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Chevron to Maintain Asian Spending, Unfazed by Crisis

Bloomberg
 

By Ang Bee Lin

The company will spend a fifth of the $23 billion allocated for global expansion in Asia this year, Kurt Glaubitz, the head of media relations for exploration and development, said in Hong Kong today. “We have a $5 billion credit facility that we expect will be fully available to us and our cash position is strong,” said Glaubitz, who is based at the company’s headquarters in San Ramon, California.

The worst financial crisis since the Great Depression is freezing lending, causing delays in projects such as London’s Olympic Village and pushing the world economy toward recession. Benchmark crude oil prices in New York have fallen more than 50 percent from a record in July on concerns the global stock market plunge will damp economic growth and curb demand.

“We are watching the crisis closely,” said Glaubitz. “Fundamentally, the long-term Asian energy demand growth prospects are still strong.”

Chevron said last week its third-quarter earnings will exceed the $5.98 billion reported in the previous three months even though output will fall for an eighth straight quarter. The company has $8 billion of cash as at the end of the second quarter, Glaubitz said today.

The shares slumped 12.5 percent yesterday to $59.98 in U.S. trading. The stock has fallen almost 36 percent in the past year, compared with a 38 percent decline in the Dow Jones Industrial Average.

Australian Ventures

In Asia, Chevron has oil exploration ventures in countries including Thailand, Indonesia and China. It operates refineries in Singapore, Australia and Thailand.

The company pumped the equivalent of 2.46 million barrels of crude oil a day in July and August, compared with 2.59 million barrels during the third quarter of last year, the company said Oct. 9.

Analysts have said Chevron is among liquefied natural gas producers in the Australian region that may delay committing to new projects because of lower oil prices and difficulty in raising finances.

Chevron’s proposed Gorgon LNG project has already been delayed several years. It was first put on hold in 1998 when the Asian economic crisis hit. More recently, the venture, which includes Royal Dutch Shell Plc and Exxon Mobil Corp., scrapped a timeline for approving and building the plant as they seek to tackle a surge in construction costs.

Chevron’s ventures in Australia are making “good progress,” spokeswomanNicole Hodgson said in an e-mailed response to questions earlier this week. Chevron remains committed to Gorgon and the venture has “recently secured an additional A$1 billion ($670 million) in vital funding,” she said.

“The Chevron-operated Gorgon and Wheatstone projects continue to make good progress, with both projects ramping up staff and contractor positions as we speak,” she said.

To contact the reporter on this story: Bee Lin Ang in Hong Kong at[email protected]

Last Updated: October 16, 2008 20:49 EDT

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