Global oil giant Chevron is reportedly undergoing its largest-ever restructuring, planning to cut its global workforce by 20% by the end of 2026. The company will also reduce local and regional business units, shifting to a more centralized model to improve performance.
According to Chevron Vice Chairman Mark Nelson, the company plans to reduce the number of upstream business units from 18–20 a few years ago to just 3–5.
On the other hand, earlier this year, Chevron announced plans to drill in Namibia, invested in exploration in Nigeria and Angola, and last month secured exploration rights for nine offshore blocks in Brazil’s Amazon River mouth basin.
While cutting jobs and streamlining operations, Chevron is simultaneously accelerating exploration and development—a strategic shift that reveals the new survival playbook for the energy industry in turbulent times.
Cost-cutting to address investor pressure
One of the core objectives of Chevron's current strategic restructuring is to achieve up to $3 billion in cost reductions by 2026. This target is driven by profound industry trends and market forces.
In recent years, global oil prices have experienced frequent volatility, remaining depressed for prolonged periods. Meanwhile, growing uncertainties surrounding the future of fossil fuels have intensified investor demands for stronger cash returns from major energy companies. Shareholders are now urgently pushing these firms to improve operational efficiency and reduce costs, ensuring sufficient funding for dividend payouts and stock buybacks.
Under such market pressures, Chevron's stock performance faces significant challenges. Currently, energy stocks account for just 3.1% of the S&P 500 index - less than half their weighting from a decade ago. In July, while both the S&P 500 and Nasdaq hit record closing highs, energy stocks declined across the board: ExxonMobil and Occidental Petroleum fell over 1%, while Schlumberger, Chevron, and ConocoPhillips all weakened.
Chevron Vice Chairman Mark Nelson stated unequivocally in a Bloomberg interview: "If we want to remain competitive and stay as an investment option in the market, we must continuously improve efficiency and find new, better ways of working." To achieve this goal, Chevron has not only implemented deep structural reforms to its business operations but has also undertaken large-scale workforce reductions.
In February this year, Chevron announced plans to reduce its global workforce by up to 20%, potentially affecting approximately 9,000 employees. This downsizing initiative is undoubtedly painful and challenging, with Nelson acknowledging, "These are difficult decisions for us, and we don't take them lightly." However, from a strategic corporate perspective, workforce reduction serves as one of the critical measures to achieve cost-cutting objectives.
Business Centralization: Reshaping the Operating Model
To achieve the dual objectives of cost reduction and efficiency improvement, Chevron has implemented fundamental reforms to its business operations - transitioning from its previous decentralized global operating model to a more centralized management approach.
In its production division, Chevron will establish a separate offshore unit to centrally operate assets in the U.S. Gulf of Mexico, Nigeria, Angola, and the Eastern Mediterranean. Simultaneously, shale assets in Texas, Colorado, and Argentina will be consolidated under a single department. This cross-regional asset integration aims to eliminate inefficiencies in resource allocation and collaboration challenges caused by previous geographical divisions, while reducing operating costs through centralized management.
In its service functions, Chevron plans to consolidate financial, human resources and IT operations previously scattered across multiple countries into service centers in Manila and Buenos Aires. Additionally, the company will establish centralized engineering hubs in Houston and Bangalore, India.
The establishment of these centralized service centers and engineering hubs will help standardize workflows, achieve economies of scale, improve efficiency, and reduce redundant work and resource waste. Through this centralized management model, Chevron aims to break down previous organizational barriers characterized by bureaucratic hierarchies and inefficient information flow. This will enable innovations developed in one business unit to be rapidly deployed across others without requiring multi-layer management approvals and coordination, thereby enhancing the company's overall innovation capability and market responsiveness.
Moreover, in this strategic transformation, Chevron has placed significant emphasis on technological innovation, recognizing it as a crucial driver for enhancing operational efficiency, achieving cost reductions, and fueling business growth.
Particularly noteworthy is how artificial intelligence has demonstrated remarkable value in Chevron's downstream operations. A prime example is the El Segundo Refinery in California, where employees utilize AI-powered mathematical models to determine optimal petroleum product blends in minimal time, thereby maximizing revenue potential.
Expansion Under Cost-Cutting Strategy
While aggressively pursuing cost-cutting and business centralization strategies, Chevron is by no means forgoing expansion opportunities. In fact, amid intensifying global energy market competition, the company continues to actively seek new growth vectors—strategically deploying capital to strengthen and enhance its industry position.
Earlier, Chevron announced plans to conduct drilling operations in Namibia. The country has demonstrated significant potential in petroleum exploration in recent years, attracting attention from numerous international oil companies. This move by Chevron aims to leverage Namibia's resource advantages to develop new oil and gas production bases, thereby increasing the company's reserves and output.
Simultaneously, Chevron continues to intensify exploration investments in established oil and gas regions like Nigeria and Angola. These nations possess abundant hydrocarbon resources, where Chevron has built decades of operational experience and strong partnerships. Through additional investment and exploration, the company anticipates discovering more high-quality oilfields to increase its market share in these areas and consolidate its position in Africa's hydrocarbon sector.
Last month, Chevron secured exploration rights for nine offshore blocks in Brazil's Amazon River Mouth Basin through a competitive bidding process. With vast maritime territories and rich offshore hydrocarbon potential, Brazil represents a strategic frontier for Chevron. Acquiring these exploration rights will significantly expand the company's global deepwater portfolio.
Chevron will proceed with its $53 billion acquisition of Hess, after it prevailed in a landmark legal battle against larger rival Exxon Mobil to gain access to the largest oil discovery in decades.
Chevron is implementing business centralization and cost-cutting strategies to optimize its organizational structure and enhance operational efficiency, while actively pursuing expansion opportunities through increased global resource exploration and investment.
Moving forward, whether Chevron can successfully achieve its strategic objectives and distinguish itself in the fiercely competitive market remains a key focus for observers.
Post time: Jul-28-2025