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CNBC EXCLUSIVE: CNBC TRANSCRIPT: CNBC'S MARIA BARTIROMO INTERVIEWS CHEVRON CHAIRMAN & CEO DAVID O'REILLY ON CNBC'S "CLOSING BELL" TODAY

WHEN: Today, Wednesday, November 12th at 4:25 PM ET

WHERE: CNBC's "Closing Bell"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Chevron Chairman & CEO David O'Reilly, on CNBC'S "Closing Bell" Today.

All references must be sourced to CNBC.

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DAVID O'REILLY: I THINK THE KEY MESSAGE FOR THE PRESIDENT-ELECT IS TO LOOK AT THE ENERGY SITUATION THROUGH TWO LENSES. ONE IS TO SUPPORT AND CONTINUE TO SUPPORT ENERGY EFFICIENCY AND SUSTAIN AND IMPLEMENT THE ENERGY EFFICIENCY PLANS THAT HAVE ALREADY BEEN ADOPTED BY CONGRESS. THE SECOND PART, HOWEVER,IS SOMETHING THAT HAS NOT BEEN FULLY ADDRESSED BY OUR ADMINISTRATION AND THAT IS THE SUPPLY SIDE. WE NEED TO WORK ON ENERGY SUPPLY HERE AT HOME TO MAKE US LESS DEPENDENT ON IMPORTS AND WE NEED TO WORK ON A BROAD PORTFOLIO OF ENERGY SUPPLIES. WE CAN'T JUST PICK ON ONE SUPPLY. THE SCALE OF SYSTEM IS SO LARGE WE NEED TO WORK ON MULTIPLE FRONTS.

MARIA BARTIROMO: YOU'VE SAID A LOT OF THINGS THERE AND I WANT TO TOUCH ON ALL OF THEM. FIRST, LET'S TALK ABOUT THE SUPPLY IN THIS COUNTRY. SO DO YOU BELIEVE WE SHOULD BE DRILLING IN NEW AREAS? DO YOU BELIEVE THAT ALASKA OFF THE COAST IN THIS COUNTRY ARE VIABLE?

O'REILLY: YES, OF COURSE THEY ARE. AND THE REASON THEY ARE, IS LOOK, THE EUROPEANS, WHICH ARE VERY ENVIRONMENTALLY-CONSCIOUS NATIONS, ALOOW DRILLING OFF THEIR SHORES AND WHY SHOULDN'T WE DO IT HERE? THIS IS AN ENORMOUS OPPORTUNITY. LET ME GIVE YOU AN EXAMPLE. WE HAVE TWO OFFSHORE DEVELOPMENTS COMING ON STREAM IN THE GULF COAST DURING THE NEXT YEAR. COMBINED THEY WILL PRODUCE $5 BILLION WORTH OF OIL PER YEAR. THAT'S $5 BILLION LESS OF A TRADE IMBALANCE THAT WILL OCCUR ONCE THOSE COME ON STREAM. THOUSANDS OF JOBS CREATED TO BUILD, TO SUPPORT, TO OPERATE THOSE FACILITIES.

BARTIROMO: ARE WE SURE THAT THERE'S ACTUALLY THE ACTIVITY THERE THAT YOU EXPECT?

O'REILLY: WELL, NOBODY REALLY KNOWS BECAUSE WE HAVEN'T DONE THE WORK TO KNOW YET. YOU'VE GOT TO DO SEISMIC WORK AND THEN DO DRILLING AND ULTIMATELY IN THE AREAS THAT ARE MOST PROMISING. SO UNTIL WE LOOK, NOBODY KNOWS. SO I DON'T THINK WE CAN DRILL OUR WAY OUT OF THE CHALLENGES THAT WE FACE. AND THAT'S NOT WHAT I'M SAYING FOR A MOMENT. WHAT I'M SAYING IS WE CAN SOLVE PART OF OUR PROBLEMS BY SENSIBLY DEVELOPING OFFSHORE IN AREAS THAT ARE OFF LIMITS TODAY. SO I WOULD ENCOURAGE THAT PART TO BE PART OF A POLICY. IT'S NOT ENOUGH BUT AN ESSENTIAL PART OF A LONG-TERM ENERGY POLICY.

BARTIROMO: GIVE ME YOUR TAKE ON SOME OF THE POLICIES THAT WE ARE EXPECTING TO COME OUT OF THE NEW ADMINISTRATION.CLEARLY WE DON'T KNOW YET BUT THERE'S BEEN A LOT OF TALK ABOUT A WINDFALL TAX ON THE OIL COMPANIES. ARE YOU WORRIED ABOUT THAT?

O'REILLY: I'M WORRIED ABOUT IT BUT I THINK IT WOULD BE A BAD IDEA. I MEAN, WHAT SENSE DOES THAT MAKE. WE CAN'T BE JUST TURNING TO OPEC AND SAYING, YOU INCREASE YOUR OIL SUPPLY AND AT THE SAME TIME SUPPRESS OIL SUPPLY HERE AT HOME. LET ME GIVE YOU AN EXAMPLE. OVER THE LAST 20 YEARS, OIL DEMAND HAS GROWN BY 4 MILLION BARRELS A DAY. SUPPLY HAS DROPPED BY 4 MILLION BARRELS A DAY. SO WE BECOME A LOT MORE VULNERABLE. THE REASON WE BECOME VULNERABLE IS THAT THERE'S BEEN INADEQUATE ACCESS TO OIL OPPORTUNITIES IN THIS COUNTRY AND WE CAN FIX THAT PROBLEM BY OPENING UP SOME OF THESE AREAS THAT WE TALKED ABOUT EARLIER. WE'VE TRIED A WINDFALL TAX BEFORE WE DID IT IN THE '80s. IT FAILED. WHAT HAPPENED AS A RESULT OF THAT, OIL PRODUCTION BEGAN TO DECLINE EVEN FASTER BECAUSE OF LACK OF INVESTMENT AND WE BECAME MORE EVEN MORE DEPENDENT ON IMPORTS. SO I THINK IT'S THE WRONG WAY TO GO. WE'VE TRIED IT IN THE PAST. IT'S A FAILED POLICY AND SHOULD NOT BE PART OF THE POLICY OF A NEW ADMINISTRATION.

BARTIROMO: GIVE ME YOUR SENSE OF WHAT IS HAPPENING IN WASHINGTON WITH REGARD TO THE T.A.R.P. PLAN. NOW THE AUTOMAKERS WANT MONEY FROM THAT T.A.R.P. PLAN AND FROM THE GOVERNMENT. DO YOU AGREE WITH THAT? SHOULD THE GOVERNMENT BE SAVING THE AUTO BUSINESS?

O'REILLY: THE T.A.R.P. PLAN, THE WAY I UNDERSTAND IT, WAS SET UP TO SOLVE THE FINANCIAL ISSUE. WE HAVE A CREDIT SQUEEZE IN THIS COUNTRY AND CREDIT IS FROZEN. IN ORDER TO GET PEOPLE ENCOURAGED TO BUY IN, WE NEED TO HAVE GREATER CONSUMER CONFIDENCE AND WE NEED TO HAVE LIQUIDITY AND CREDIT. AND WITHOUT THOSE TWO THINGS, NOBODY IS GOING TO BE BUYING AUTOMOBILES. SO WE'VE GOT TO START WITH WHAT IS THE T.A.R.P. PLAN THERE FOR? IT'S TO IMPROVE THE HEALTH OF THE FINANCIAL SYSTEM. NOW, IF THE GOVERNMENT WANTS TO LOOK AT SOMETHING TO DO WITH AUTOS AND RESOLVING THE AUTO ISSUES THAT'S A DIFFERENT ISSUE. IT'S STILL AN ISSUE THAT NEEDS TO BE ADDRESSED BUT IT SHOULDN'T BE CONFUSED WITH THE ISSUE OF T.A.R.P. WHICH WAS WAS THERE TO IMPROVE THE FINANCIAL SITUATION.

BARTIROMO: THE PROBLEM IS, SOME PEOPLE SAY THE BANKS ARE HOARDING THE MONEY AND NOT PUTTING IT INTO THE SYSTEM.

O'REILLY: WELL, I DON'T KNOW. I MEAN, IT MAY BE TOO SOON TO TELL. THIS MONEY HAS JUST FLOWED INTO THE SYSTEM OVER THE LAST FEW WEEKS AND MONTH, SO IT'S VERY EARLY TO TELL. I THINK WE'VE GOT TO LET THE SYSTEM PLAY OUT. AND SEE WHAT HAPPENS IN THE FUTURE.

BARTIROMO: WHAT KIND OF AN IMPLICATION WOULD YOUR COMPANY SEE, YOUR INDUSTRY SEE IF THE AUTOS WENT BANKRUPT?

O'REILLY: I DON'T THINK IT'S A HEALTHY THING FOR THE AUTOS TO GO BANKRUPT. I THINK THERE'S STILL GOING TO BE AUTOMOBILES. PEOPLE ARE GOIJHNG TO BE BUYING THEM. THE REAL ISSUE TODAY IS THAT AUTO SALES ARE A 12 MILLION UNITS PER YEAR, OR 16 OR 17 UNITS PER YEAR. SO WE'VE GOT TO GET PEOPLE BUYING. IF PEOPLE AREN'T BUYING, ALL OF THE MONEY IN THE WORLD ISN'T GOING TO SOLVE THE PROBLEM.

BARTIROMO: DO YOU THINK THE U.S. GETS OUT OF THIS BEFORE THE REST OF THE WORLD, GIVEN THE FACT THAT THIS COUNTRY THE FIRST IN TERMS OF GETTING INTO IT?

O'REILLY: I THINK IT CAN. CLEARLY WE'LL GET -- THE SOONER WE ALLOW THE MARKETPLACE TO FUNCTION, THE SOONER WE'LL GET OUT OF IT. ONE OF MY GREAT FEARS IS THAT IF WE OVERREACT TO THIS AND TRY TO OVERMANAGE IT WITH LAYERS OF REGULATION AND TOO MUCH INTERFERENCE, WE MIGHT NOT HAVE THE MARKET RESPOND AS QUICK AS WE CAN. REMEMBER, THE LESSON HERE FROM JAPAN IN THE '80s AND '90s WAS A LOT OF GOVERNMENT INTERFERENCES AND LONG LAG TIME BEFORE THE JAPANESE ECONOMY GOT HEALTHY AGAIN. SO I THINK IT'S VERY IMPORTANT THAT WE FIND THE RIGHT AMOUNT OF GOVERNMENT SUPPORT, GET THE BALANCE RIGHT SO THE ECONOMY AND THE MARKET CAN BEGIN TO FUNCTION AND RESTORE THE GROWTH THAT WE DESERVE AND CAN ATTAIN.

BARTIROMO: HAVE YOU BEEN SURPRISED AT SOME OF THE REACTIONS TO THIS EXTRAORDINARY PERIOD?

O'REILLY: OF COURSE I'M SURPRISED. I'M NOT AN EXPERT ON THE FINANCIAL SYSTEMS BUT I THINK IF YOU WERE TO ASK ME WOULD WE BE IN THIS POSITION TODAY A YEAR AGO, I WOULD HAVE SAID, NO, YOU'VE GOT TO BE DREAMING. HOWEVER, WE ARE WHERE WE ARE. AND I THINK THE IJMPORTANT PART IS TO GET THE RIGHT AMOUNT OF GOVERNMENT INVOLVEMENT. MAKE SURE THAT THE INTERESTS OF THE PEOPLE ARE PROTECTED. BECAUSE THIS IS THE PEOPLE'S MONEY, YOUR MONEY AND MY MONEY THAT'S GOING INTO THIS SYSTEM. BUT LET'S MAKE SURE THAT IT WORKS AND THAT IT IMPROVES THE LEVERS OF THE ECONOMY SO WE CAN GET THE GREATER ECONOMY GOING AGAIN. I THINK IT'S A VERY ESSENTIAL ISSUE TO RESTORE CONSUMER CONFIDENCE AND TO GET PEOPLE BUYING AGAIN. WE WILL NOT BE ABLE TO BUY THOSE AUTOMOBILES IF WE DON'T HAVE CREDIT AND CONFIDENCE TO GO WITH IT.

BARTIROMO: AND OF COURSE YOU'RE INVESTING IN AND LOOKING AT GROWTH REGARDLESS OF WHAT IS GOING ON IN THE BROADER ECONOMY. TELL ME WHERE YOU SEE THE GROWTH RIGHT NOW FOR CHEVRON.

O'REILLY: WELL WE'RE GROWING -- OUR PRODUCTION GROWTH IN THE NEXT YEAR IS GOING TO BE PRETTY HEALTHY. WE'RE LOOKING AT 4 OR 5% PRODUCTION GROWTH YEAR OVER YEAR BECAUSE OF THESE PROJECTS THAT WE HAVE COMING ON LINE IN 2009. SO 2009 IS GOING TO BE A VERY GOOD YEAR FOR GROWTH FOR US.

BARTIROMO: LET ME ASK YOU ABOUT DROP OFF IN OIL AND REALLY THE IMPACT YOU'VE GOT SOME PROJECTS FINALLY ON LINE. DO YOU EXPECT THE IMPACT TO BE SEVERE, GIVEN THAT YOU HAVE THESE PROJECTS ON LINE AND OIL PRICES HAVE COME DOWN? IS THIS GOING TO IMPACT THE BOTTOM LINE AT CHEVRON?

O'REILLY: OUR INVESTMENTS THAT WE'RE BRINGING ON STREAM, THE DECISIONS TO MAKE THOSE INVESTMENTS WERE NOT MADE IN TODAY'S PRICE ENVIRONMENT. THEY WERE MADE IN THE PRICE ENVIRONMENTS THAT EXISTED THREE TO FIVE YEARS AGO. SO WE FEEL VERY CONFIDENT THAT OUR NEW PROJECTS ARE GOING TO BE VERY ECONOMIC, GOOD RETURNS, AND THEY ARE GOING TO BE VALUABLE, PARTICULARLY THE ONES THAT ARE COMING ON STREAM IN THE UNITED STATES.

BARTIROMO: SO ARE YOU CHANGING YOUR CAPITAL EXPENDITURES IN ANY WAY IN THE COMING TWO YEARS?

O'REILLY: WE EXPECT TO CONTINUE TO INVEST AT THE SAME SORT OF LEVELS AS WE HAVE BEEN OVER THE LAST FEW YEARS. WE HAVE A GREAT CUE OF PROJECTS. WE HAVE THE FORTUNATE SITUATION OF HAVING A VERY STRONG BALANCE SHEET, WE'RE VARY CASH STRONG, WHICH WE SHOULD BE AT THE STRONG END OF THE CYCLE, THAT ALLOWS US TO INVEST THROUGH THE LOW END OF THE CYCLE FOR THE LONG TERM. OUR PROJECTS, WHEN WE BUILD THEM, LAST FOR 20, 30, 40 YEARS. WE HAVE TO LOOK PAST A YEAR OR TWO EITHER HIGH OR LOW AND INVEST FOR THE LONG TERM.

BARTIROMO: TELL ME WHAT IS HAPPENING AROUND THE WORLD IN TERMS OF YOUR PROJECTS AND THE WEAKENING ECONOMIES THAT WE'RE SEEING. HOW WOULD YOU CHARACTERIZE THINGS IN TERMS OF YOUR INTERNATIONAL BUSINESS?

O'REILLY: WELL THE INTERNATIONAL BUSINESS IS DOING WELL. REMEMBER OIL PRICES ARE DENOMINATED IN DOLLARS. SO EVEN THOUGH THERE HAVE BEEN WEAKENING CURRENCIES IN OTHER PARTS OF THE WORLD, WE'VE STILL BROUGHT ON VERY GOOD PROJECTS. FOR EXAMPLE, WE BROUGHT A NEW PROJECT ON IN DEEP WATER NIGERIA IN AUGUST AND IT'S RAMPING UP TO 250 THOUSAND BARRELS A DAY BY THE END OF NEXT YEAR. WE JUST EXPANDED OUR BIG PLANT AND FIELD IN KHAZIGSTAN, THE TENGHIS FIELD AND HAVE ESSENTIALLY DOUBLED THE CAPACITY OR ALMOST DOUBLED THE CAPACITY THIS YEAR SINCE THE END OF LAST YEAR. SO THAT'S UP AND RAMPING UP. SO WE'RE VERY BULLISH ABOUT THE LONG-TERM GROWTH IN OUR BUSINESS BEYOND THE IMMEDIATE YEAR OR TWO.

BARTIROMO: YOU'VE GOT TO BE OPERATING IN SOME AREAS THAT HAVE BEEN HOSTILE. DO YOU THINK PRESIDENT-ELECT OBAMA WILL IMPACT OR IMPROVE THE RELATIONS BETWEEN THE UNITED STATES AND SOME OF THESE HOSTILE AREAS? WHETHER IT BE VENEZUELA AND CHAVEZ OR RUSSIA AND PUTIN?

O'REILLY: I DON'T KNOW. CLEARLY HE HAS THE OPPORTUNITY TO IMPROVE SOME OF OUR RELATIONS. BUT SOME OF THE PROBLEMS ARE RELATIVELY INTRACTABLE AND SOME OF THEM I THINK WHEN YOU STEP BACK AND THINK ABOUT THEM ARE ISSUES THAT EXTEND FAR BEYOND ONE ADMINISTRATION. I THINK ONE WAY HE CAN HELP THOSE, IN OUR INDUSTRY, IS TO BEGIN BY RECOGNIZING THE VALUE THAT OUR INDUSTRY CREATES IN TERMS OF JOBS, IN TERMS OF INVESTMENT AND IN TERMS OF STRENGTHING OUR BALANCE AND PAYMENTS BY THE SORT OF INVESTMENTS WE CAN MAKE HERE AT HOME BY OPENING UP MORE OPPORTUNITY FOR US TO DO THAT.

BARTIROMO: DO YOU THINK HE'S POISED TO DO THAT?

O'REILLY: I HOPE SO. AND THAT'S WHAT I SUGGESTED IN MY LETTER TO HIM. IT'S NOT JUST OIL AND GAS BY THE WAY. IT'S NUCLEAR WHICH WE BADLY NEED TO RE-INVEST IN. HERE WE ARE, WE'RE TALKING ABOUT A CARBON-FREE FUEL THAT DOES NOT GENERATE CARBON EMISSIONS. WE'VE GOT TO GET BACK AT LOOKING AT NUCLEAR, WE'VE GOT TO FIGURE OUT HOW TO MAKE CLEAN COAL WORK. WE'VE GOT TO CONTINUE TO WORK ON RENEWABLES. WE'RE AN ENERGY-STRONG COMPANY. A LOT OF PEOPLE VIEW US THROUGH THE LENS OF A WEAK COMPANY. BUT THINK ABOUT IT. THE UNITED STATES IS THE NUMBER ONE PRODUCER OF NUCLEAR POWER IN THE WORLD. THE NUMBER ONE PRODUCER OF ETHANOL, THE NUMBER TWO PRODUCER OF COAL, THE NUMBER TWO PRODUCER OF WIND, THE NUMBER TWO PRODUCER OF NATURAL GAS. THE NUMBER THREE PRODUCER OF OIL IN THE WORLD. WE KNOW HOW TO DO THIS STUFF. WE JUST HAVE TO GET ON WITH IT AND LOOK AT IT THROUGH A POSITIVE LENS RATHER THAN A NEGATIVE ONE.

BARTIROMO: REFINING AND PRODUCTION RIGHT NOW. GIVE ME YOUR GROWTH EXPECTATIONS FOR THE NEXT COUPLE OF YEARS.

O'REILLY: IN REFINING?

BARTIROMO: YES.

O'REILLY: I THINK WELL, GIVEN THE SLOTHY MARKETS THAT WE SEE TODAY, SLOW GROWTH OVER THE NEXT COUPLE OF YEARS, I THINK REFINING IS GOING TO GO THROUGH A LEAN PERIOD IN 2009 AND 2010 BEFORE GROWTH RESUMES TO BRING SUPPLY AND DEMAND INTO BETTER BALANCE.

BARTIROMO: AND IN TERMS OF EXPLORATION, YOUR OWN EXPLORATION?

O'REILLY: OUR OWN EXPLORATION PROGRAM IS DOING WELL. WE SEE A SIGNIFICANT -- WE'VE BEEN ADDING ABOUT 1 BILLION BARRELS A YEAR OF RESOURCES TO OUR PORTFOLIO. WE ANTICIPATE CONTINUING THAT. BUT, REMEMBER, EXPLORATION IS AT THE FRONT END OF THE LONG TERM. THE PROJECTS THAT WE'RE BRINGING ON STREAM THAT I'VE BEEN REFERRING TO EARLIER TODAY, THOSE ARE PROJECTS THAT WE DISCOVERED OR EXPLORATION SUCCESSES THAT WE HAD IN THE '90s. SO WE'RE INVESTING NOW FOR THE NEXT DECADE.

BARTIROMO: MY THANKS TO DAVID O'REILLY





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