LONDON (ICIS)--Fourth-quarter earnings for Chevron’s downstream business fell steeply to $390m, from $925m in the same period the year before, partly because of lower margins on refined product sales, the US-based energy major said on Friday.
US downstream operations earned $265m in the fourth quarter 2013, down from $331m a year earlier, “mainly due to higher operating expenses reflecting repair and maintenance activity at company refineries and lower margins on refined product sales, partially offset by higher gains on asset sales,” acording to the company.
Fourth-quarter earnings from Chevron’s international downstream operations fell to $125m compared to $594m during the same period in 2012.
“Current quarter earnings decreased due to lower gains on asset sales, lower margins on refined product sales, an unfavourable change in price effects on derivative instruments and higher income tax expenses,” the company said.
It added that foreign currency effects decreased international downstream earnings by $96m and $97m in the 2013 and 2012 periods, respectively.
Chevron did not provide details about the chemical earnings.
For the whole of 2013, total downstream earnings dropped significantly to $2.24bn from $4.30bn in 2012, on the back of year-on-year falls in both US (down to $787m from $2.05bn) and international (down to $1.45bn from $2.25bn) operations.
“In the downstream, we progressed our new premium base-oil plant in Pascagoula, Mississippi, and look forward to start-up in early 2014,” said Chairman and CEO John Watson.
“In addition, Chevron Phillips Chemical reached a final investment decision on a new ethane cracker in Texas. Both of these projects advance our strategy of focusing investments on higher growth and higher margin products.” He added.
Overall, Chevron reported fourth-quarter earnings of $4.93bn, compared with $7.25bn in the same period a year ago. The group’s full-year 2013 earnings were $21.4bn, down 18% from $26.2bn in 2012.
“Global crude oil prices and refining margins were generally lower in 2013 than 2012. These conditions, as well as lower gains on asset sales and higher expenses, resulted in lower earnings. We continue to have an advantaged portfolio, and we have maintained our industry-leading position in upstream earnings per barrel for the past four years,” said Watson.
“Our strong financial position and healthy cash generation in 2013 have allowed us to fund a substantial investment program, add several new resource opportunities and, at the same time, raise shareholder distributions. Major capital projects currently under construction are expected to deliver significant production growth and shareholder value in the years ahead,” he added.