Annual demand for oil is expected to continue rising globally, Chevron CEO Mike Wirth said, as the company expects ten percent growth over the next several years.
“Markets are relatively balanced. Demand growth is strong. Last year was all-time record demand. We’ll see demand grow again this year,” Mr. Wirth said in an interview with Fox that aired on Tuesday. “So, the end of the oil age is not yet upon us.”
The interview was recorded on Monday at the 27th annual Milken Institute Global Conference, where the Chevron CEO shared his expectations for the oil sector’s positive financial performance and increased oil production throughout the year.
“Global demand was up about 2 million barrels a day last year, year on year,” Mr. Wirth said. “This year we think it’s gonna be up about 1.5 million. So still, strong growth in oil demand.”
Mr. Wirth said the two big drivers for the increasing demand on the international oil market are Asia and the U.S.—Europe less so.
“It’s important that we continue to meet that [demand] with new production, which is certainly what we’ve been doing,” Mr. Wirth said.
“Driven by the Permian, driven by some other shale assets in our portfolio, projects in the deepwater Gulf of Mexico,” he pointed out, “we’ve got a number of other assets that are delivering growth.”
In addition, a merger with Hess is underway, which will bring the offshore Stabroek assets in Guyana, as well as its facilities in North Dakota, under Chevron’s umbrella.
“The combination with Hess only strengthens our cash flow longer into the future, not only to the end of this decade, but well into the next.”
Though the $53 billion deal has been brought before arbitration by Exxon Mobil—which owns part of the Stabroek assets—Mr. Wirth said he was very confident that the deal would close, albeit likely not before 2025.
When asked about the ongoing turmoil in the Middle East—the Israel-Hamas war, the rising tensions with Iran, and rebels attacking ships in the Red Sea—Mr. Wirth said Chevron was preparing itself as much as possible to secure a steady oil supply.
“In the short term, these risks due to geopolitical events, are things to pay attention to because they could impact markets,” he said.
“We did see some impact on our supply of natural gas into Israel during the early days of the conflict,” he explained. “We now have both platforms online and are meeting all the needs not only for Israel’s domestic market, but also for Jordan and Egypt, where the gas goes as well.”
“The risks in a situation like this are that, through some sort of an escalation, a miscalculation, you could see impacts on physical supply in an area that supplies so much of the world’s oil. And that’s a real concern.”
Mr. Wirth was asked whether the situation in the Middle East would cause oil prices to remain high for the foreseeable future.
“It’s really hard to predict oil prices,” he answered.
“We’re prepared for volatility; we’ve got a balance sheet that allows us to withstand a period of very low prices for a long period of time,” he explained, noting that the company predicts it will deliver ten percent compound annual growth in free cash flow over the next several years.
“We had really strong performance operationally, the largest production in the history of our company, and in the U.S., up 35 percent year on year,” he said. “Our 8th quarter in a row over $5 billion in earnings and distributed over $5 billion to shareholders for the 9th consecutive quarter.”
