Chevron may sell refineries as demand, margins shrink
The company wants to focus more on production projects offshore and overseas, an executive says.
Chevron Corp. said Tuesday that it may sell some refineries as recession in the world's largest economies cuts demand for gasoline and diesel, squeezing fuel-production margins.
The San Ramon, Calif.-based company wants to focus on higher-profit ventures such as natural gas production offshore Australia and oil developments in the Gulf of Mexico and West Africa, said John Watson, Chevron's executive vice president of strategy and development.
Watson, speaking at an energy conference in New York, declined to say which or how many refineries might be sold. Chevron's refining profit fell 59% during the first nine months of 2008 as crude prices soared to a record and refined fuel prices failed to keep pace. The refining unit's contribution to total profit dwindled to 7.1% during the first three quarters of this year from 24% a year earlier.
"It's shaping up to be a difficult year for the refining business," said Watson, formerly chief of Chevron's international exploration business. "The margin environment has been relatively weak."
Chevron operates or owns stakes in 18 refineries that can process 2.94 million barrels of crude a day. The company's last refinery-related divestiture was in 2007, when it sold a 50% stake in a Netherlands plant to London-based BP for $900 million.
Chevron shares rose $3.52 to $75.54.
