Chevron: M&A advisable for cycle downturn

31 March 1997 00:00  [Source: ACN]

COMPANIES should look into buying assets from marginal competitors and taking part in mergers and alliances to prepare for the downside of the petrochemical cycle, said Chevron vice-chairman James Sullivan at the NPRA conference in San Antonio, Texas.

Most projections show margins will hit bottom next year, he said.

Sullivan said the winners in the twenty-first century will be companies that are the most efficient and reliable suppliers, and good at quickly developing and applying new technologies. They will also be open to alliances and innovative ways of doing business.

Chevron merged with Gulf in 1984 as a strategic move and it has worked well, Sullivan said. The company plans to increase its international business from 12% to 30% of total sales over the next ten years, he said.

To achieve this, the company will focus on three core areas for growth: chemicals; upstream businesses; and joint-venture refining operation Caltex, which will generate downstream business.

The US major will continue to increase its exports to Asia as well as build new plants here, Sullivan said. It has just confirmed plans for a major petrochemicals investment in China (ACN 31 March p22), and is pushing forward with an aromatics investment with the Petroleum Authority of Thailand.

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