* Price change determines share of output between partners
* Q1 price rises cut Chevron share of output by 22,000 bpd (Adds spokesman on the move, background, byline)
By Braden Reddall
SAN FRANCISCO, April 29 (Reuters) - Chevron Corp (CVX.N) delivered another blow to the once-preeminent U.S. West Texas Intermediate (WTI) oil futures contract on Friday, saying it had switched to Europe’s Brent crude benchmark when calculating production-sharing contract changes.
Chevron, the third-largest nongovernment-controlled oil company by value, said on Friday higher oil prices cut volumes under production-sharing and variable-royalty contracts in the first quarter by about 22,000 barrels per day (bpd).
“Given the recent divergence in the WTI-Brent spread, going forward we will use the change in Brent to calculate a price effect because it is more closely tied to our international realizations,” Jeanette Ourada, general manager of investors relations, told analysts on a conference call.
A Chevron spokesman said the move to Brent was done in an internal index measuring the quarterly impact of oil price movements on the company’s production-sharing contracts, but did not affect the contracts themselves.
While the change is largely notional, it comes at a time when an unprecedented divergence with WTI has helped Brent gain momentum -- and trading volumes -- as the global oil price reference of choice for producers and users of the world’s most widely traded commodity. [ID:nSGE73A00A]
Earlier this month, Malaysia’s Petronas [PETR.UL] dropped national crude Tapis as its export benchmark in favor of Brent. Two weeks earlier, Atlanta-based Delta Air Lines (DAL.N) announced it had swapped out its previous jet fuel hedges based on the WTI contract CLc1, and switched to Brent.
London Brent prices LCOc1 have jumped to a record premium to U.S. crude oil futures this year, due to a glut of crude at the Cushing, Oklahoma delivery point for the New York Mercantile Exchange’s (NYMEX) contract CLc1.
A surge in Cushing crude inventories pushed WTI to a record discount of $17 a barrel CL-LCO1=R to Brent crude in March. Many traders and analysts say the London contract is a more accurate guage of international markets, with U.S. crude futures more indicative of conditions in the U.S. Midwest.
Ourada said Brent prices rose an average $19 per barrel between the fourth quarter and first quarter, resulting in a 1,200-bpd volume reduction for Chevron for each $1 increase in Brent.
The San Ramon, California-based firm had reported a near 1 percent decline in overall first-quarter oil and gas production, along with a sharp rise in profits.[ID:nN29188488] (Additional reporting by Matthew Robinson in New York; Editing by David Gregorio)