Chevron has announced a significant restructuring plan that will see its global workforce reduced by 15 to 20 per cent by next year.
The move, impacting potentially 9,000 employees, is part of a broader strategy to cut structural costs by US$2-3 billion by 2026.
The oil giant, which employed 46,500 people at the end of 2023, recently relocated its headquarters from San Ramon, California, to Houston, Texas.
Company executives say the restructuring is necessary to streamline operations and improve long-term competitiveness.
“Chevron is taking action to simplify our organisational structure, execute faster and more effectively, and position the company for stronger long-term competitiveness,” stated Chevron Vice-Chairman Mark Nelson.
The job cuts will further strain US oil and gas employment, which is already approximately 10 per cent below pre-pandemic levels, despite increasing domestic production.
Factors contributing to the employment slump include mergers, advancements in drilling efficiency, and a shift towards prioritising profitability over simply increasing production.
Chevron CEO Mike Wirth emphasised the company’s commitment to “cash flow harvesting” and a more conservative approach to new projects, which may lessen the need for a large workforce.
“We do not take these actions lightly and will support our employees through the transition.
“But responsible leadership requires taking these steps to improve the long-term competitiveness of our company,” Wirth commented.
While Chevron has experienced growth in the Permian Basin and from the start-up of its Tengiz development in Kazakhstan, the company is also looking towards future growth through its US$53 billion acquisition of Hess, which includes a 30 per cent stake in Exxon’s Guyana discovery.
The announcement comes after Chevron reported lower-than-expected Q4 earnings, largely attributed to weak refining margins, marking the first loss in this segment in four years.
Wirth noted the end of the post-pandemic surge in fuel margins and anticipates a continued downtrend this year.
Chevron’s move mirrors similar actions taken by other major players in the industry. ExxonMobil, for example, has reduced its global workforce by 17 per cent since 2019, a period during which its stock outperformed Chevron’s.
