Chevron to cut up to 15% of staff amid restructuring

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Chevron Corp <CVX.N> will cut 10% to 15% of its worldwide workforce as part of an ongoing restructuring at the second-largest U.S. oil producer.

The oil producer previously disclosed a 30% 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 due to the COVID-19 pandemic.

Chevron, which had 48,000 employees at the end of December, expects to remove about 10% to 15% of its global staff to “match projected activity levels,” spokeswoman Veronica Flores-Paniagua confirmed.

U.S. crude oil prices <CLc1> 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 U.S. shale output by about 125,000 bpd.

The about 5,000 to 7,000 job cuts envisioned are to “address current market conditions,” with varying impact on each business unit and region, said 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, No. 1 U.S. oil producer Exxon Mobil Corp <XOM.N> 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% of staff at a minimum,” said Jennifer Rowland, an energy analyst at Edward Jones.

A next round of selections for outplacement will take place in June, according to a memo from Chevron Executive Vice President Joseph Geagea viewed by Reuters. Reorganization 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 U.S. employees who lose their positions, he wrote.

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

It last year launched a major cost-cutting overhaul that has already pared the number of units.

This article was originally published on finance.yahoo.com/news/.

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