Chevron Corp. (CVX) Chief Executive John Watson said Wednesday that oil prices of more than $80 a barrel aren't a risk for the global economy and it isn't likely that they will increase dramatically.
Chevron Corp. (CVX) Chief Executive John Watson said Wednesday that oil
prices of more than $80 a barrel aren't a risk for the global economy and it
isn't likely that they will increase dramatically.
"We haven't seen significant impact from oil prices at the currently
levels in the economy today," Watson told Dow Jones Newswires in an
interview. "Current oil prices don't pose a great risk."
The head of the largest
U.S.
oil
company by market value after Exxon Mobil Corp. (XOM) said the
"tenuous" rebound the economy has experienced, however, could be hurt
if oil prices experience extreme volatility like that seen in 2008 when oil
prices hit $145 a barrel, a level Watson said is unlikely to be reached. "We
don't foresee that to happen again," Watson said.
Watson's remarks came the same day that Saudi Arabia Oil Minister Ali al-Naimi
said oil prices are still trading at sustainable levels and that he is more
optimistic about the prospects of world energy demand. Watson and the minister,
who controls the petroleum policy of the most powerful member of the
Organization of Petroleum Exporting Countries, shared a panel at the U.S.-Saudi
Business Forum in
Chicago
. Naimi
said the worst of the economic crisis was "over."
Other factors such as increasing sovereign debt pose a bigger risk for the
economy than high oil prices, Watson said. Oil ended Wednesday at $83.22 a
barrel.
The San Ramon, Calf.-based company hasn't changed its $21.6 billion
capital-expenditure budget for this year, but Chevron is looking for the right
investment opportunity that could boost its expenditures, Watson said. He
confirmed that the company's oil and gas production is expected to grow 1%, the
same target Chevron provided in its analyst meeting.
Watson said he "hopes" President Barack Obama won't change his
proposal to open new areas in federal waters for oil and gas exploration due to
the blast that sank a Transocean Ltd. (RIG) drilling rig in the U.S. Gulf of
Mexico last week, which he described as a "terrible" accident.
"We don't think the Obama administration has changed that view,"
Watson said. "I hope they will continue to make acreage available to the
industry." Watson said the oil industry should do "everything it
can" to learn from the accident and make all the safety improvements
required.
Despite the current oversupply of natural gas, long-term fundamentals will
support the relationship that links natural-gas prices to oil prices, Watson
said. "The supply-demand balance is going to be different than today in
four or five years," Watson said. Chevron, which is aggressively investing
in massive liquefied-natural-gas projects in
Asia
,
still expects long-term demand for LNG to grow in the years ahead.
Watson also said the company is in talks with
China
to
sell liquefied natural gas. "We have, and we will continue to have,
discussions with Chinese customers," Watson said. Chevron is one of the
few oil majors that isn't selling or committing to sell LNG to
China
, the
world's fastest growing market for LNG.
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