Chevron is one of the world’s largest energy companies with a vast portfolio of projects all around the globe. Now the US company has stated that it has plans to increase refinery and petrochem operations in South Korea, amidst a restructuring of the company. The goal for Chevron is to increase a balanced downstream portfolio, as well as prop up the flailing petrochem industry in the region. Some have speculated whether this is the right move, as Chevron has laid off several thousand workers both in the United States and abroad.
Chevron has made a significant investment in its South Korea operations
For any company, regardless of sector, the aim is to maximise profits while keeping costs at a minimum. And for a company the size of Chevron, any potential changes to the structure of the company will be met with some raised eyebrows. Chevron does not have the best reputation on the global stage following several oil spills in the past that had massive environmental impacts on the planet.
After a few years of begging for the public’s forgiveness, Chevron has now implemented organizational changes in order to maximize profits and increase its global portfolio both in the oil refinery and petrochemical sectors. One of the biggest regions in which the American company operates is South Korea. Chevron has a 50% interest in its South Korean affiliate GS Caltex Corp.’
The Caltex Corp operates what it claims is one of the largest refinery complexes in the world. What is troubling is that to reach their lofty ambitions, Chevron has stated that major layoffs are forthcoming; that’s not to mention the existing layoffs that have occurred in several operations in the United States. Chevron has been hard at work focusing on core growth assets to reduce costs and boost profits.
Chevron has plans to lay off a significant number of its global workforce
While we understand the need for companies to constantly assess operations to make them more profitable in the long run, Chevron’s approach to reach that goal is somewhat questionable. They have announced plans to lay off roughly 15-20% of their global workforce. One questions how they plan to increase their foothold in the global energy market by downsizing their workforce.
At a recent event in Singapore, the company’s president of International Products outlined Chevron’s plans to restructure the company and increase oil refinery production as well as gain a stronger presence in the region’s troubled petrochemical sector. The South Korean government has stated that the petrochem sector needs to slash expenses in order to become relevant and profitable again.
“There’ll be places like Korea where we go investment heavy in petrochemicals and in heavy oil upgrading. On the other hand, there will be geographies and refineries, “like here in Singapore, where we’ve chosen to not make those big investments and actually get a better return through most parts of the cycle on capital employed. – Brant Fish, president of International Products at Chevron
Will Chevron’s plan to slash its workforce have an unforeseen downside
It’s the classic case of profits over people. Yes, it is necessary to evaluate a company’s expenses and make cuts where needed, but at what cost? And who ends up paying in the long run? One thing we are certain of is that Chevron will do what’s best for its bottom line; not to do so would be a mistake by one of the world’s largest energy companies. The energy sector is in a constant state of evolution. Every day, we are presented with new and interesting projects led by the biggest companies in the world, and this new plan by Chevron is a positive step for the company, but spare a moment for the workers who have been laid off.
