The Strategist

Chevron to leave Canadian LNG project Kitimat

12/11/2019 - 09:02

The Canadian division of the American oil and gas company Chevron plans to withdraw from Kitimat LNG project in British Columbia, where the company owns 50%, the firm said.

Jonathan McIntosh
Jonathan McIntosh
Chevron notes that the decision on the LNG project was within optimizing the portfolio of assets aimed at increasing profitability. The company considers the above project to be competitive, but Chevron's investment plans do not include financing. According to the company, this project "can be of great value to another company."

“With Chevron’s disciplined approach to capital allocation and the revision of its long-term commodity price forecast, the company will reduce funding for various gas-related opportunities, including the Appalachia shale project, Kitimat LNG project and other international projects. Chevron is evaluating strategic alternatives for these assets, including their sale, "the company said.

Together, these actions will lead to deductions to reserves, taking into account the impairment of assets in the amount of 10 to 11 billion dollars in the fourth quarter of 2019 (after tax), more than half of which are associated with the Appalachia project, Chevron adds.

Chevron also announced a $ 20 billion investment program for 2020, of which $ 16.8 billion will go to the upstream sector (exploration and production). Of this amount, about $ 4 billion will be spent on the development of "unconventional Permian basin reserves." In addition, of the total investment, $ 2.8 billion will be directed to the downstream sector (processing and marketing), and $ 400 million will go "for other purposes."

Chevron is the second largest US oil and gas company. The corporation operates in more than 180 countries.