Chevron Corp. has said it will invest $1.5bn to upgrade its aging fleet of engines, a move that would see the company restarting a decades-long project that has seen it transform from a small supplier of oil into a global powerhouse.
Chevron’s decision comes as it seeks to expand into a growing segment of the global economy as a major player in the global fuel market.
The company said on Wednesday that it will begin the project in 2019 with a focus on developing a fleet of 350 engines.
The plan, outlined in a white paper that has been leaked to the press, is to begin construction on the project by 2021.
Its announcement came days after Exxon Mobil Corp., the world’s largest oil company, said it was considering a similar investment.
On Wednesday, Chevron said it would invest $4.5billion in a “global engine development program” to develop a new generation of engines.
The plan, announced in an annual report, includes a focus “on the development of an advanced fuel and lubricant technology for use in its global fleet of more than 100 engines, which would significantly increase the company’s oil-oil-gas-combustion capacity and enable it to operate with greater efficiency than before the oil price crash of the past decade.”
Chevy, a unit of Texas-based Chevron Corp., has been struggling with declining demand for its petrochemical products as the global economic crisis and rising global demand have pushed up the price of petroleum.
In March, the company reported a $5.5-billion loss for the first quarter, its first full-year loss in five years.
The company said it had spent $2bn on new capital expenditures since the beginning of 2016 and had about $3.4bn in cash on hand.
According to the white paper, the project will be a combination of the existing engineering and production capabilities at Chevron’s Petronas plant in Brazil, where it is currently building its refinery and refining plants.
After the completion of the refinery in Brazil this year, the pipeline will carry oil from the refinery to the PetronAS plant in Valencia, Argentina, where the plant will produce its own petrochemicals.
Petronas has said the refinery is not a cost-effective alternative to producing oil, and has been working on a solution.
It said it has agreed to develop an oil recovery system to ensure the refinery’s capacity can meet the needs of future demand.
“This refinery will be the world-class oil refinery with the highest level of safety, reliability, and productivity in a refinery that is expected to produce around 500,000 barrels per day, which is equivalent to more than 40% of the world oil demand, by 2020,” the company said in a statement.
Under the plan, Chevron will build and operate a new refinery and two other plants.
The new refinery will have capacity to process around 7 million barrels of oil a day, the white plan said.
The plan also calls for Chevron to spend $1bn on “improving production capabilities, production processes, and technologies, as well as on improving operations efficiency and quality.”