EXCLUSIVE-Marathon Petroleum cutting at least 6% of refinery staff at nine U.S. plants


By Erwin Seba

HOUSTON, Sept 30 (Reuters)Marathon Petroleum Corp’s MPC.N oil-refining unit is cutting at least 6% of its staff, according to people familiar with the matter, demonstrating the depth of declining fuel demand during the pandemic.

Refiners and oil producers have been cutting staff, slashing spending and reducing production to cope with weak prices and a global glut of fuel. U.S. gasoline futures are down 26% from a year ago and oil futures are trading down a third from where they began the year.

A total of 1,255 salaried and hourly employees at nine of Marathon’s 16 refineries were notified of job losses, the people said. It could not immediately be learned whether jobs at other Marathon refineries or pipeline operations also were affected.

The largest U.S. refiner by volume, Marathon on Tuesday said it was evaluating roles throughout the company but gave no details. A spokesman on Wednesday declined further comment.

“The pandemic has resulted in near-record lows on diesel margins, the go-to product for refineries as we enter into the winter heating season,” said Andrew Lipow, president of consultancy Lipow Oil Associates.

“The glut in refining capacity has forced these downstream companies into layoffs,” he said.

Marathon is cutting back operations not tied to its retail gasoline business, the people familiar with the matter said. The company’s Speedway retail unit, is being sold to 7-Eleven Inc., an arm of Japan’s Seven & i Holdings Co Ltd 3382.T.

There have been 405 salaried employees at seven Marathon refineries dismissed so far this week and another 1,250 hourly and salaried employees will lose their jobs in Gallup, New Mexico and Martinez, California. The latter refineries, which Marathon announced it would shut down in August,are set to close Thursday.

Marathon is cutting 100 jobs at its Robinson, Illinois, refinery, 60 in Los Angeles, 57 in Catlettsburg, Kentucky, refinery, 45 in Garyville, Louisiana, 20 in Canton, Ohio, and 15 in St. Paul Park, Minnesota, the people said.

There were 108 jobs cut on Tuesday at Marathon’s largest plant, the 585,000 barrel-per-day (bpd) Galveston Bay Refinery, in Texas City, Texas. The total may reach 208 by Friday, the people said.

Red ink and job cuts are expected to appear across the oil industry as results start rolling out next month. U.S. refiners typically gear up for winter heating oil demand after summer driving season ends. But this year, heating oil and gasoline are both depressed.

On Tuesday, Royal Dutch Shell said it would dismiss up to 9,000 workers, or 10% of its staff. The top U.S. oil companies, Chevron Corp <CVX.N> and Exxon Mobil Corp XOM.N, are in the process of restructuring their businesses to halt losses.

Shell disclosed its refineries ran at between 64% and 68% of their capacity in the quarter ending today.

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

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

Last week, LyondellBasell Industries LYB.N also disclosed plans to cut 10% of staff at its Houston oil refinery because of heavy losses. Plant operations would be challenged for several years due to a drop in demand, a LyondellBasell executive said.

(Reporting by Erwin Seba Editing by Chizu Nomiyama, Cynthia Osterman and Aurora Ellis)

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