Downstream investment in 2012 to focus on base oils plant, energy efficiency and feedstock flexibility projects.

Chevron has reported full-year earnings of US$26.9 billion for 2011 – a new company record. It also retains its guidance of around 1% CAGR in net oil production over the 2010–2014 period and reports that its growth projects are on track. Chevron is looking to grow its oil production at a rate of 4–5% per year over the 2014–2017 period. It is currently expecting to see net oil production of 2.680mbpd boe, compared with the 2.673mbpd boe seen for 2011.

Fourth-quarter 2011 earnings were down by US$172 million year-on-year, at US$5.123 billion, due in part to losses of US$204 million incurred by the company’s refining activities in the US. Chevron says its crude oil input shrank to 763,000bpd in 4Q11, down 113,000bpd on year “mainly due to maintenance-related downtime at the Richmond refinery”. Refined product sales for the quarter came in at 1.23mbpd, down 69,000bpd on year, mostly due to lower gasoline and residual fuel oil sales. Branded gasoline sales were down 3% at 515,000bpd, on weaker demand.

International operations in 4Q11 generated US$143 million in earnings for 4Q11, down from the US$267 million seen in 4Q10, with Chevron attributing most of the decline to weaker margins, with currency effects also working to drag down earnings. Refinery crude input fell by 235,000bpd on year to 805,000bpd in 4Q11, “primarily due to the sale of the Pembroke refinery”, and total refined product sales dropped by 12% on year, “primarily related to the sale of the company’s refining and marketing assets in the UK and Ireland”.

The company’s downstream activities generated a loss of US$61 million in 4Q11, compared with a profit of US$742 million booked in 4Q10. Overall earnings from the segment for 2011 came in at US$3.591 billion, up 44.9% YoY, and worldwide refining inputs averaged 1.787mbpd in 2011, down from the 1.894mbpd in 2010.

As far as the company’s capital and exploratory programme is concerned, Chevron spent a total of US$29.1 billion in 2011, of which US$1.5 billion and US$1.2 billion was spent in the US and international downstream segments, respectively. For 2012, the company is looking to invest US$32.7 billion, of which US$2.1 billion and US$1.5 billion will be allocated to US and international downstream activities. The bulk of this will be spent on the Pascagoula base oil project, along with projects aimed at improving energy efficiency and feedstock flexibility.

John Watson, Chevron’s chairman and chief executive, said in a conference call to investors that the company is still on course for completion of its Pascagoula base oil project in 2013, which will add a 25,000bpd lubricants manufacturing facility at Chevron’s 330,000bpd Pascagoula refinery in Mississippi.

“We are continuing to develop an enviable project queue, with almost 90% of the programme earmarked for upstream activity. We are progressing construction on our two world-class Australian LNG projects and deepwater Gulf of Mexico developments.  We are planning for increased exploration activity around the world, along with additional work to further assess the Marcellus and Unicar acreage we acquired this past year. The investments we are making today are on track to deliver significant production growth by mid-decade, which is expected to generate substantial cashflow over a long period of time,” Watson said.