Chevron to cut up to 15% of jobs in restructuring

Oil major says reduction is being taken to 'match projected activity levels' as budget slashed by 30%

Chevron's purchase of Noble Energy will help it strengthen its presence in the Eastern Mediterranean but the company faces challenges as it looks to leverage the area’s big gas resources. Reuters

Chevron will cut 10 to 15 per cent of its worldwide workforce as part of an ongoing restructuring at the second-largest US oil producer.

The company previously disclosed a 30 per cent reduction in its 2020 budget and voluntary job cuts amid this year's sharp drop in oil prices and lower demand for oil and gas because of the Covid-19 pandemic.

Chevron, which had 48,000 employees at the end of December, expects to remove about 10 to 15 per cent of its global workforce to "match projected activity levels", spokeswoman Veronica Flores-Paniagua confirmed.

US crude oil prices have nearly halved this year to about $33 a barrel as the Covid-19 pandemic slashed travel and led to stay-at-home orders that have cut oil demand by as much as 2 million barrels per day. Chevron this month said it would reduce planned US shale output by about 125,000 bpd.

The planned cuts of between 5,000 to 7,000 jobs are to "address current market conditions", with varying impact on each business unit and region, said Ms Flores-Paniagua. Most reductions will take place this year.

"This is a difficult decision and we do not take it lightly," she said.

At its annual shareholder meeting on Wednesday, the biggest US oil producer Exxon Mobil said it had not yet taken steps to reduce its workforce.

But Chevron's proposed job cuts match those at oilfield service and many smaller producer companies amid the oil-price collapse.

"Most companies are looking to cut 10 per cent of staff at a minimum," said Jennifer Rowland, an energy analyst at Edward Jones.

A new round of selections for outplacement will take place in June, according to a memo from Chevron executive vice-president Joseph Geagea. Reorganisation at his technology, products and services operation could be finished by the end of October, he wrote.

Additional severance pay, a medical benefits subsidy and education services will be available to US employees who lose their positions, he wrote.

In March, Chevron began offering severance payments to its US oil exploration and production employees.

Last year, it launched a major cost-cutting overhaul that has already pared the number of units.