Chevron raises 2023 project spending budget to $17 bln

Dec 7 (Reuters) -

Chevron Corp on Wednesday said it increased its 2023 capital spending budget by a double-digit percentage from this year to $17 billion, as inflation drives up energy production costs and the firm pours cash into low-carbon fuel projects.

Like other U.S. energy companies that profited from this year's rise in fuel prices, Chevron faces mounting pressure from the White House to invest more in fossil fuel supplies. The company is also preparing to expand operations in Venezuela.

Chevron indicated it will keep spending within a $15 billion to $17 billion range, despite this year's surge in oil prices that generated all-time high profits and allowed for record amounts of cash distributions to shareholders.

“We’re maintaining capital discipline while investing to grow both traditional and new energy supplies,” said Chevron Chief Executive Officer Michael Wirth.

Oil producers in the United States and Europe prioritized rewarding investors with dividend increases and stock buybacks as prices and profits soared. The companies to a lesser extent have also boosted spending on renewable fuels and carbon emissions reductions.

Chevron said its 2023 budget will include doubling to approximately $2 billion this year's spending on renewable fuels and projects that reduce carbon dioxide emissions.

Cost inflation averaged in the mid-single digit percentage rate this year with certain regions higher, Chevron said. In the Permian Basin, the top U.S. shale field, inflation has run at a low double-digit rate.

Chevron and oil rivals over the years slashed spending on megaprojects, shifting to fast-return areas such as U.S. shale. While next year's budget is higher, it is well below the $20 billion-plus outlays in last decade and less than half the $41.9 billion spent in 2013.

The second-largest U.S. oil producer will spend less than $15 billion on new projects this year, slightly below the $15.3 billion it had budgeted a year ago.

Last month, Chevron affirmed a goal of a 3% annually compounded growth between 2023-2026 for its overall oil-and-gas output, and to pump 1 million bpd in the Permian in 2025.

(Reporting by Sabrina Valle in Houston, Ananya Mariam Rajesh in Bengaluru; Editing by Maju Samuel and David Gregorio)