Strategy: Improve returns and grow earnings across the value chain.
Our downstream and chemicals businesses are focused on strategic markets where we have a competitive advantage. In addition to gasoline, diesel and other fuels, we have strong positions in additives, petrochemicals and lubricants.
Manufacturing
Approximately 95 percent of our crude oil processing capacity is located in North America and the fast-growing Asia-Pacific region where we have several joint-venture refineries.
We have spent the past few years upgrading our manufacturing system to improve flexibility and enable our refineries to process a broad slate of crude oils. In the United States, we started up a new processing unit during the year at our El Segundo, California, refinery that is expected to improve reliability, high-value product yield and flexibility to process a range of crude slates. At our 50 percent-owned Yeosu Refinery affiliate in South Korea, a 53,000-barrel-per-day gas oil fluid catalytic cracking unit reached mechanical completion in early 2013. The unit is designed to increase high-value product yield and lower feedstock costs. This enhancement will further strengthen the competitiveness and world-class performance of the refinery.
Our manufacturing expertise is essential to our growth plans in the upstream. This is especially true in the development of major capital projects that involve crude oil upgrading, gas-to-liquids operations, and sour gas and liquefied natural gas processing. Since 2007, we have redeployed approximately 650 employees from manufacturing and related jobs to support our major upstream projects and operations.
Chemicals, Lubricants and Additives
The demand outlook is strong for petrochemicals and lubricants, and we believe we are well positioned in both. Our Chevron Phillips Chemical joint venture has 36 production facilities worldwide. During the year, a new ethylene cracker started up in Saudi Arabia, making Chevron Phillips Chemical the largest producer of high-density polyethylene in the world. At the company's Cedar Bayou facility in Baytown, Texas, construction began on a 1-hexane plant that is expected to be the largest plant of its kind in the world. Startup is expected in 2014. The company also began front-end engineering and design for several projects on the U.S. Gulf Coast that are expected to capitalize on advantaged feedstock from shale gas development in North America. These include an ethane cracker to be built at Cedar Bayou and two polyethylene units to be located at Old Ocean, Texas.
We are on schedule with a $1.4 billion lubricants facility at our Pascagoula, Mississippi, refinery that is expected to position the company as the worldwide industry leader in premium base oil production. Premium base oil is used in more advanced lubricant formulations by newer vehicles. The project is scheduled for mechanical completion by year-end 2013.
We are the only integrated energy company with a wholly owned additives company—Chevron Oronite. During the year, we began construction on a major expansion project at our additives facility on Jurong Island in Singapore, already the largest additives plant in the Asia-Pacific region. Commercial operations are expected to begin in 2014.
Portfolio Rationalizations
As part of our downstream restructuring effort, we continued to rationalize nonstrategic assets during the year. In Spain, we completed the sale of our fuels marketing, finished lubricants and aviation fuels businesses. We also sold certain fuels marketing and aviation businesses in eight Caribbean countries, an asphalt business in Vietnam and the idled Perth Amboy, New Jersey, refinery, which had been operating as a terminal. Our 50 percent-owned GS Caltex affiliate completed the sale of its nonrefining and marketing assets. Since 2010, we have exited 35 countries to better focus our refining and marketing portfolio.
Posted: April 2013