2009 Annual Meeting Remarks by Mike Wirth

Mike Wirth

By Mike Wirth, Executive Vice President for Downstream
Chevron Corporation

Overview of Downstream

San Ramon, California, May 27, 2009

Good morning. It's a pleasure to be with you to discuss our downstream. Before I review last year's achievements, let me highlight our key areas of business.

Downstream operations include refining, marketing, lubricants, and supply and trading. In 2008, we refined about 1.9 million barrels of crude oil, and sold about 3.4 million barrels of products, per day. Today we market under the Chevron, Texaco and Caltex brands through more than 22,000 retail stations.

Slide: Advantages in the Pacific Rim

We've concentrated the large majority of our assets in North America and Asia-Pacific. These are the largest markets today and will be the fastest-growing markets tomorrow. In the future, growth in demand will be heavily focused in Asia — and skewed toward diesel and jet fuel.

Both of these long-term trends align well with our strengths.

Slide: What We Accomplished in 2008

In 2008 we executed well, and we delivered results. 2008 was Downstream's safest year ever. We continued to streamline our portfolio through asset divestments. And we delivered best-ever reliability exceeding our commitment to improve the utilization of our operated refineries 6 percent versus 2005.

Our return on capital employed improved to better than 14 percent, and we ranked second among the four majors with worldwide downstream operations. The magnitude of our improvement was greater than that of any other competitor.

And we continued to invest in refinery reliability and flexibility.

Slide: Slide: Strengthen Competitive Position and Reduce Costs

Going forward, the strategies to strengthen our competitive position focus on four areas — all of which improve our cost structure. Safe and reliable operations deliver consistent performance and reduce the cost of incidents. Investments in flexibility reduce raw material costs — the single largest element of our cost structure. Supply efficiency improvements reduce finished product costs. And high-grading our portfolio — that is, selling off less profitable assets and exiting markets that don't align with our strategy — reduces operating costs and capital employed.

Slide: Investing in Flexibility, Reliability

Here's a little more detail about our investments in refinery flexibility and reliability.

At El Segundo in California, projects under construction will improve reliability and increase runs of more economic crudes and yields of high-value products. This multiphase upgrade will be completed by 2011.

At Richmond in California, we're improving crude flexibility, reliability and energy efficiency. Projects include a new hydrogen plant, product upgrading facilities and retiring older units to improve energy efficiency.

At Pascagoula in Mississippi, a project to increase utilization and improve the yield of high-value products will start up next year.

And in South Korea, we're building on the success of the heavy oil upgrade project completed in 2007. The first phase of a second upgrade project should be complete in 2010.

Slide: Improving Returns in Marketing

To further improve returns, we're continuing to streamline fuels and lubricants marketing.

Through the end of last year, we reduced our lubricant product line by more than 40 percent versus 2005. By 2010, we expect this reduction to reach two-thirds. These changes simplify operations, reduce costs and boost earnings. And since 2005, we've more than tripled the profitability of our lubricants business.

We're focusing on stronger market positions and withdrawing from weaker ones. Last year we exited more than 20 markets and continued to rationalize our service station network. In 2009, planned market exits will reduce operating expense by $300 million per year and capital employed by nearly $1 billion.

We'll continue these efforts in 2009 and beyond.

Slide: Well-Positioned for Today and the Future

Let me wrap up.

We're focused on performance through continual improvement in operational excellence, earnings and returns. Our strategy is concentrated on growth regions of the world and increasing the flexibility and reliability of our refineries. We're improving competitiveness through reducing costs, and sustaining our gains in utilization and application of technology.

I'm convinced our performance will remain strong.

Thanks for your attention. Now, I'll turn the meeting over to Dave.

Read the Summary Remarks by David J. O'Reilly

Cautionary Statement

Updated: May 2009