Chevron Faces $4bn Hit Amid Stringent California Regulations

Despite a 15% drop in production in the state, the oil giant plans to continue operations while also grappling with decommissioning costs in the Gulf of Mexico.

• Chevron, the US oil giant, is set to take a $4bn hit due to stringent regulations introduced by California's Democrat-led government, which have deterred investment and led to lower anticipated future investment levels.
• California's regulations have restricted licensing of new oil and gas projects, forced operators to allocate more funding to plug wells nearing the end of production, and given the state the power to fine oil companies that cause major oil spills.
• Chevron's production in California has dropped 15% since the Covid-19 pandemic and now accounts for just 3% of its worldwide output.
• Despite the writedowns, Chevron plans to continue operating the oil fields and related assets for years to come.
• Chevron also faces costs related to decommissioning its former oil and gas platforms in the Gulf of Mexico, after the company that purchased these assets filed for bankruptcy, leaving Chevron responsible for the clean-up costs.

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