Exxon Mobil CEO makes first big changes to refining

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HOUSTON (Reuters) – Exxon Mobil Corp Chief Government Darren Woods is reorganizing the corporate’s refining operations, a part of a push to spice up income amid unstable oil and pure gasoline costs, the corporate mentioned on Monday.

The modifications on the world’s largest publicly traded oil producer are probably the most sweeping up to now by Woods, who grew to become chief government in January after former chief Rex Tillerson resigned to turn into U.S. secretary of state.

Woods has moved first to reshape the elements of the companies he is aware of greatest, in accordance with sources acquainted with the matter. Earlier than taking the helm at Exxon, Woods ran Exxon’s refining operations.

Exxon spokeswoman Charlotte Huffaker confirmed the downstream enterprise overhaul in an announcement, including the corporate expects it’ll “enhance choice making and improve efficiency out there.”

The elements of the enterprise impacted had been refining and advertising and marketing divisions, mentioned spokesman Scott Silvestri.

Firm sources instructed Reuters Exxon’s chemical operation additionally has been restructured, however Silvestri denied this.

It was not instantly clear if the modifications will contain job cuts or government departures. Exxon’s Huffaker mentioned she couldn’t say if there could be any influence on jobs.

The reorganization goals to squeeze extra income from the downstream enterprise as the corporate works to enhance its exploration and manufacturing operations, which have struggled since 2014 to regulate to decrease oil and gasoline costs.

The downstream restructuring, disclosed internally final month, will mix the fuels and lubricants division with the provision and refining divisions.

Monetary accountability for the merged operation will relaxation with nation and regional chiefs who report back to Exxon’s Irving, Texas, headquarters quite than divisional bosses as beforehand, in accordance with folks acquainted with the matter.

Darren Woods, Chairman & CEO of Exxon Mobil Company speaks throughout a information convention on the New York Inventory Alternate (NYSE) in New York, U.S., March 1, 2017. REUTERS/Brendan McDermid

The modifications are designed to simplify operations and enhance accountability for profitability, the sources mentioned.

REFINING STRENGTH

Exxon’s refining and chemical operations have grown in stature below Woods, delivering regular earnings in contrast with its oil and gasoline manufacturing.

Exxon operates 22 refineries in 14 international locations, processing practically 5 million barrels of oil per day. The agency builds chemical and refining crops in the identical location, permitting managers to shift manufacturing between fuels or chemical substances based mostly on demand.

The modifications come as Exxon expands the refining division. The corporate is investing $20 billion by 2022 to increase its chemical and oil refining crops on the U.S. Gulf Coast.

The refining and chemical substances arms contributed greater than $four.2 billion apiece to 2016 earnings, in contrast with a $196 million revenue from exploration and manufacturing. Final 12 months’s outcomes had been affected by sharply decrease crude costs.

In some quarters, Exxon wouldn’t have made any cash had been it not for its refineries.

This 12 months, the corporate’s oil and gasoline enterprise bounced again to a $5 billion revenue in the course of the first 9 months on stronger crude costs. Refining earnings had been $four.03 billion and chemical substances $three.25 billion, respectively, for the primary three quarters this 12 months.

Some employees members have raised questions as as to whether there’s any want to change a system seen as largely profitable, mentioned the sources who declined to be recognized.

It was unclear if the modifications would influence an inner accounting apply referred to as common curiosity precept. That rule permits sure transactions to be loss-making for an area division if they’re helpful for the company as an entire.

Exxon didn’t touch upon any potential accounting modifications.

Enhancing by Gary McWilliams, Cynthia Osterman and Lisa Shumaker

Our Requirements:The Thomson Reuters Belief Ideas.

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