Chevron to shed 2,000 jobs, sell some assets
Tuesday March 9, 2010, 5:29 pm EST
Chevron plans to cut 2,000 jobs, sell some overseas assets in restructuring
Chevron Corp. said Tuesday it will cut 2,000 jobs this year and sell some overseas operations as it revamps its struggling refinery, marketing and transportation operations.
The job cuts represent almost 12 percent of its 17,000 workers in the so-called downstream part of its business and just over 3 percent of its overall work force.
Executives of the second-largest U.S. oil producer are still deciding where and when they will eliminate the jobs as they try to complete the restructuring by the third quarter, company spokesman Lloyd Avram said. Additional cuts are expected next year.
Chevron said it will also seek bids for the Pembroke refinery in southwest Wales, and fuels marketing, aviation and lubricants businesses in the Caribbean and some markets in Central America.
Refineries, which turn crude into gasoline, diesel and other fuels, struggled amid rising oil prices and falling demand last year. In addition, new refineries are being built.
"Downstream conditions are likely to be difficult for the next several years," Mike Wirth, executive vice president of Chevron's global downstream business, said in a statement.
Argus Research analyst Phil Weiss said he believes Chevron is making the right move but he questions whether the producer will get a good price for the assets in the difficult business environment.
Major oil companies worldwide have battled weak demand that cut into profits at refineries.
Royal Dutch Shell recently said it would cut an additional 1,000 jobs in 2010, mostly at its refining operations.
France's Total SA said Monday that it will end refining operations at its plant in Dunkirk, France, in response to falling demand.
In the fourth quarter, Chevron lost $613 million in its refining operation compared with a $2 billion profit in the year-ago quarter.
The company has said it will reduce spending by $1 billion this year on downstream businesses, which include refining, marketing and transportation.
Chevron wants to focus its downstream portfolio in North America and the Asian-Pacific region, and is shifting its production toward natural gas and Asian assets.
In addition to seeking bids for the Pembroke refinery and for fuels marketing, aviation and lubricants businesses in the Caribbean and Central America, Chevron said it is reviewing refinery operations in Hawaii and other undisclosed operations outside South Africa, Avram said.
Chevron, based in San Ramon, Calif., said severance charges are expected to range from $150 million to $200 million on an after-tax basis in the first quarter.
The company has about 60,000 employees worldwide, including about 17,000 in downstream operations that include refining, marketing and retail operations. It laid off 1,900 employees in downstream operations last year.
Shares of Chevron closed down 34 cents at $74.30.
Source: Associated Press
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