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CHEVRON RESTRUCTURES U.S. REFINING AND MARKETING BUSINESS; AFTER-TAX CHARGE OF $550 MILLION PLANNED FOR SECOND QUARTER

 SAN FRANCISCO, May 27 /PRNewswire/ -- Chevron U.S.A. (CUSA) Products Company, the nation's largest refiner and marketer of fuels, today announced a major restructuring of its U.S. "downstream" business.
 Chevron's new refining and marketing organization will focus resources in the West, Southwest and South where its business is strongest. The company's refineries at Port Arthur, Texas, and Philadelphia, Pa., will be sold, and investments in retail marketing activities east of the Rockies will be concentrated in fewer states.
 "We must change with a changing business environment," said Dave Hoyer, president of Chevron U.S.A. Products Co. "The U.S. refining and marketing business has always been highly competitive and capital intensive. But today, increased regulation, mandated capital expenditures and rising taxes impose enormous added risks and burdens on a system as large as ours," he continued. "We also see very slow growth in future demand.
 "Our new core system will be smaller, more efficient and able to operate at lower cost. We'll concentrate on those areas where Chevron is most competitive," said Hoyer. "Assets being sold just don't fit our long-term corporate strategy to have a more focused operation. In the case of Philadelphia, we no longer market fuel products in the Northeast. And Port Arthur represents more refining capacity than we need in the Gulf Coast market."
 The restructuring, recommended after a comprehensive internal study, will improve cash flow and return on capital employed. It also will reduce future downstream capital investments, which are escalating dramatically due to requirements of the Clean Air Act and other environmental regulations. At the end of five years, Chevron's total capital employed in the U.S. downstream business will be almost $2 billion less than it would have been if the company had retained and continued to invest in the current system.
 In connection with the restructuring, the company expects to take a second-quarter, after-tax charge to earnings of about $550 million. This charge represents preliminary estimates of losses on the disposition of fixed assets and related inventories, and provisions for environmental site assessment and employee severances.
 The restructuring includes plans to:
 -- Sell Chevron's refineries at Philadelphia, Pa., and Port Arthur, Texas. Philadelphia's processing capacity is 173,000 barrels of crude oil per day. Port Arthur was successfully reconfigured recently from a rated capacity of 316,000 barrels per day to a new single-train capacity of 177,000 barrels per day. These changes, coupled with recent improvements in operating efficiency, have improved profitability, reduced future capital requirements and eliminated the use of inefficient processing equipment. Both refineries are very well-run facilities, making them attractive to another operator as ongoing businesses. There are approximately 1,200 employees at Port Arthur and 600 at Philadelphia.
 -- Retain the Port Arthur lubricants blending and packaging center. Nationwide marketing of finished lubricants will be unaffected.
 -- Retain the Port Arthur chemical facilities, which will continue to be owned and operated by Chevron Chemical Co.
 -- Concentrate Chevron's investment service stations in six Gulf Coast states (Florida, Georgia, Alabama, Mississippi, Louisiana and Texas) where competitive strengths and brand value are high. Chevron also will continue to provide products to a strong network of Chevron- branded wholesalers (known in the petroleum business as "branded jobbers") in these states.
 -- Sell investment service stations to Chevron-branded wholesalers in other states east of the Rockies, including South Carolina, North Carolina, West Virginia, Virginia, Maryland, Ohio and most of Kentucky and Tennessee, where branded jobbers will continue to market Chevron products.
 -- Discontinue Chevron-branded retail fuel sales in Arkansas, and in western Kentucky and western Tennessee, effective at the end of this year.
 Chevron has previously announced a market withdrawal in portions of the mid-Atlantic area, which will continue as planned. Sales of branded lubricant products are not impacted by this decision to exit the branded retail fuels business in these markets.
 As has been typical in other Chevron asset sales over the last several years, Chevron will attempt to find buyers for its facilities that will continue to employ the current work force. Where jobs are ultimately eliminated, severance payments will be provided.
 "I'm aware that what we're announcing today will affect many people, especially CUSA Products employees who have been working hard to make their operations better and more competitive and other Chevron employees who provide support and service," said Chevron Corp. (NYSE: CHV) Chairman and CEO Ken Derr. "That's the most difficult aspect of this decision, and I'm very sensitive to the concerns of our employees, their families and the people in the communities where we've done business in many cases for decades. However, to make jobs secure for the vast majority of our employees, we must be highly competitive and able to respond effectively to a changing environment."
 -0- 5/27/93
 /CONTACT: Larry Shushan, 415-894-2978, or Mike Libbey, 415-894-4440, or Bonnie Chaikind, 415-894-1200, all of Chevron media relations; or Jack Galloway, Philadelphia Refinery, 215-339-7155, or Art Spencer, Port Arthur Refinery, 409-985-1100, all of Chevron/
 (CHV)


CO: Chevron U.S.A. Products Co.; Chevron Chemical Co.; Chevron Corp. ST: California, Pennsylvania, Texas IN: OIL CHM SU: RCN

GT -- SF003 -- 2793 05/27/93 09:05 EDT
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Date:May 27, 1993
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