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US oil refiner Marathon Petroleum cuts 12% of workforce amid pandemic

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HOUSTON (Reuters) – Marathon Petroleum Corp MPC.N, America’s largest oil refiner, is cutting its workforce by 12% amid continued decline in fuel consumption due to the COVID-19 pandemic, he said Wednesday.

FILE PHOTO: A Marathon Petroleum banner covers an Andeavor sign in front of the refinery in El Paso, Texas, USA October 1, 2018. REUTERS / Julio-Cesar Chavez

Oil refiners and producers have laid off staff, cut expenses and cut production to cope with low prices and a global fuel glut. Gasoline futures in the United States are down 26% from a year ago and oil is trading a third from the start of the year.

Marathon will incur a charge of up to $ 175 million on third-quarter earnings for the 2,050 job cuts, he reported to the US Securities and Exchange Commission. About 20% of the costs will be recovered from its publicly traded pipeline unit, the company said.

The Findlay, Ohio-based company revealed the downsizing after Reuters reported Tuesday that company employees had been told of impending layoffs.

The cuts include staff at its refineries in Martinez, Calif., And Gallup, New Mexico, which were slated to close in July. The closures and layoffs will reduce overall costs from next year, Marathon said in a statement.

Employees at his retail gasoline business are not included in the 12% discount. Marathon agreed in August to sell its Speedway unit to Seven & i Holdings Co Ltd of Japan. 3382.T, an agreement that should be concluded next year.

Red ink and job cuts are expected in the oil industry as the results begin to air next month. US refiners generally prepare for the demand for winter fuel oil after the summer driving season ends. This year, the consumption of fuel oil and gasoline is depressed.

The pandemic has resulted in near-record lows in the margins of diesel, the product of choice for refineries as we enter the winter heating season, said Andrew Lipow, chairman of the board of Lipow Oil Associates.

The glut of refining capacity has forced these downstream companies to layoffs, he said.

Marathon this week notified employees of 100 layoffs at its refinery in Robinson, Ill., 60 at its refinery in Los Angeles, 57 at the refinery in Catlettsburg, Ky., 45 at the refinery in Garyville, Louisiana, 20 at the Canton, Ohio plant. and 15 in St. Paul Park, Minnesota, refinery, according to sources familiar with the matter.

Workers were also told of 108 job cuts at Marathons’ largest plant, the 585,000 barrels per day (b / d) refinery at Galveston Bay, Texas City, Texas. The total could reach over 200, people say.

This month, Royal Dutch Shell and LyondellBasell Industries both announced 10% workforce cuts. Major U.S. Oil Companies Chevron Corp CVX.N and Exxon Mobil Corp XOM.N are also restructuring their businesses to stop the losses.

Shell revealed on Tuesday that its refineries were operating between 64% and 68% of their capacity during the quarter ending today, a very low rate.

Marathon is expected to report a third quarter loss of $ 623 million on Nov. 2, according to IBES data from Refinitiv. It lost $ 9.2 billion in the first half, mostly due to write-downs.

Its shares traded at $ 29.34 on Wednesday, down a fraction. The stock is down 52% since the start of the year.

Reporting by Erwin Seba; Edited by Chizu Nomiyama, Aurora Ellis and Richard Pullin

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