ExxonMobil CEO Makes First Big Changes to Refining
Exxon Mobil Corporation Chief Executive Darren Woods is reorganising the company’s refining operations, part of a push to boost profits amid volatile oil and natural gas prices, the company said on the 27th November.
The changes at the world’s largest publicly traded oil producer are the most sweeping to date by Mr Woods, who became chief executive in January after former chief Rex Tillerson resigned to become US secretary of state.
Mr Woods has moved first to reshape the parts of the businesses he knows best, according to sources familiar with the matter. Before taking the helm at Exxon, he ran Exxon’s refining operations.
Exxon spokeswoman Charlotte Huffaker confirmed the downstream business overhaul in a statement, adding the company expects it will “improve decision making and enhance performance in the market.”
The parts of the business impacted were refining and marketing divisions, said spokesman Scott Silvestri.
It was not immediately clear if the changes will involve job cuts or executive departures. Ms Huffaker said she could not say if there would be any impact on jobs.
The reorganisation aims to squeeze more profits from the downstream business as the company works to improve its exploration and production operations, which have struggled since 2014 to adjust to lower oil and gas prices.
The downstream restructuring, disclosed internally last month, will combine the fuels and lubricants division with the supply and refining divisions. Financial responsibility for the merged operation will rest with country and regional chiefs who report to Exxon’s headquarters in Irving, Texas, rather than divisional bosses as previously, according to people familiar with the matter.
The changes are designed to simplify operations and increase accountability for profitability, the sources said.
Exxon’s refining and chemical operations have grown in stature under Mr Woods, delivering steady earnings compared with its oil and gas production.
Exxon operates 22 refineries in 14 countries, processing nearly five million barrels of oil per day. The firm builds chemical and refining plants in the same location, allowing managers to shift production between fuels or chemicals based on demand.
The changes come as Exxon expands the refining division. The company is investing US$20 billion through 2022 to expand its chemical and oil refining plants on the US Gulf Coast.
The refining and chemicals arms contributed more than US$4.2 billion apiece to 2016 earnings, compared with a US$196 million profit from exploration and production. Last year’s results were affected by sharply lower crude prices.
In some quarters, Exxon would not have made any money were it not for its refineries.
This year, the company’s oil and gas business bounced back to a US$5 billion profit during the first nine months on stronger crude prices. Refining earnings were US$4.03 billion and chemicals US$3.25 billion, respectively, for the first three quarters this year.