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Chevron plans to cut 2,000 jobs, sell some overseas assets in restructuring

Chevron Corp. (NYSE:CVX) said Tuesday it will cut 2,000 jobs this yearand sell some overseas operations as it revamps its strugglingrefinery, marketing and transportation operations.

Chevron Corp. (NYSE:CVX) 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 per cent of its 17,000 workers in the so-called downstream part of its business and just over three per cent of its overall workforce.

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.

Oil 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 which has affected the entire sector.

Chevron 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 has growing operations in Canada, where it is a minority partner in the Athabasca oilsands project in northern Alberta, a project operated by Shell Canada and which includes Marathon Oil Corp.

The company also has major interests in oil and gas exploration and production offshore Newfoundland and Labrador on Canada's East Coast.

It also owns a 75-year-old refinery in suburban Vancouver, where it refines diesel and gasoline to supply its 150 gasoline stations in British Columbia. There has been some speculation that Chevron might consider selling that refinery, located in Burnaby, B.C., just outside Vancouver

A Chevron spokesman declined comment on how the cuts announced by the parent company will affect Canada.

The company, which is based in San Ramon, Calif., said severance charges are expected to range between $150 million and $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 refining and gasoline marketing operations last year.

Shares of Chevron fell four cents to US$74.60 in trading Tuesday on the New York Stock Exchange.

 
 
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