Oil & Gas

Conflict hampering Mediterranean operations, says Chevron CEO

December 12, 2024, 4:05 PM

Chevron CEO Michael Wirth at the Gastech conference earlier this year. Wirth says the energy transition may take longer than originally hoped

Chevron produces most gas for Israel
Regional conflict affecting operations
Only US company in Venezuela

US energy major Chevron has struggled to keep natural gas production online in the Eastern Mediterranean during the conflict in the Middle East, according to its chairman and chief executive Mike Wirth.

Chevron is the largest producer of natural gas for Israel, in particular through two “large” offshore platforms, Tamar and Leviathan, that also supply to Jordan and Egypt, Wirth said last week.

“We’ve had to shut-in operations multiple times over the last few months as these have been targeted by rockets and missiles from Hezbollah,” Wirth explained.

However, he noted, the naval version of Israel’s air defence system Iron Dome has been “effective in interdicting” the attacks.

The 64-year-old, who has headed Chevron since 2018, was speaking at an event hosted by the Atlantic Council in Washington DC.

“We’ve had autonomous underwater attacks as well, and so the infrastructure has been at risk,” Wirth said.

“We’ve got to keep our people safe first and foremost, and secure the facilities so we don’t have an environmental incident.”

The energy executive welcomed recent “progress” in “ramping down” the conflict after the ceasefire between Israel and Hezbollah, and predicted that US President-elect Donald Trump’s return to the White House would again unleash a maximum-pressure approach to sanctions against Iran.

“The first time, the Trump administration had very strong views on what they should be doing to influence the Iranians not to develop nuclear weapons and I don’t expect that to change,” he said.

Extensive US sanctions against oil from Iran as well as Russia are currently being enforced in a way that “redirects” supply, not “crimps” it, according to Wirth.

“The overarching goal for the current administration has been to try to keep oil prices from getting away from them as we saw during the early days of the conflict in Ukraine,” he said. “That’s why these barrels are still flowing in the market.”

Chevron has experience working in another heavily sanctioned nation, Venezuela, where it remains the only American oil company still in business.

Wirth told the Atlantic Council audience last week that he hopes to stay there and “to help one day rebuild their petroleum economy.”

Venezuela is in the midst of escalating political upheaval and repression months after President Nicolás Maduro declared he had won re-election in July despite significant questions about the votes count.

Any future changes in the Latin American nation’s government that realigns it with the US would have enormous repercussions on global energy markets.

“Most people don’t realise Venezuela has more oil and gas than any other country on the planet, and that includes Saudi Arabia,” said Wirth.

“And it’s right here in our hemisphere and the characteristics of their oil actually fit really well with the US refining system. So there’s a natural synergy there that could exist.”

Wirth was separately asked about the impact the second Trump administration might have on oil prices by the moderator, Atlantic Council president and CEO Frederick Kempe, who cited a senior Middle Eastern official estimating it to him at about $20 less a barrel.

“Oil prices are really hard to predict,” Wirth said. “They're a function of supply and demand in this country. You've got Opec and Opec+ that have come together to try to manage supply into the market, to keep supply and demand in balance, and they have a lot of influence over global markets.”

Opec+ last week decided to again postpone a planned hike in output by three months as the group struggles to bring the price of crude closer to members’ breakeven levels.

The Chevron head also said he has noted a shift in the debate over energy, climate change and the transition towards cleaner power.

“I think there is a recognition that the transition is going to take longer than people hoped a few years ago," Wirth said.

"We will make progress on it but there is a bit of a reality that is now coming back into the conversation about the degree of difficulty, the scale of the system and the realities of the timeline that are involved.”