By the OGJ Online Staff
HOUSTON, Feb. 6 -- ChevronTexaco Corp. said Wednesday it plans a $9.4 billion capital and exploratory spending program for 2002, including $1.6 billion in non-cash affiliates' expenditures.
That is 22% lower than 2001 spending of $12 billion. After adjusting for major acquisitions, divestitures, and lease buy-backs, underlying spending in 2002 is 9% lower than in 2001.
Chairman and CEO Dave O'Reilly attributed the reduction to "merger-related capital efficiencies, including high grading of opportunities, increased use of best practices, and procurement integration. While smaller, this program continues our long-term strategy to pursue high-return upstream growth projects, while improving our competitive position and returns in global downstream."
About 65% of the total spending, or $6.1 billion, will be invested in worldwide exploration and production, with $1.8 billion of that to be spent in the US. This is 14% lower than the $7.1 billion spent last year. Significant one-time items in both years are largely offsetting: the purchase of an additional 5% of Tengizchevroil in 2001 and a lease buyback associated with Captain field in the North Sea in 2002.
ChevronTexaco said the 2002 exploration program is expected to deliver $300 million lower exploration expense than pre-merger levels. More than 50% of the exploratory spending will be in the most promising prospects in the deepwater Gulf of Mexico, Brazil, and West Africa. The rest will be spent in areas such as Nova Scotia, Alaska, Norway, and China's Bohai Bay, in addition to activities near core production areas.
The worldwide upstream program includes longer-term growth projects in: Kazakhstan, where Karachaganak and Tengiz fields are due production increases in 2003 and 2005, respectively; Chad, where development of Doba field and the Cameroon pipeline will come on stream in 2004; Nigeria and Angola, where offshore investments continue; Venezuela, where Hamaca field and a crude upgrading facility will reach full production in 2004; and in western Canada, where construction continues on the Athabasca Oil Sands project with expected bitumen production in late 2002 and synthetic oil output shortly afterwards.
ChevronTexaco said it would continue to develop its US upstream portfolio with the goals of maximizing long-term cash flow and value. About $1.7 billion, or 18% of total spending, will be invested in global downstream. This is $200 million less than in 2001, excluding Equilon and Motiva, affiliates to be divested under a US Federal Trade Commission order.
ChevronTexaco plans to invest $700 million in US refining and marketing and about $700 million in international refining and marketing. About $300 million will also be invested in transportation, which includes pipelines to support expanded upstream production.
Investments in chemicals will be $400 million. Almost half of this is ChevronTexaco's share of a world-scale petrochemical complex being constructed in Qatar by its Chevron Phillips Chemical Co. affiliate.
Investments in power and related businesses (including Dynegy Inc.) will total $800 million, down from about $2.3 billion in 2001, which included acquisition of $1.5 billion in redeemable, convertible preferred shares of Dynegy. The remaining $400 million will be invested primarily in emerging technologies and improvements in information technology infrastructure.