Chevron says it may sell some refineries

Chevron Corp. said Tuesday that it might sell some refineries as recession in the world’s largest economies began to cut demand for gasoline and diesel, squeezing fuel-production margins.

The San Ramon, Calif.-based company wants to focus on higher-profit ventures such as natural gas production off the coast of Australia and oil developments in the Gulf of Mexico and West Africa, said John Watson, Chevron’s executive vice president of strategy and development.

Watson, speaking at an energy conference in New York, declined to say which or how many refineries might be sold. Chevron’s refining profit declined 59% during the first nine months of this year as crude prices soared to a record and refined fuel prices failed to keep pace. The refining unit’s contribution to total profit dwindled to 7.1% during the first three quarters of this year from 24% a year earlier.

“It’s shaping up to be a difficult year for the refining business,” said Watson, formerly chief of Chevron’s international exploration business. “The margin environment has been relatively weak.”

Chevron operates or owns stakes in 18 refineries that can process 2.94 million barrels of crude a day. The company’s last refinery-related divestiture was in 2007, when it sold a 50% stake in a Netherlands plant to London-based BP for $900 million.

Chevron plans to continue divesting filling stations and retail fuel-distribution networks in low-profit markets, Watson said. Shedding those businesses will cut annual operating costs by $700 million, he said.

In the last two years, Chevron exited retail fuel markets in Norway, the Philippines, Uruguay, the Netherlands, Kenya, Britain and Nigeria.

Chevron shares rose $3.52, or 4.9%, to $75.54.