Chevron has locked in a 20‑year power‑sale contract with Microsoft for a new data centre in West Texas, marking the oil major’s first major foray into electricity generation. The deal ties the tech giant to Project Kilby, a partnership with activist investor Engine No. 1 that will eventually supply 2.7 gigawatts of capacity from the Permian Basin for the next decade.

Jeff Gustavson, Chevron’s head of new energies, said the agreement gives the company a competitive edge as few peers have secured comparable off‑grid power contracts. The firm must still decide whether to build a gas‑fired plant for the project later this year, a move that would tap abundant Permian natural gas—a by‑product of the region’s booming oil output that currently faces pipeline bottlenecks soon.

The arrangement pits Chevron against Exxon Mobil, which is also courting big‑tech customers such as Google through a partnership with NextEra Energy. With AI‑driven data‑centre spending surging, securing reliable power sources has become a critical cost driver for Microsoft, Amazon and Alphabet. Project Kilby therefore represents a tangible revenue stream that could offset the low‑margin pressures facing traditional oil operations for years to come.