ENERGY AMBASSADOR
Chevron’s man in Asia
It was mid-afternoon on a Wednesday when I walked into a meeting room set aside for an interview with Stephen Green, the president of Chevron Asia Pacific Exploration and Production Company. As I greeted the 190-centimetre-tall executive who was making his second business visit to Thailand in two weeks, a jingle sounded, followed by woman’s voice saying “It’s time to stretch” twice. What an extraordinary welcome to the office of a multinational energy company, I thought.
It turns out the announcement signalled the start of a 10-minute stretching exercise that the company holds at 3pm every day. Aimed at preventing repetitive strain injuries, the daily routine, in my view, is a great idea for any company that wants to help its workers reduce stress — and few businesses are more in need of stress relief than the energy industry.
Watching volatile oil prices is certainly stressful for energy executives but not for Mr Green, who has been in the business for 37 years since he graduated from Texas A&M University.
“I started in this business in 1980. This is the fifth time in my career that oil prices have decreased 50% or more in less than six months. We’ve seen these kinds of cycles before and we’re experienced in managing our way through them,” says the 58-year-old American.
“[During] my 37 years in the industry, I’ve seen very high prices and very low prices. Successful businesses have to be competitive and continue to invest and execute their businesses across that wide range of processes,” he tells Asia Focus.
To manage his stress, Mr Green says he tries not overreact to the situation or the moment because most of the decisions in his industry require “careful thought and consideration”.
“I try not to add drama to the situation,” he says, laughing. “If it appears that I’m stressed about something, the workforce picks up on that and that adds stress to the workforce. That’s not helpful to meeting the challenges that we have on a day-to-day basis.
“If it’s really a stressful time and decision, I try to change the context. If I find that continuing on is not helpful for me, I’ll try to take a break, do something else for a while, do some exercise, have a nice dinner, go for a walk, read something for leisure, or watch a sporting event and come back to refocus on that issue at a later time.”
Assuming the post in April this year, Mr Green now oversees Chevron’s exploration and production activities in eight countries in the Asia Pacific region. Prior to that, he served as vice-president of policy, government and public affairs, responsible for US and international government relations to protect and enhance the company’s reputation.
Before joining Chevron, Mr Green was chief executive officer of Unocal Thailand and vice-president of international energy operations for Myanmar, Thailand and Vietnam. Following the Chevron-Unocal merger in 2005, he became the head of Chevron’s Asia South business unit, adding Bangladesh, Cambodia and China to his previous responsibilities.
“I’ve been fortunate to work in the energy business for my entire career,” he says. “This is the most fascinating industry in the world with opportunities to work with people and governments around the world to bring our expertise to help solve their needs and help grow the economy.
“It’s been s tremendous excitement to have the opportunity to live and work in several parts of the world and travel around the entire world. I can’t think of another industry that would afford such a great opportunity to travel, work and experience many fascinating cultures.” LONG-TERM VIEW As oil prices fluctuate constantly and sometimes dramatically, energy companies such as Chevron take a long-term view in managing the business and staying competitive in both up and down cycles.
“E&P (exploration and production) is a very long-term business and the nature of the business is that we tend to invest for a very long time horizon,” says Mr Green, noting that the company has been producing natural gas in Thailand for 53 years.
Headquartered in San Ramon, California, Chevron has had a long-term presence in Asia Pacific including more than 80 years in Indonesia and 40-plus years in Australia.
“It’s not an industry that many companies have been successful of getting in and getting out quickly,” he says. “It does require unique management, applications and skills to effectively manage in a commodity business that requires consistent reinvestment.
“We have to operate when oil prices are high or low. I think responsibly managing your business so that it can be competitive and being able to continue to invest across those up and down commodity cycles is the key success factor for companies in our industry.”
As prices are constantly changing, constant application of innovation and technology is needed to get the results that Chevron and its peers around the world need.
This year alone, Chevron and its partners expect to invest the total of 100 billion baht in their projects in the Gulf of Thailand. An average of 300 to 400 new wells are drilled every year to maintain the production level in the area.
Last year, Chevron’s average production from the Gulf was 1.7 million cubic feet per day. The company supplies 40% of Thailand’s gas demand.
“The Thai economy depends on our production to provide the energy to grow the economy,” Mr Green notes. “The Thai or other economies don’t want to have a lot of energy this year and a little bit of energy next year. It would be very hard to manage the economy and attract investment without that reliable supply of energy.
“I don’t think that in recorded history, there has been a long-term successful economy that has not had a reliable, dependable, affordable supply of energy.”
The nature of Chevron’s operations all over the world is that they focus on long-term quality and long-lasting partnerships with the government and other groups with which the company works.
“We have established a true partnership with every government that we worked with and the goal is to execute our business professionally, reliably, independently and it doesn’t depend on one government being in place during the time,” says Mr Green. “That’s one of the key things that keeps us in really good constructive partnerships around the world.” SMALLER, BUT STAYING ON As oil prices have gone down considerably over the past two years, there is an inevitable impact on the workforce, however. Chevron to date has reduced its worldwide employee headcount on the organisational side by 4,000 since the end of 2014 and expects to have to cut 4,000 more jobs by the end of this year. The upstream business worldwide projects a 20-25% headcount reduction in the total workforce relative to 2014.
Under its “Project Spring” programme, Chveron’s Thai unit has cut its total workforce by 20% or about 800 positions including Thai national employees and contractors.
On the asset side, Chevron is considering options to divest its 16% ownership in the Arthit gas field in the Gulf of Thailand and also 28.3% in the Yadana block in Myanmar. Both stakes are non-operated working interests, but no decision has been made at this stage.
Mr Green points out that such decisions are all part of Chevron’s normal global portfolio review process.
“When oil prices go down like in the past few years, it forces the industry including Chevron to take a look at what work we continue to do as activity is reduced. Normally you look for ways to lower your cost structure,” he says.
“It requires companies to periodically look at your workforce, demand for work and how much of the workforce is required to do it and then adjust that to be in balance.”
Thailand, however, has remained a core part of Chevron’s oil and gas portfolio. The company is the operator of the Erawan gas field in the Gulf of Thailand that has been producing since 1981.
“The core assets that we operate in the Gulf of Thailand, we have every intention of having them remain in our key portfolio. We are not leaving Thailand,” he states.
Discussing Yadana, Chevron’s only asset in Myanmar currently, Mr Green says the company is seeking expressions of interest as it wants to focus its resources only on assets where it is the operator.
“We will see what the market thinks about it,” he says. “We’re happy to keep it if the market does not value it at the same value that we think it should be.”
Chevron’s concession in Thailand is set to expire in 2022 and the company has been in discussions with the government with the desire to continue its presence.
“Our expected desire is that our partnerships will continue for many more years,” says Mr Green. “We expressed our interest very clearly that we want to stay involved with Thailand but it’s not for us to say what the terms and conditions to be.”
The Thai government, he says, wants to ensure that the terms it offers to investors are attractive while also ensuring a balance of benefits offered to investors and the people of Thailand.
The National Legislative Assembly is currently reviewing amendments to the Petroleum Act, which would introduce two new approaches to oil and gas development in addition to the concession system. They are a production sharing agreement (PSA) and a services contract. All three approaches offer different levels of risk and reward to both the state and exploration companies, and each has its merits depending on the conditions.
“The government’s role is to create the environment that attracts the investments from industries necessary to get the gas out of the ground to power the economy,” says Mr Green.
“We will help them by providing our experience and expertise but at the end of the day, it is their decision and we are confident in our ability to operate successfully in any kind of arrangement. At the end of the day, it is the government’s responsibility to decide what is best for Thailand.”
Asean, including Thailand and Myanmar, has been and will continue to be a very important area of focus Chevron for many more years. Australia, meanwhile, has attracted the largest single investment in the company’s history.
“As Chevron looks around the world, we still see tremendous growth opportunity in the Asean economies,” he says.
Thailand is also one of favourite destinations for Mr Green who enjoys travelling.
“I travel a lot. I love coming to Thailand and enjoy Thai hotels and services. I love golf. That’s the best thing about living in Thailand,” says Mr Green, who lived in the country for four and a half years during his time with Unocal and had two boys graduate from Thai high schools.
As our conversation continues, I come to realise that for Mr Green, a sense of humour definitely helps to deal with the stresses of the work.
“We are a project company. We call everything a project,” he says, using the term to help soften the blow of the “workforce transformation programme” that has resulted in job cuts in every part of the company’s business around the world including the US parent.
When asked about volatile oil prices, he points says, “That’s why my hair looks like this” while pointing at his grey hair.
And to my final question about oil price forecasts, Mr Green simply replies” “One thing I’ve learned here is that we are not good at predicting prices.” That sent me on my way with a smile.
I try not to add drama to the situation. If it appears that I’m stressed about something, the workforce picks up on that and that adds stress to the workforce. That’s not helpful to meeting the challenges that we have on a day-to-day basis”