are the rocks — a compelling hypothesis that there are hydrocarbons at commercial scale. Second is a supportive fiscal environment, with which, upon discovery, you'd have the opportunity to create value for everyone. The third is access — the country has to offer a way for an operator like Chevron to enter, whether that's through a competitive bid round or through a direct negotiation; we'll also do farm-ins to other people's acreage. And regular access. That hypothesis of where hydrocarbons are can change through time. Having regular, predictable opportunities to access acreage is important, and it is sometimes a challenge. Some countries have opportunities for a while, and then they'll take things off the market, and then you don't really have another way to invest, and that creates a challenge. And then the fourth consideration is just the overall welcomeness for us to deliver the work programme that we commit to — functioning governmental organisations, all the way from environmental to operational permitting.

Where is the most exciting place to explore at the moment? Are there any new Namibias around the corner?

I hope so! Everywhere we enter, we have a story. Sometimes it works and sometimes it doesn't work. But we've got a well drilling in in Egypt now, so west of the Nile in the Herodotus basin — it's called the Khendjer well. So Egypt, we're excited. Namibia, it's the hot story of the past few years. In the Orange basin, we're in PEL90, and that well will start notionally [on a] December timeframe. Think of a big deepwater exploration well. Think of 90 days as an average. [We are] really very keen to see what our block holds. Certainly, high hopes.

And then we've added new acreage in Brazil, the South Santos and the Pelotas basin, we signed a block last week in Uruguay. And so, you know, some of that geology is what we call conjugate margin in Namibia.

And Angola and Nigeria. There are places in the world that are very successful hydrocarbon provinces that are still under explored and we think have a tremendous potential. And Nigeria deepwater is one. We had a lovely discovery on the Nigeria shelf a few weeks ago — the Meji well. And then we added two blocks in Angola earlier this year, deepwater.

I'm getting a sense, not just from Chevron, that exploration around the world is picking up?

I think this is true across the board. And one of the reasons that you explore is the idea that there's likely a further advantaged barrel relative to some of the existing discoveries. So there are a lot of stranded discoveries — either cost-prohibitive, geopolitically challenged, any number of issues that prevent some of the really big discoveries around the world from coming to market. From an exploration standpoint, if you are able to discover at scale, develop that and then bring it to market, it will be lower in the supply stack from a breakeven perspective. And lower carbon intensity as well from the get go, and it will find a place in the market.

On Namibia, what we have heard from some other operators is high gas content. This might make it more challenging. Have you thought about that?

So when we're thinking about entering a new basin, and then when we're thinking about drilling the well, before we make those investments, we're always thinking about what the development scenario might look like. Because we've got to test that development scenario against our range of resource outcomes and test, you know, whether it's going to be economically viable. Or how would we make it economically viable?

So for Namibia, we have considered, what would you do at various gas contents? The first, simplest, development is that you bring your production flow to your FPSO, compress the gas and reinject it. You can do that, given the resource volumes at a commercial outcome, Over time, I think it'll be interesting to see if there's a broader-basin scale gas solution that comes to bear, whether that's pipe to shore or LNG. It depends on the GOR [gas-oil ratio] and then it'll depend upon the gas terms that the government provides.

In the eastern Mediterranean, is Egypt your main exploration prospect?

Our focus is Egypt for exploration. When we go into an area like Egypt, we try to pick something at scale, and then high-grade from there. And so you relinquish the leases that, with additional data, don't look as prospective as the other ones. Right now, our focus is on block four. We're going to drill, and then we're also in [a block] north of that, that someone else operates on our behalf, and we have a minority interest.

What about Algeria and its shale potential? To what extent do you think you'll be able exploit those resources? And will you be signing something soon?

Chevron has been in conversations with the ministry, upstream regulator Alnaft and Sonatrach since 2020. We signed MOUs, that was in the news. And then the big milestone was 13 June of this year, where we aligned on two areas of interest. And we signed heads of agreement to negotiate Chevron's entry into these two areas of interest. And so that's ongoing now, and that's all I can say about that. We have two areas, one in the Ahnet and one in the Berkine, and seeing if there's a negotiated agreement that would have Chevron enter the country, working with Sontrach to explore and develop those.

Algeria is, again, one of these very hydrocarbon-rich countries in Africa. A tremendous gas resource. So we think it's a really strategic opportunity for Chevron, if we can get to a negotiated agreement that's amenable to both parties. You know, significant resources in an existing, vibrant oil and gas sector, access to markets through pipelines and LNG for the gas. And so we believe at Chevron that we can bring our global experience, and in particular our shale and tight expertise to bear in Algeria. To help them explore and ultimately develop.

But you think you can do shale development there?

Yes. I mean, the first piece would be exploration, right? So, you know, even in shale and tight, the molecules are there, or you're fairly confident the molecules are there. It's just, are the molecules producible at a commercial scale? And so that's always the first phase — you drill some pilots, look at your flow back, then optimise. And we believe everything that we do in the Permian is potentially applicable, especially from a factory perspective, right? And then the challenges are going to be things like supply chain.

How much more exploration potential is there left in the Gulf of Mexico? Would you say, is it mature, or is it still much to play for?

The Gulf of Mexico tends to reinvent itself. So we still see plenty of potential there. What's going on in the Gulf of Mexico right now are two critical technologies. One is on the geophysics side — ocean bottom node acquisition for exploration, which is giving us much better images of very complicated geology. That's a critical technology evolution. And we believe that that will help discern between prospects — point the way of where not to drill, and where maybe to drill. And then the other one is, of course, the Anchor platform, which is the world's first 20k. We are currently the only operator in the world that's operating a 20k field, and so I don't know where that technology would be applicable globally yet. But you know what we see? You've got to build the technology, you put it on production, and then you realise, oh, okay, now I can use this to really unlock some other areas. Still pretty, pretty excited about the Gulf of Mexico.


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03/02/25

Trump defends U-turn on Mexico tariffs

Trump defends U-turn on Mexico tariffs

Washington, 3 February (Argus) — US president Donald Trump insisted today that his abrupt decision to delay by a month the decision to impose 25pc tariffs on imports from Mexico had nothing to do with the reaction of financial markets or criticism from the normally reliable quarters of his support. Trump's decision-making on Mexico tariffs so far looks like a signature move from his first term — escalatory rhetoric and action followed by de-escalation after extracting concessions that do not appear to be significant. Trump said today he agreed to postpone the 4 February implementation of 25pc tariffs on Mexican goods by one month, after receiving assurances from Mexico president Claduia Sheinbaum that she would immediately reinforce the shared border with 10,000 national guard troops. Trump said there would be negotiations in the coming weeks between Mexican officials and US secretary of state Marco Rubio, secretary of the treasury Scott Bessent and secretary of commerce Howard Lutnick to prevent the tariffs from going into effect. Trump's plans to impose import taxes on Mexico, Canada and China weighed on stock markets early on Monday and boosted oil prices and the US dollar. The effects of his tariffs and any retaliatory actions by Mexico would have been felt on both sides of the border and would have severely curtailed the flow of energy and other commodities between the two countries. "There was no blinking", Trump said in a free-flowing gaggle with reporters at the White House. "She did agree to 10,000 soldiers on the border. I would say that's a lot." Trump in 2019 similarly threatened to impose 5pc tariffs on all Mexican goods. He relented when former president Andres Manuel Lopez Obrador said Mexico would deploy 21,000 national guard troops to contain the flow of migrants toward the US. "Dumbest Trade War" or deal pathway? Trump, who invited the press into the Oval Office today to observe the signing of an executive order establishing a sovereign wealth fund for the US, heaped praise on News Corp owner Rupert Murdoch, who was invited as a guest at the ceremony. But Trump pushed back against News Corp-owned Wall Street Journal 's editorial board, which described his tariffs on US neighbors as "the Dumbest Trade War". "I don't agree with [Murdoch] on many things," Trump said. "The Wall Street Journal is wrong, because, very simply, every single country that you're writing about right now is dying to make a deal." Canada, which is also subject to a 25pc tariffs beginning tomorrow, so far has not made a deal with the US. Trump said he spoke with Canadian prime minister Justin Trudeau this morning and would speak again at 3pm ET. "We're going to talk again at three o'clock, right after my next meeting, and we'll see what happens," Trump said. "I can't tell you what's going to happen." The US has yet to offer details on implementing tariffs or to break down which Canadian energy commodities would be subject to a lower, 10pc import tax. The White House executive order listed the exemptions as "crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, the kinetic movement of flowing water and critical minerals". Trudeau's government has unveiled a more detailed list of US imports , worth C$30bn ($21bn), that would be subject to retaliatory tariffs, to be followed by an additional C$125bn of products later this month. Trump, who imposed a lower, 10pc, tariff on imports from China, said today that imports from that country would be subject to higher taxes soon. But he added, "I will be speaking to China probably over the next 24 hours." Trump today again proposed a joint US-China ownership of social media platform TikTok, the latest of many issues that divide the two countries. He also repeated his allegation that China "is involved with the Panama Canal" and that the US would wrest back control over the waterway. In addition to pushback over tariffs, Trump today faced harsh criticism from Democratic lawmakers after he ordered the shutdown of the US Agency for International Development, which is responsible for disbursing US humanitarian aid and carrying out development programs globally. Senior Democratic lawmakers joined the staff of the agency in front of its headquarters, where security guards were preventing anyone from entering. "I love the concept [of that agency], but they turned out to be radical left lunatics," Trump said. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US delays Mexico tariffs by a month: Update


03/02/25
03/02/25

US delays Mexico tariffs by a month: Update

Adds comments from press conference, White House response, historic context. Mexico City, 3 February (Argus) — The US has agreed to postpone the 4 February implementation of 25pc tariffs on Mexican goods by one month to allow more time for negotiations, President Claudia Sheinbaum said today. Under an agreement with the US, Mexico will immediately reinforce its border with the US with 10,000 national guard troops to limit drug trafficking into the US, with a specific focus on fentanyl, Sheinbaum posted on social media platform X. The US pledged to take stronger action to curb the flow of high-powered firearms into Mexico, she said. The pause will allow "Mexico time to demonstrate good results for the US people and our people" on key security concerns, Sheinbaum said. US president Donald Trump confirmed the tariff delay in a social media post, saying there would be negotiations in the coming weeks with Mexican officials and US secretary of state Marco Rubio, secretary of the treasury Scott Bessent and secretary of commerce Howard Lutnick. The White House praised Mexico's willingness to respond positively to the tariff threats, while characterizing the Canadian response as [a] misunderstanding. "The good news is that in our conversations over the weekend, one of the things we've noticed is that Mexicans are very, very serious about doing what President Trump said," White House National Economic Council director Kevin Hassett said in a broadcast interview. Canada had "misunderstood the plain language of the executive order and they're interpreting it as a trade war." Trump said this morning that he "looks forward to negotiations" with Sheinbaum to reach a deal between the countries. He is also talking to Canadian premier Justin Trudeau later today. The announcements today do not address Trump's complaints of a trade deficit with Mexico, which Sheinbaum said during a press conference today the US misinterprets as a negative. Both the US and Mexico benefit from the region becoming more competitive, she said. Mexico will also keep its retaliatory tariffs on the table: "We will save Plan B for later, if necessary," Sheinbaum said. The current tensions are similar to those from 2019, when Trump threatened to impose 5pc tariffs on all Mexican goods. He relented when former president Andres Manuel Lopez Obrador said Mexico would deploy 21,000 national guard troops to contain the flow of migrants toward the US. If the tariffs were implemented, it would disrupt the energy trade between the US and Mexico. Nearly all of Mexico's roughly 500,000 b/d of crude shipments to the US in January-November 2024 were waterborne cargoes sent to US Gulf coast refiners. Those shipments in the future could be diverted to Asia or Europe. Mexico also imports much of its road fuels and LPG from the US. But the country is unlikely to hit these goods with retaliatory tariffs, according to market sources. By Antonio Gozain and Cas Biekmann Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Ice TTF gas risk reduction contract positions soar


03/02/25
03/02/25

Ice TTF gas risk reduction contract positions soar

London, 3 February (Argus) — Risk reduction contracts held at the Dutch TTF gas trading point on the Intercontinental Exchange (Ice) soared to a near record high in the week ending 24 January, suggesting significant hedging activity. Firms take on risk reduction contracts mostly for hedging purposes — they offset a physical position with a paper position so as to reduce exposure to price fluctuations. When firms inject gas into storage, they might for example open a risk reduction contract on paper to offset this position in the future. The gross amount of gas that commercial undertakings hold under long and short risk reduction contracts combined reached its second highest since at least 2018 at 1.38PWh in the week ending 24 January, the most recent data from Ice ( see risk reduction graph ) show. Firms increased their long positions by 19TWh week on week to 581TWh, and their short positions by 13TWh to 794TWh. After netting the two off, commercial undertakings hold a net short position of around 214TWh of risk reduction contracts, down from a recent peak of 228TWh in the week ending 3 January. Higher LNG deliveries to Europe in recent weeks may have driven some of the interest in risk reduction contracts, given that importers need to hedge ahead of time in order to lock in margins. TTF prices have increased enough in recent weeks to firmly close the arbitrage between the Atlantic and Pacific basins, attracting more LNG cargoes to Europe. European LNG imports soared in January to their highest for any month since April 2023. The TTF summer 2025 contract's growing premium to the winter 2025-26 market may have additionally boosted interest in risk reduction contracts. The spread widened sharply after Germany's THE announced a consultation for a new kind of storage tender that would subsidise injections if seasonal spreads stay inverted , with many traders seeing this as a signal that German storage sites will be refilled , regardless of commercial incentives. The TTF summer 2025-winter 2025-26 spread jumped to +€4/MWh on 21 January, the day of THE's announcement, from +€2.73/MWh a day earlier, and widened further to as high as +€6.39/MWh by 30 January. In terms of total net positions across all contract types, investment funds held a net long of nearly 278TWh in the week ending 24 January, the highest since late November. At the same time, investment and credit firms held their highest net short position since October 2021 at 245TWh. Commercial undertakings held a net total short position of 33TWh ( see net positions graph ). By Brendan A'Hearn ICE TTF net contract position TWh Commercial undertakings' risk reduction contract positions TWh Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US manufacturing expands in Jan after 26 months: ISM


03/02/25
03/02/25

US manufacturing expands in Jan after 26 months: ISM

Houston, 3 February (Argus) — US manufacturing activity expanded in January after 26 consecutive months of contraction, according to the Institute for Supply Management's latest factory survey. The manufacturing purchasing managers' index (PMI) registered 50.9 in January, up from 49.2 in December. The new orders index rose to 55.1 last month from 52.1 in December, marking a third month of expansion. Readings above 50 signal expansion while readings under that point to contraction. Production rose to 52.5 last month from 49.9 the prior month. Employment rose to 50.3 from 45.4. "Demand clearly improved, while output expanded and inputs remained accommodative," ISM said. "Demand and production improved; and employment expanded." US factory activity expanded robustly in the first two years after Covid-19 hit, then contracted for the subsequent two years, even as growth in services activity, the largest part of the economy, maintained the overall economy in expansion territory. The new export orders index rose by 2.4 points to 52.4 and the imports index rose by 1.4 points to 51.1. The prices index rose to 54.9 from 52.5, with aluminum, freight rates, natural gas, and scrap among gainers. "Prices growth was moderate, indicating that further growth will put additional pressure on prices," ISM said. The inventories index fell by 2.5 to 45.9, signaling contracting inventories. Backlog of orders fell by one point to 44.9, indicating order backlogs contracted for the 28th consecutive month after 27 months of expansion. Supplier deliveries rose by 0.8 to 50.9, suggesting marginally slower deliveries. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Ontario bans US companies from provincial contracts


03/02/25
03/02/25

Ontario bans US companies from provincial contracts

New York, 3 February (Argus) — Ontario's premier Doug Ford banned US companies from provincial contracts until President Donald Trump lifts his planned tariffs on Canada . "US-based businesses will now lose out on tens of billions of dollars in new revenues," Ford said on social media platform X today. "They only have President Donald Trump to blame." Ontario also plans to tear up the province's contract with Elon Musk's Starlink internet services as part of a retaliatory move following Trump's decision to impose tariffs. "Ontario won't do business with people hellbent on destroying our economy," Ford said. "Canada didn't start this fight with the US, but you better believe we're ready to win it." Canada announced a targeted list of counter-tariffs that will go into effect on 4 February. Ford has been particularly outspoken among Canada's provincial leaders , given the Ontario's close ties with the US auto industries and steel industries in particular. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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