Chevron Corp. is shrinking its staff from its crude-oil refining and marketing segments by more than 20% as fuel demand remains low, The Wall Street Journal reported.
Some 2,000 workers were laid off in 2009, and an equal number of layoffs are ahead this year and more are expected to continue in 2011. In 2008, Chevron, of San Ramon, Calif., had 19,000 people employed in that segment.
In January, the company announced it planned to reduce its staff, but specific figures recently emerged.
“Market conditions are likely to be difficult for the next several years,” Mike Wirth, Chevron’s executive vice president for global downstream, said in a prepared statement. “We intend to further concentrate our downstream portfolio in North America and Asia-Pacific.”
Chevron said it’s planning to ask for bids for some assets in Europe, including the Pembroke refinery in Wales. It also intends to sell its lubricants and marketing business in some parts of Central America and the Caribbean. Operations in Hawaii and Africa, outside of South Africa, will be reviewed, the Wall Street Journal reported.
The company’s cost-cutting steps should give profits a needed push this year and move margins back to the double digits by 2012. In the fourth quarter of 2009, Chevron lost $613 million in its downstream segment, compared with a $2.1 billion profit during the same period in 2008.
“We don’t contemplate closing refineries,” said Chevron Chief Executive John Watson. “Our refineries are competitive, but the industry conditions are difficult. Over time, we think returns will be competitive again.”
In its exploration and production segment, Chevron reported its output would grow about 1% through 2014; 4-5% from 2014 to 2017; and about 3% beyond 2017. The company reaffirmed its 2010 capital expenditure budget will be $21.6 billion, 2.7% lower than a year ago.