Chevron's Australian LNG Operations Face Divergent Paths After Cyclone

Chevron's Wheatstone LNG facility faces weeks of downtime after a cyclone, as CEO Mike Wirth warns markets are underestimating supply risks from Middle East conflicts and logistical chokepoints.

While one major liquefied natural gas facility has resumed full operations, another owned by Chevron Corporation will require weeks to return to service following Tropical Cyclone Narelle. The incident has prompted CEO Mike Wirth to issue a broader warning about underestimated supply risks in global oil markets.

Stock Performance and Corporate Updates

Investors have responded positively to the company's overall trajectory. Chevron's stock reached a new 52-week high of €183.46 on Friday, reflecting an approximate 38% gain since the start of the year. Analysts at Morgan Stanley maintain an "Overweight" rating on the shares.

On the corporate front, the board approved a quarterly dividend of $1.78 per share, distributed on March 10, marking a 4% increase from the previous payout. Governance changes were also implemented to facilitate a key board role for John Hess following the acquisition of Hess Corporation, despite his classification as a non-independent director under NYSE standards.

Facility Status: Gorgon Online, Wheatstone Offline

The cyclone's impact varied significantly between Chevron's two Australian LNG projects. Full operations have been restored at the Gorgon facility on Barrow Island, with all three production turbines now running. The plant, with an annual capacity of 15.6 million tonnes, is once again operating at full capacity.

The situation is markedly different at the Wheatstone project near Onslow. Significant damage was sustained at both the onshore plant and the offshore platform. Management anticipates a shutdown lasting several weeks before the facility, which can produce 8.9 million tonnes per year, is fully functional again. Combined with other regional disruptions, these Australian outages currently account for roughly 8.4% of global LNG trade.

CEO Highlights Systemic Supply Chain Underestimation

Beyond the immediate operational disruptions, CEO Mike Wirth used the weekend to caution energy markets about a broader miscalculation. He argues that oil traders are operating with incomplete data, leading to a substantial underestimation of the logistical damage caused by ongoing Middle East conflicts.

Wirth specifically pointed to the effective closure of the Strait of Hormuz, a chokepoint for 20% of the world's oil supply. Tanker traffic through the strait has declined sharply, and Gulf states are being compelled to cut production due to blocked export routes. In the CEO's view, current crude prices do not yet adequately reflect this physical market reality.

Domestic Pressure in California

Chevron is also facing mounting challenges in its home market. Andy Walz, head of the company's refining business, warned of a potential energy emergency in California. The state relies heavily on fuel imports from Asia, shipments now jeopardized by the disruptions in the Strait of Hormuz.

The company has linked the future of its California refineries to regulatory reforms. Proposed amendments to the state's cap-and-invest program could impose up to $500 million in additional costs on the remaining facilities. Chevron has not ruled out a complete exit from the state within the next decade absent adjustments to tax and climate regulations.