Chevron's (CVX) Australian Plants to Lay Off 20-30% Workforce

Chevron Corporation CVX recently announced that it will slash headcount at its Australian facilities by nearly 20-30%, indicating an approximatejob loss of 410 employees. This move comes within four months of the company’s decision to retrench 6000 of its 45,000 non-gas station staff worldwide.

Chevron's operations Down Under have been severely affected by interruptions at its giant Gorgon liquefied natural gas plant, which is facing phased shutdowns of each of its three processing units for weld repairs.

Earlier this month, management informed that it will postpone the expected restart date of Train 2 at its Gorgon liquefied natural gas plant in Western Australia until October. The reason for this delay is that the company requires additional time to fix and restore welds on its propane heat exchangers.

Since May 2020, Train 2 at Australia's second-largest LNG plant has been closed for maintenance purpose. The shutdown was stretched after welding glitches were detected on propane kettles at the time of a planned checking. This integrated energy player plans to carry on with its contractual obligations to deliver gas to the Western Australian domestic market through the prolonged halt in activity.

The Department of Mines, Industry Regulation and Safety, Western Australia’s industrial regulator, has been coordinating with Chevron in its maintenance work and it directed the company on Aug 7 to examine the propane heat exchangers in Trains 1 and 3 at the three-train LNG plant by Aug 21 after welding snags were found out on propane kettles in Train 2. Chevron plans to shut Train 1 at Gorgon LNG this early October and Train 3 in January next year.

While Chevron is the chief operator of Gorgon LNG project holding 47.3% stake, Exxon Mobil Corporation XOM and Royal Dutch Shell plc RDS.A own 25% interest each. The remainder is held by Osaka Gas, Tokyo Gas and Chubu Electric Power.

Gorgon LNG project is the largest single resource endeavor in Australia dealing with the transportation of natural gas to international and domestic customers. Valued at $69 billion, it is one of the costliest energy projects, employing more than 10,000 people to construct the processing facility at Barrow Island. The project boasts a shipment capacity worth 15.6 million metric tons per year.

Brief on the Company

Chevron is one of the largest publicly-traded oil and gas companies in the world with operations spread to almost every corner of the globe. A component of the Dow Jones Industrial Average, this energy player is a fully-integrated company, participating in every energy-related process, ranging from oil production to refining and marketing. 

Zacks Rank & Key Pick

Chevron currently carries a Zacks Rank #3 (Hold). A better-ranked player in the same space is Murphy USA Inc. MUSA, presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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