Chevron CEO Michael Wirth on Saudi Arabia oil attack

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CNBC Exclusive: CNBC Transcript: Chevron CEO Michael Wirth Speaks with CNBC’s “Closing Bell” Today

WHEN: Today, Monday, September 16, 2019

WHERE: CNBC’s “Closing Bell

The following is the unofficial transcript of a CNBC EXCLUSIVE interview with Chevron CEO Michael Wirth on CNBC’s “Closing Bell” (M-F 3PM – 4PM) today, Monday, September 16th. The following is a link to video of the interview on

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CNBC's full interview with Chevron CEO Wirth and his reaction to Saudi Arabia oil attack


WILFRED FROST: Oil, surging today, following this weekend’s attack on Saudi Arabia’s oil facilities. It’s expected to knock off 5.7 million barrels per day in production or about 5% in global oil output. Joining us now on the phone in an exclusive interview, Michael Wirth, the CEO of Chevron. Michael, good afternoon. Thanks for joining us.

MICHAEL WIRTH: You’re welcome, Wilfred. Good to talk to you.

WILFRED FROST: It’s great to have you with us on a day like this. I wanted to start by asking, during the course of your career, gauge for us the scale and level of surprise of this attack, relative to other geopolitical shocks that there have been.

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MICHAEL WIRTH: Well, it’s a reminder that risks are always present in our business. And it’s been some time since we’ve seen a major event in the Middle East like this. You have to go back to the Gulf War, the invasion of Kuwait. So, it’s been quite some time. But we prepare for these things. This is a feature of our business. And so, while you can never predict when an event like this might occur, you always need to be prepared. So, we plan for these things and I would say when they happen, we’re surprised like everybody at one level, but at another level, we’ve actually thought about it.

SARA EISEN: How do you think, Michael, it’s going to affect U.S. oil production?

MICHAEL WIRTH: Well, I think in the short-term, there’s not a lot of impact that you’ll see on U.S. oil production, because there’s a lead time. And even in shale, which has been, you know, the driving growth in the U.S., you can’t just flip a switch and see more oil coming to the market. So, there’s months of lead time in standing up new rigs and actually bringing on additional production. So, in the very short-term, there’s not a lot that can happen. In the medium-term, there can be a fair amount. In the short-term, things like the Strategic Petroleum Reserve were actually built for circumstances like that and can serve as a way to buffer through uncertain market times.

SARA EISEN: I guess what I’m wondering is, would you plan to raise your CapEx on an event like this? Do you think we’re going to see that across U.S. oil producers, and therefore, get a lot more oil flowing out of this country?

MICHAEL WIRTH: Well, I think it’s way too early to draw a conclusion like that. This is an evolving event. And I will tell you, Saudi Aramco is a very capable company. I have enormous respect for Aramco. And if there’s a company that can rebound quickly from something like this, it’s Saudi Aramco. So, I think there are still damage assessments being done.

There’s signs that they may bring some of their production back online fairly soon. And I think that’s the real question, is for how long will this supply be off the market. And then of course, there are other areas where supply can come in perhaps for quickly than further ramp-up in the United States.

SARA EISEN: Michael, how easy would it be to attach Chevron’s assets around the world in a similar manner and who’s responsibility is the to protect those assets, yours or the states within which you operate? I get that Aramco being state-owned kind of covers both basis. But for you, who’s responsibility is it?

MICHAEL WIRTH: Well, we work with local, regional and national security agencies and forces in every country where we operate. You know, the safety of our people and the security of operations is paramount. And so, the proximity of an asset to a threat and what are the specific threats, that varies all around the world and it can vary over time. And so frankly, that’s of the highest priority for us, is to always maintain safe operations for our people and the communities around us. So, it’s a joint responsibility and we have measure in place that we’re constantly evaluating and upgrading.

MICHAEL SANTOLI: Michael, today’s move in the price did not bring it to a level that’s particularly extreme, but there has been a lot of talk about it being a reminder of the vulnerability of the supply infrastructure out there. Do you think that there’s any reason to alter your longer-term projections or longer-term assumptions about the commodity price? Or is this just working up against a world that’s still going to be well-supplied for a while?

MICHAEL WIRTH: Well, you know, 5% of global supply coming off unexpectedly certainly has an impact on the fundamentals that determine prices. And the question is, how long is the supply off? What does this event suggest about a risk premium that perhaps has not been as evident in the market? And so, you know, the backdrop, the fundamental global, macroeconomic backdrop, hasn’t changed. I think a lot of the supply fundamentals haven’t changed in the long-term.

So, it’s early to -- it’s early to assess, I think, the longer-term ramifications of this, other than to say, I do think our -- you know, the sector, the energy sector has been somewhat out of favor. And part of that is I think that perhaps the market had grown a little bit comfortable with risks that we never became comfortable with and I think these events demonstrate that those risks are real.

SARA EISEN: You obviously have exposure to this part of the world. You have petrochemicals, I believe, in Saudi Arabia, a field on the border of Saudi Arabia and Kuwait. What are your sources in Saudi telling you. How do you think they’re going to respond?

MICHAEL WIRTH: I think everybody in Saudi is focused, number one, thankfully on the fact that nobody was hurt in this event. Number two, there’s a lot of work underway at Abqaiq and Khurais to assess the damage and what needs to be done to bring things back into operations safely and reliably. And then, I think a third order question is are there other facilities that are vulnerable? People are working all of those things simultaneously right now. And we don’t discuss publicly the specific measures that may be taken around specific assets, but I think it’s reasonable to assume that all of the operators not only in the Kingdom but within the region are reassessing the current security posture.

WILFRED FROST: Michael, the 5% of global supply, 12% jump in WTI today, how long do you think the market is suggesting that supply would be offline? If it came out it was going to be offline for multiple months, do you think there would be more of a jump in the oil price?

MICHAEL WIRTH: Well, it’s a bit of a hypothetical, because the circumstances around that and the market response to it is a function of many other things. Not the least of which, I want to come back to the strategic petroleum reserve, it’s too soon to know if releases will be needed, but the President is doing exactly the right thing in making the SPR available. That’s the kind of leadership that we need at a time like this. That’s what the SPR was built for. And in a scenario like that, I think you would see actions from the U.S. and other countries that would mitigate, you know, some of the market reaction.

SARA EISEN: Who else can make up for the shortfall right now in the world?

MICHAEL WIRTH: Well, there’s certainly other countries that have been curtailing production within OPEC. You mentioned a field that we operate in the kingdom of Saudi Arabia. That’s actually been out of production for several years, due to a dispute between Saudi Arabia and Kuwait. It could be restarted relatively quickly. And so, there are -- you know, there are a number of assets around the world where you have things, whether it’s strategic storage, fields that are offline, fields that have been curtailed as part of OPEC agreements that could be activated. And it’s a combination of all of the above that would fill a supply gap.

WILFRED FROST: Michael, how much pressure do you think this is going to put on the Aramco IPO plans?

MICHAEL WIRTH: Yeah, I can’t speculate on that. I think that’s a question obviously for Aramco to answer.

SARA EISEN: Sounds like President Trump is agreeing now, latest headline, with his Secretary of State, Mike Pompeo, that Iran does bear responsibility for the Saudi attacks. If we did see more of a full-scale war between Saudi and Iran, Michael, what would that do to price of oil?

MICHAEL WIRTH: Well, a full-scale war in the Middle East would very likely move prices higher. I think everybody hopes to avoid something like that. And I’m not privy to anything of that thinking. I think that, you know, at this point, as I said, making SPR barrels available and calming markets is the right thing for the President to do. And then, obviously, the assessment of responsibility in any response to this is a matter for governments to determine, not us.

WILFRED FROST: Michael, how quickly in that circumstance or if the oil price climbs significantly for other reasons, could the U.S. be fully energy independent for the short-term and the long-term?

MICHAEL WIRTH: Well, the U.S., in round numbers, uses around 20 million barrels of oil a day. We produce about 13. That’s up from 5 a decade or so ago. And so, to go from 5 to 13 has taken a lot of work, a lot of investment, and a lot of time. So, to truly become energy independent is not realistic in short-term. We have become much more energy secure.

I think our exports are valued around the world. Were the U.S. not in a position to be exporting oil and producing at the level that it is today, the market impact would be much more severe. And so, I think we should be thankful that we’ve got a healthy industry in this country, that we do have access to exports and exporting have been growing and that helps to stabilize markets. And in a prolonged higher price environment, I think you would certainly see investment decisions that would accelerate that versus the base case.

SARA EISEN: Michael Wirth, thank you so much for phoning into the show today.

MICHAEL WIRTH: You’re welcome, Sara.

SARA EISEN: Important day to have you. Michael Wirth, the CEO of Chevron on one of the biggest jumps in oil’s history.

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