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article imageChevron struggling, cutting 2,000 jobs this year

By Elliot Meszaros     Mar 10, 2010 in Business
Chevron says that it will be cutting 2,000 jobs and selling some overseas projects to restore its struggling marketing, refinery and transportation operations.
The report came on Tuesday. Out of the 17,000 employees in the 'downstream' part of the business nearly 12 percent will be laid off as well as 3 percent of the overall workforce. More cuts are expected next year.
According to the company spokesman, Lloyd Avram, the actual details such as the where and when of the job cuts are still being decided by the executives of Chevron, the second largest oil producer in the US, as they try to finish up on the restructuring by the third quarter.
Chevron says that this year its spending will be reduced by $1 billion on downstream businesses, such as marketing, refining and transportation. It also said that the job cuts are part of its plans to raise earnings by exiting unprofitable markets, lowering costs and streamlining its business.
The company, which is based in San Ramon, is seeking bids for the aviation, fuels marketing and lubricants business in the Caribbean, some markets in Central America and the Pembroke refinery in southwest Wales, said Chevron.
Rising oil prices and falling demand last year caused the oil refineries, which convert crude into diesel, gasoline and other fuels, to struggle. Also, new refineries are being built.
Executive vice president of Chevron's global downstream business, Mike Wirth, stated that "Downstream conditions are likely to be difficult for the next several years,"
In January, Chevron reported earnings that were down 39 percent, detailing fourth quarter earnings of $3.07 billion.
Phil Weise, an Argus Research analyst, said that he believes that Chevron are doing the right thing although as the business environment has become increasingly difficult, impacting the entire sector, he queries whether a good price will be given to the producer for the assets.
Chevron is shifting production towards Asian assets and natural gases and subsequently wants to concentrate its downstream portfolio in North America and in the Asian-Pacific region.
As well as some of its other bids in the Caribbean, Central America and for the Pembroke refinery, Chevron said that it is revising its refinery operations in undisclosed operations outside South Africa, including Hawaii, Avram stated.
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The company expects severance charges to range from $150 million to $200 million in the first quarter on an after-taxis basis.
Last year the company dismissed 1,900 employees in downstream operations. At present Chevron has around 60,000 employees worldwide.
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