The Chevron House building stands in the central business district of Singapore.

Chevron Corp., the second -biggest US oil company, will “stay the course” on its investment plan in Asia this year, including Vietnam and Cambodia, even as energy prices have plummeted after reaching records.

Chevron posted its lowest profit in five years in the first quarter after the global recession cut fuel demand, dragging down energy prices. Chief Executive Officer David O’Reilly plans to boost output by 4 percent this year to the equivalent of 2.63 million barrels of oil a day, after 2008 production dropped by the most in half a decade.

The company will invest more than US$4 billion in a natural-gas project off Vietnam’s southwest coast, unchanged from its earlier estimate, Geagea said. The company’s negotiations with the Vietnamese government on gas prices are “progressing quite satisfactorily,” he said.

“Clearly it’s a viable project and it will be enough to support those power plants that the government is intending to build,” Geagea said.

The San Ramon, California-based company plans to spend $22.8 billion this year to add new sources of petroleum, keeping its capital budget unchanged after crude dropped more than $100 in six months after peaking in July. Last year, it spent a fifth of $22.8 billion allocated for global expansion in Asia.

Cambodian oil

In Cambodia, Chevron is negotiating to extend the lease agreement for Block A, where the company discovered oil in 2005, Geagea said. The project remains “on track,” he said.

“Cambodia and Chevron are aligned on the need to get those discovered reserves to the market,” Geagea said. “The question is how do you do it in a way that meets our interests and their interests, and that’s where we are continuing to have a dialogue.”

The development of some of the company’s fields has been deferred until construction costs decline and crude prices rise, O’Reilly said on March 11. The company’s investments are mostly based on contractual agreements to supply energy to governments, providing little flexibility to change them if market conditions sour, Geagea said.

“We are pacing ourselves,” he said. “The period we were in before was really a fast growth and clearly that is not the case. It’s a good thing for the industry to take a pause in a way because the system was stressed in terms of capabilities, labor. Now we go back to something a little more manageable.”

In Asia, Chevron has oil exploration ventures in countries including Thailand, Indonesia and China. It operates refineries in Singapore, Australia and Thailand. Geagea oversees Chevron’s upstream operations in Thailand, China, Bangladesh, Vietnam, Cambodia and Myanmar.

Source: Bloomberg