FIVE-A-LIVE ! POWER PLATERS - EIMEAR BONNER - chevron cfo

Transcript

SPEAKER_00 0:00

Do you want to just address the president's concerns first of all? And by the way, nice to see you.

SPEAKER_02 0:03

Nice to see you, Steve. And thanks for having me. Look, I mean, what I would say is we're we're all concerned about prices. So there's there's a lot of empathy, whether it's in the US or here in the UK or in Europe, for consumers. I mean, we're all consumers. It's it's gonna take time though. I mean, there is a lag uh between you know oil prices and reductions in oil prices and when that shows up in the pump. But you know, we expect that prices will come down as things continue to normalize.

SPEAKER_00 0:32

And and the president's got his constituency. We know who he's talking to as well, and we know what the pressures on the calendar look like for him as well. Mike, your CEO, Darren and others as well. I'm sure they're very they're having very active conversations with uh the energy secretary as well. And I mean, can I just address the concern one more time, can the majors do more to get prices down in the short term?

SPEAKER_02 0:53

Well, I think the majors are doing everything that that we can. I'll talk for Chevron. And you know, we're growing this year. We're going to grow production a 7 to 10%, and so all that growth is underway. In fact, we'll likely to grow at the high end of that guidance. So we're doing everything we can with the diverse crude slits that we have, with the flexibility we have in our refineries, and we've optimized through the conflict and continue to optimize the levers that we have to deliver the energy the world needs and to deliver products to consumers. So I think again, there's a lag. It takes it takes time, especially after large disruptions, for prices to normalize. But we highly expect the prices will normalize.

SPEAKER_00 1:32

Okay, I think you've addressed that plenty now in two questions. Let's let's move on. Tell me about some of this growth and the exciting growth. I I know how what a year it's been. Well, probably for you amongst more than most executives at Chevron, you know, kind of taking a very important role and the Hess integration as well. Huge deal, even for someone the size of Chevron as well. $55 billion deal, picking up some amazing reserves in places like Guyana. I know that uh I think it was the Chinese and Exxon. We're like, oh, why aren't we getting that share? Why is it going to Chevron as well? So just talk to us about some of the great growth initiatives and maybe about that Hess acquisition.

SPEAKER_02 2:04

Yeah, well, maybe starting with Hess, it's just been a fantastic uh year. We're fully integrated now. The assets you talked about Guyana, but we also have um unconventional assets in in North America, the back and field that we've integrated into our large, larger unconventional asset class. We also have assets in the Gulf of America, so they've been fully integrated. So we've fully integrated, we've delivered the $1 billion in synergies, we're chasing and more synergies, so more cost efficiencies. But most importantly, the the people that have integrated into Chevron, they're just fantastic. And we've been able to take the best of what Hess was doing and the best of what Chevron was doing and bring them together. And a good example there is maybe an exploration. We've re-organized our exploration organization, and we have a blend of both Chevron and Hess in that organization. And that's a really good example of where you know the people from Hess are really adding significant value in the new combined company.

SPEAKER_01 3:00

The comp the conversation so far opens the door for a conversation on energy security because it feels as though we've all had a wake-up call again around the Strait of Hormuz. Product coming out of that region, the price that it got to, even as we embark upon one of the most energy-intensive cycles that we've seen for many decades. You've also got assets too in Venezuela through joint uh ventures as well. How important is the conversation for that diversification now for anything other than the Strait of Hormuz?

SPEAKER_02 3:26

Well, I think the Strait of Hormuz has reinforced the importance of energy security and resilience in the portfolio and having a portfolio that can weather disruptions. And so that is part and parcel of the ongoing discussions that we have when we think about making portfolio choices. So I think since the disruption, it's really brought that in into focus. The long-term resiliency of a portfolio, a portfolio that's that's flexible, that's what that's what we have. We were able to divert some of our crude from South America to help keep refineries full in in Asia. We don't have a lot of exposure in the Middle East, so we we weren't directly impacted, but we still played a role in optimizing our system so that we could deliver the energy the world needs.

SPEAKER_01 4:08

It feels as though the US President has had to cut a deal here to give the Iranians something that they want, including access to international oil markets. But that could come at a cost for those that have been looking to bolster investment elsewhere. Do you see it that way? If you've got Iranian oil as part of the mix, it can impact the investment decisions elsewhere, even as we talk about energy security.

SPEAKER_02 4:28

Well, look, there's a there's a lot of moving parts there. It's very dynamic. It's such it's you know that from a supply perspective, there's obviously large supply um in Iran, and so you know, any any adjustments or investments and there put supply onto the market. But you you can't bring supply on overnight either. So things take time in the energy system. It's a massive, a massive system. But regardless of whether it's in Iran or whether it's you know incentivizing more growth in other parts of the world, like in in Venezuela, at the end of the day, for investment, you need predictability, competitiveness of physical terms, and durability of those physical terms. And I thought that's more important to Chevron is wherever the opportunity to invest is in the world, uh though the terms have to be competitive, they have to be predictable and they have to have durability.

SPEAKER_00 5:18

You've mentioned Venezuela twice, I'm also just go there as well. You guys already had a special licence to operate, I think, in the eastern Orinoco as well. Chris Wright talking in the last few hours, last 24 hours, about the extra capacity that can come out of there. The quiz question of the year is who's got the greatest oil reserves? Well, everyone always thinks it's Saudi or someone. We you know better than anyone, it's Venezuela. But how difficult is it for you to really scale up and uh and and take advantage of your your position already in Orinoco with those heavy oils?

SPEAKER_02 5:44

Yeah, we've been in the country for a hundred years, so we do see ourselves as you know an advantage incumbent in Venezuela, have deep operational know-how, um, great partnerships with Venezuela, and of course the human capital in Venezuela is terrific as well. We have firsthand knowledge of that. So we're excited about the opportunities that exist in Venezuela. We've actually been growing there over the last few years. We took production from 50,000 barrels a day to 250,000 barrels a day over the last four years with development drilling, good maintenance programs, and infrastructure investments. So we do see a path to more growth, but it will take time. We have recently executed a swap that has given us more acreage, and so we do intend to grow more than 50% on that production rate over the next few years. But beyond that, it comes back to my previous comment. Beyond that, it's it'll come down to the physical terms and how competitive and durable and predictable they are.

SPEAKER_00 6:40

I mean, yeah, you've already mentioned Bacon, you've mentioned Guyana, we mentioned Isan Orinoco and your expertise there as well. Plus, we know now that Iraq's talking about how much oil they want to produce, and then the UAE, they're coming out of open. There seems to me there's a lot of products around that people are desperate to get to market as well. Is that going to give us price instability or certainly a testing of the downside?

SPEAKER_02 7:01

Well, again, it's very complex and supply takes time to be developed and be brought to market. So, you know, it it it can take years between uh you're acquiring acreage or acquiring supply of resources and bringing that to market. So I I think it's uncertain. I am right now, I think it's very hard to predict. Um, I do believe that there are resources around the world that could be brought to market. But it's the timeline and it's the investment required to turn resources in the ground into products on on ships. And I think that's the major, that's the major question. There could be a case you could build for you know more supply coming on the market than maybe we anticipated, but there also could be a case where there's there's less supply because the the investments will not be made without the certainty around the the fiscal terms and the predictability and competitiveness of them.

SPEAKER_01 7:53

I want to take that story a little bit further from product in the ground to product on ships to where it ends up because it feels as though the opportunity in energy solutions is changing today because of AI. I was talking to a company last week that is trying to manage efficiency and connect up grids, and he was talking about how the hyperscalers are building their own energy infrastructure. They're not relying on simply connecting to grids these days because they don't have the capacity that they they require. What does that mean in terms of how far down the vertical stack a company like Chevron can go now because of that opportunity?

SPEAKER_02 8:26

Well, it's a great opportunity for us, and in fact, earlier this week we announced a deal where we'll be supplying uh power to uh Microsoft's data centers in West Texas. So this is a a deal that we uh announced together on Monday, and so a 2.67 gigawatt behind-the-meter power deal to enable the AI power needs. And so the energy challenge is around power to support the AI demand growth that's out there, and so a company like ours is playing in that space with this first for this project, first project.

SPEAKER_01 8:59

That's really interesting because I've had so many conversations over the years with iron ore companies where there was a subtle change of just selling product into the spot market and some uh invisible customer bought it, eventually there's some reporting as to who that invisible customer was, to a change where there were contracts done directly between mining companies with end customers. Is that the change we've now got in the oil industry? We're seeing more and more contracts directly with customers rather just selling into a big, wide global market.

SPEAKER_02 9:27

Well, well, that's representative of the deal that we've just struck, exactly. Our customer is Microsoft, so a partner that we've had for many, for many years, a company, a high-quality company that has ambitions, AI ambitions, and it's directly for that customer. So that is that's what we're doing with the with our deal, and we'll provide first power in 2028, and then the the power uh capacity will ramp up through the end of the the next this decade and into the into the next decade. So, you know, West Texas co-located uh facility that's taking advantage of the land, our operational know-how, and you know, an abundance of um of of gas.

SPEAKER_00 10:07

Let me gas, let me bring it back to closer to home. I don't know if you've been to the eastern med on your trip or you're going to Eastern Med after London as well, maybe you can fill us in on that. But when I say things like uh Leviathan, Zor, Kronos, you know, Zeus, there's a lot of lot of gas in the eastern Med. Some of it's quite political off Israel, of Lebanon, but some of it is going full steam already in places like Egypt and as well. How excited for Chevron are you about the opportunities in the Eastern Med?

SPEAKER_02 10:34

Yeah, we're really excited, and we have the two operations in uh in Israel, Leviathan and Tamar. We've recently completed an expansion project on Tamar. We've another major expansion project planned for Leviathan at the end of this decade. We're we're drilling exploration wells in Egypt, and then we've recently acquired blocks in Greece. We've we've been out in and been inquiring in Libya, talking to people in Libya. There's opportunities in Malta. So all of those Eastern Mediterranean opportunities are exciting. And when you think about the proximity of those opportunities to Europe, I mean that's the obvious market that eventually those those that's those that supply would serve.

SPEAKER_00 11:14

Will that be at the detriment of LNG west to east flows into Europe from the States? Because it's been a great boom for US companies. Dare I say it, Europe requiring more LNG from the US. Is that going to be at the detriment if we do have closer to home sources of LNG and gas more generally?

SPEAKER_02 11:32

Well, not not specifically. It depends on where demand goes, and I think all the the pre-conflict outlooks on demand were of increasing in demand. So I do believe the the demand, uh, the demand is there, and I think it's a really exciting opportunity for us over the next couple of years to you know take those opportunities from where they are today as ICRIC and turn them into profitable high-return projects.

SPEAKER_01 11:55

Ema, just a quick technology question because you're also formerly CTO. So I want to ask you about the technology you're using today and where you're going to get it from. There's a lot of conversations around sovereign AI. You're working with digital twins, robotics too, for monitoring tools enhancing safety. There is a push to ensure that there's enough robotics built out of the United States, that there's the entire technology stack in the US, and that's physical AI too. Do you care as a global company, American company, where you get your technology from? Can it be Chinese robotics or does it have to be American in future to ensure that you have the supply chain?

SPEAKER_02 12:28

Yeah, we have a lot of partnerships around the world. I mean, we were we look we work with local providers because we're a global business, so um our partnerships in the US are primarily with US companies, but we have other partnerships in other parts of the world where we have operations and local content requirements. But on the technology, it's a major focus for us at a company level. I mean, all of our major assets have technology portfolios and very clear ambitions around what unlocks they expect through the use of technologies. I would point to you know AI being one where we're supercharging across the company and we're using it across all our value chains, whether that's to drill faster, whether to be more efficient with our operations, reduce downtime, or to help us find where our best prospect is for exploration. We're using it across the board. And I think that's an area where we're really accelerating our our efforts and we're we're excited about that.

SPEAKER_00 13:21

Ema, your team uh want you to uh well what want you to uh to wrap this up. Want us to wrap it up with you. So we better leave it there. Lovely chatting to you. We could do this all day. Thank you so much for finding time and your visits to London to talk to Karen and myself.

SPEAKER_02 13:32

Thanks, Steve. Thanks, Karen.

SPEAKER_00 13:33

Uh Ema Bonner, who is the CFO of Chevron.