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Exxon and Chevron to focus on US investments in snub to EU windfall tax

By Angela Barnes

14:01, 5 January 2023

Exxon and Chevron
Exxon and Chevron focus on Permian Basin projects as Europe's windfall tax drives away investment – Photo: Getty

US oil majors Exxon Mobil (XOM) and Chevron (CVX) are focusing on projects closer to home in 2023 – after considering numerous factors including the impact of the EU’s windfall tax on future investment plans.

Exxon Mobil (XOM) price chart

Exxon has made no secret of its disapproval of the bloc's new windfall tax on oil groups, arguing Brussels exceeded its legal authority by imposing the levy – and is taking legal action against the European Union to try and stop it.

Exxon has invested $3bn in the past decade in refinery projects in Europe but the oil and gas titan said thoughtful policy is now critical to address current issues.

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Chevron (CVX) price chart 

Chevron also recently warned that taxing oil production would reduce energy supply by discouraging investments.

Where will the money go instead?

Exxon said in a news release that its upstream earnings potential is expected to double by 2027 versus 2019, resulting from investments in high-return and low-cost-of-supply projects.

“More than 70% of capital investments will be deployed in strategic developments in the US Permian Basin, Guyana, Brazil, and LNG projects around the world. By 2027, upstream production is expected to grow by 500,000 oil-equivalent barrels per day to 4.2 million oil-equivalent barrels per day with more than 50% of the total to come from these key growth areas,” the company said.

Exxon said the growth plans are focused on high-return projects that are anticipated to double volumes of performance chemicals, lower-emission fuels, and high-value lubricants. 

“Increased cash flow and earnings enable further net debt reduction and increased shareholder distributions,” it said.

Chevron, meanwhile, also said in its 2023 capital expenditure announcement in December that it will focus its investment in the Permian Basin.

The group said it will also be investing in Gulf of Mexico projects and its petrochemical construction on the US Gulf Coast.


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“We’re maintaining capital discipline while investing to grow both traditional and new energy supplies,” Chevron Chairman and CEO Mike Wirth, said. “Our 2023 capex budgets are consistent with our long-term plans to safely deliver higher returns and lower carbon,” he added.

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Other oil and gas companies pulling back

Chevron and Exxon are not the only oil and gas majors to reconsider their international investments this side of the pond.

French energy company TotalEnergies (TTEF) also recently announced that it will reduce its investments in UK oil and gas projects by 25% in 2023, because of the British government’s decision to increase the Energy Profits Levy (EPL) too.

TotalEnergies (TTEF) price chart

As reported by at the time, British finance minister Jeremy Hunt announced the changes to the levy on 17 November.

As well as increasing the windfall tax on the profits of oil and gas companies from 25% to 35%, Hunt also said electricity generators will have to pay a new temporary levy of 45%.

Shell (RDSa) is also reviewing its plans in light of the windfall tax. The company recently told in an exclusive interview on 25 November that it is not going to suddenly stop investing in the UK but will now review each of its investment projects accordingly.

Shell (RDSa) price chart

“Shell will invest £20bn-£25bn over the next ten years and there’s no question that we are suddenly not going to invest any of that anymore but we will make investment decisions on a case by case, project by project basis,” the company representative said.

It is expected that other companies will follow suit.

Markets in this article

159.23 USD
-2.83 -1.750%
Exxon Mobil Corp (Extended Hours)
116.12 USD
-2.83 -2.380%
Shell - EUR
33.350 USD
-0.58 -1.710%
TotalEnergies SE
62.695 USD
-1.295 -2.030%

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