Chevron plans to cut jobs at refinery

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Published: January 20,2010

Tags: economy, fuel

Chevron Corp. said Tuesday it plans to shrink its refining business in a move that will cut jobs.

The company told its employees this week that it plans to streamline refinery, marketing and retail operations to make the company’s business more efficient.

Chevron’s Pascagoula Refinery is expected to be affected, though a company spokesman couldn’t say to what extent or when.

“No decisions have been made as to which assets we need or which markets we will be in,” said Lloyd Avram, a spokesman from Chevron’s corporate offices in California, on Tuesday.

“All the employees will be involved in this reorganization,” Avram said. “A lot of the detail work will be starting in March. The new organization will be in place by the end of September.

“We don’t know what it will look like yet,” he said.

Chevron has 19,000 employees globally. The company hasn’t yet decided whether the cuts will be concentrated in the United States.

The Pascagoula refinery is the company’s largest, with 1,600 employees and the capacity to refine 330,000 barrels of oil a day. Employment at the plant has increased by several hundred over the last decade.

Avram said employees throughout the company were notified on Monday. The public announcement came Tuesday.

“We’re going to create an organization that is smaller and more efficient,” Avram said, and will require fewer positions. He said that’s good news for employees who remain with the company.

“We’re doing this to make our (refining and retail) operations more profitable and competitive,” he said.

Employees then will be part of an organization that will function better in what is considered a difficult economic environment.

Avram said the need to reduce overhead at refineries is a global phenomenon.

He said that while refineries are being built in other countries, the global recession has reduced demand for their product.

More and more refineries are coming on line around the world, producing gasoline, jet fuel, diesel and lubricants, Avram said. “But now the world is saying, ‘We need less.’ Margins are thin. If you’re refining oil, you’re getting less money for it.”

Officials at the Pascagoula refinery referred all calls to Avram.

Petroleum refineries have struggled to make money as oil prices doubled from early 2009 while demand dropped, according to the Associated Press.

Independent refiners shuttered some of their operations last year, and others are running at the lowest levels since 1991.

Chevron, the second-largest U.S. oil company, has warned investors that profits will shrink in the fourth quarter, primarily because of its refining business.

According to an interim report released earlier this month, Chevron said fourth-quarter profit margins were about 39 percent lower than last year for its Gulf Coast refineries. They were 59 percent lower in Singapore and 45 percent lower in Europe.

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