Downstream. Mike Wirth. Executive Vice President Downstream Chevron Corporation

Transcription

1 Downstream Mike Wirth Executive Vice President Downstream

2 What We Delivered in 2006 Base Business Record safety Record utilization Record energy efficiency Record earnings - $4 Billion Selective Growth Pascagoula FCC expansion South Korea upgrade U.K. Caspian upgrade Refining investment in India 2

3 Delivering Competitive ROCE U.S. Downstream ROCE Rank Non-U.S. Downstream ROCE Rank Competitor Group: XOM, RDS, BP, COP (U.S. only) Calculated based on CVX estimates and public information handled on a consistent basis. Excludes special items. Reconciliation to non-gaap earnings measure is available at under Investors. 3

4 Profitable Growth Effective Execution Right Strategies 4

5 We Have the Right Strategies Improve base business returns and selectively grow with a focus on integrated value creation Operational excellence in base business Disciplined growth in refinery scale/flexibility Focused portfolio high-grading 5

6 High-Grading Portfolio Asphalt U.S. Southwest Retail Fuels Scandinavia Nerefco Interest Netherlands Cumulative Proceeds $ Billions A/T 1.2 Retail Fuels Ecuador Retail Fuels Benelux Retail Fuels Uruguay Divested Progressing Retail Fuels Paraguay

7 Strong Focus on Improving Marketing Returns Standardization Increasing efficiency Supply Chain Optimizing product channels Premier Brands Leveraging topranked brands Focused Advertising Transport Alliances Gasoline Sales Volume YTD Oct. (2006 vs. 2005) 3% 1% Maintenance Partnerships -1% Market Global Centers -3% Majors PADD 5 core markets Source: Lundberg 7

8 Capitalizing on Demand Growth North America Asia-Pacific 2/3 of global demand growth 3/4 of CVX refining capacity Major CVX Refineries Under Construction Source: PFC Energy Supply/Demand Model 8

9 Superior Refining Assets Solomon Complexity 20 Chevron 15 Industry 10 Building further advantage in U.S. configuration 5 USWC USGC Asia-Pacific Including Korea upgrade Increasing complexity in Asia Solomon Net Cash Margin (Indexed) USWC USGC Asia-Pacific Top quartile performer Improving through reliability, efficiency and investment 9

10 Effective Execution 10

11 Improved Utilization Utilization Loss High-Value Product Volume (MBD) % -8% Chevron-Operated Refineries Focusing on continual and sustained improvements Building reliability refinery is a top priority 11

12 Sustaining High Reliability Unplanned Unit Outages (Number) Solomon Utilization (Indexed) avg avg. 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Chevron-Operated Refineries Reliability focus driving down incident rate 2006 utilization consistently better than

13 Maximizing Margins Through Optimization U.S. Crude Costs vs. WTI ($/bbl) $(2) $(4) Lower Feedstock Costs $(6) $(8) Asia Margins vs. Benchmarks ($/bbl) $0.8 $0.6 $0.4 Higher Value Yields $

14 Industry Leader in Energy Efficiency Energy Usage Refining Index 100% Base Index 100% Base 95% 95% 90% 90% 85% Better 85% 80% USWC USGC Asia-Pacific 80% Chevron Industry Chevron System Top quartile U.S. Solomon energy efficiency 2006 performance was best ever 14

15 Integration Creates Advantage Versatile fuel supplies to Japan Gasoline stocks to U.S. Caspian Blend to U.K. High-mercury crudes to Pacific Basin refineries Chad Doba to U.K. Qatar GTL to U.K. Major CVX Refineries Under Construction 15

16 Profitable Growth 16

17 Constrained Industry Refining Capacity Global Capacity & Product Demand MMBD Surplus Capacity Product Demand Source: Pervin & Gertz, PFC Energy, IEA Road Transportation Fuel Demand 40 MMBD Source: PFC Energy Supply & Demand Model Response to Constraints Industry Significant capacity builds (risked assessment) Capacity additions expected to peak in Chevron Build reliability refinery Pursue capacity creep Invest to expand margins Reliance ahead of peak 17

18 Investing to Further Expand Margins Average Crude Slate API (Indexed) Average Crude Slate Sulfur (Indexed) Base Heavier 100 Base Higher Sulfur API gravity improvement 25% increase in %wt sulfur 18

19 Larger-Scale Flexible Refining Atlantic Basin U.S. West Coast & Asia-Pacific Pascagoula Pembroke El Segundo Richmond South Korea India 2007 Caspian Blend Expansion 1 Heavy Sour Resid Upgrade Capacity Expansion FID Heavy Sour New Build Online 2009 CCR Capacity Expansion CCR Opportunity for 29% 2010 Caspian Blend Expansion 2 Resid Upgrade 2 Flexibility Organic Creep Acquisition 19

20 Focus and Execution Are Key High-grading portfolio Building reliability refinery Cost-effective capacity creep Expanding flexibility/margins Capturing integration value 20

21 Our Continued Commitment to Earnings and Returns Portfolio High-Grading 2007 South Korea Upgrade 2007 U.K. Caspian Upgrade 2007 Improve Utilization by 6% 2008 Pascagoula Expansion FID 2008 Reliance 29% Opportunity