UPSTREAM: What impact will the energy transition have on the operations of oil and gas companies over the next five years and beyond?

GUSTAVSON: Individual companies are taking a variety of approaches while working toward a lower carbon future. We are addressing different needs, making different investments, and exploring different technologies.

Chevron intends to be a leader in efficient and lower-carbon production of traditional energy — in high demand today and for years to come – while growing the lower-carbon businesses that will be a bigger part of the future like hydrogen, carbon capture and storage, renewable fuels, and offsets.

We believe we are well positioned with an oil and gas business that is highly profitable, supports our financial position, and targets 35% reduction in upstream carbon intensity by 2028 from 2016.

To advance our 2050 net zero aspiration for equity upstream Scope 1 and 2 emissions, we’re taking actions to reduce the carbon intensity of our portfolio, investing in many greenhouse gas reduction projects intended to reduce methane emissions and flaring, as well as improve energy management.

We are supporting our energy transition strategy by tripling our planned total capital investment to $10 billion through 2028. ($2B in carbon reduction projects and $8B in low-carbon investments.)

UPSTREAM: Is natural gas becoming more attractive than oil for companies and, if so, what implications does that have for the business?

GUSTAVSON: Both oil and natural gas have a vital role to play in any global transition of energy by providing scalable, lower-carbon solutions that meet growing energy demands.

Natural gas plays an important role in powering critical industries across the world. It is used to generate electricity, heat buildings, cooking and for many industrial uses. And we are confident that gas will remain a viable component of the energy mix.

We are seeking to be a leader in efficient and lower carbon production of traditional energy, in high demand today and for years to come, while growing low-carbon businesses that will be a bigger part of the future.

UPSTREAM: How can large-scale, multi-billion-dollar conventional oil and gas developments, including in deep waters, continue to compete for capital?

GUSTAVSON: At Chevron, we believe in a two-pronged approach to addressing climate change that provides energy the world needs. We have the opportunity to reduce the carbon intensity of our operations, as well as growing and commercialising low-carbon businesses.

We have increased our lower carbon capital investments and our ambitions to progress our energy transition goals, tripling our lower carbon capital versus prior guidance to over $10 billion between now and 2028.

While Chevron has shifted somewhat to more short-cycle investments overall, major projects like deep-water development still compete for capital because they deliver on both our higher returns and lower carbon objectives.

We have a disciplined approach to reducing carbon emissions consisting of activities across the spectrum – from operational practices to design standardisation, to deployment of new technologies. And US deep-water developments can produces some of the lowest carbon barrels in the world. Our goal is to maintain our position in the first quartile of all upstream producers in producing energy at a carbon intensity well below the average of the global system.

UPSTREAM: The debate around COP26 revealed widespread perceptions that the oil and gas sector is more concerned about preserving the value of fossil fuel assets than engaging in real energy transition. Such divisions can be seen when the different "colours" of hydrogen are discussed. What role do oil and gas companies must play in the energy transition, and how do they build trust?

GUSTAVSON: We’ve been around for 142 years and intend to be around for many, many decades to come. We believe the future is lower carbon. Energy companies will continue to play a role in solving the complex challenge of meeting the world’s growing energy demand with reliable, affordable, and ever-cleaner energy – leveraging our capabilities, assets, and partnerships.

We believe it’s not an ‘or’ conversation, but an “and” world where we can continue to fuel global energy demand with lower carbon traditional businesses, as well as accelerate the development of new low carbon businesses.

Achieving the Upstream Scope 1 and 2 2050 net zero aspiration will require continued partnership and progress in technology, policy, regulations, and offset markets – Chevron seeks to continually develop partnerships to share best practices.

We can build trust by collaborating on solutions and advocating for continued transparency in carbon emissions reporting.

UPSTREAM: Where do you expect the oil price to be by the end of this year? And in five years? What are your hopes and fears for energy transition?

GUSTAVSON: Global crude oil and finished products are priced based on supply and demand fundamentals. We do not speculate on the direction of prices or future market conditions and instead we focus on those things under our control. Our hopes are that together we – industry, governments, and society – can achieve our lower carbon ambitions while still delivering the energy the world needs to progress.

We believe energy transitions must work for all. We support markets, partnership, and competition as the most effective way to deliver the progress needed to achieve shared goals. Together, we are poised to create innovative solutions to meet the world’s biggest challenges.