BD SIGNPOST
• Newly announced ‘Growing the Gulf’ programme includes work begun years ago, but the president is delighted
Exxon Mobil has announced a $20bn building spree in the heart of the US chemical and refining industry, a programme it said would create 45,000 jobs. US President Donald Trump quickly tweeted his support.
Exxon Mobil has announced a $20bn building spree in the heart of the US chemical and refining industry, a programme it said would create 45,000 jobs. US President Donald Trump quickly tweeted his support, calling the oil producer a “special company”.
The only problem? Monday’s announcement just gave a name to a series of investments the company began making as far back as 2013, before the collapse in oil prices. CEO Darren Woods dubbed the programme “Growing the Gulf”, part of an effort to boost energy exports from abundant natural gas and oil supplies on the US Gulf Coast.
It is the latest effort by a corporation to present itself as a job creator to a president who has made the issue a centrepiece of his campaign in his less than two-month tenure in office.
Trump described Exxon as a “true American success story” in a statement. The president followed up with a tweet: “We are already winning again, America!” and a short video celebrating the announcement, which he said was in part because of his administration’s policies.
All the jobs would be located along the Gulf Coast and many would pay an average of $100,000 a year, Woods said in a speech at CERAWeek, a huge annual industry conference in Houston. The investments will continue to at least 2022.
Woods was making only his second public appearance as CEO since January, when he succeeded Rex Tillerson, who left the company to become Trump’s secretary of state.
Exxon follows other US giants such as Ford Motor, Intel, General Motors and Wal-Mart Stores responding to Trump’s call to eschew overseas investments and focus on domestic developments. Like those other plans, Exxon did not specify how much of the 10-year investment programme was previously announced.
After decades of locating refineries and chemical plants close to raw materials and end markets in the Middle East and East Asia, Exxon was committed to steering construction dollars to its home country, Woods said. The plan involves 11 projects in the Gulf Coast region.
“These projects are export machines, generating products that high-growth nations need to support larger populations with higher standards of living,” Woods said. “The supply is here; the demand is there. We want to keep connecting those dots.”
Woods’s comments followed Exxon’s disclosure last week that it would shift half its worldwide drilling budget to US shale fields in 2018.
The company’s shares have dropped 8% in 2017 as oil prices have stabilised after falling from more than $100 in 2014.
One of the projects includes the construction of an ethane cracker at Exxon’s chemical complex in Baytown, Texas. Work began in June 2014 and was projected to employ 10,000 construction workers and spur 4,000 additional full-time positions. Another was the expansion of Exxon’s polyethylene plant in Mont Belvieu, Texas, where work began at about the same time. The company did not say how much the investments would cost.
“This is exactly the kind of investment, economic development and job creation that will help put Americans back to work,” Trump said in a statement. “Many of the products that will be manufactured here in the United States by American workers will be exported to other countries, improving our balance of trade.”
Like Exxon bosses before him, Woods used his remarks to champion “free and fair trade” as essential for economic growth and corporate profitability.
FREE TRADE
That stance may veer from Trump’s repeated criticisms of international trade deals, including the North American Free Trade Agreement with Canada and Mexico, as unfair and disadvantageous to US workers.
Woods, a 52-year-old Exxon lifer, inherited a company hobbled by the biggest reserves reduction in its modern history and the loss of the platinum credit rating it held for 85 years as the collapse in crude markets destroyed cash flow.
The expansion programme hews close to Woods’s pedigree as an executive who focused on refineries and chemicals for most of his career.
His comments at CERAWeek may presage major themes up for debate at the conference.
He was preceded at the conclave by Russian Energy Minister Alexander Novak, and other luminaries scheduled for the conference include Saudi Oil Minister Khalid Al-Falih; the secretary-general of the Organisation of the Petroleum Exporting Countries, Mohammad Barkindo; and the CEOs of Royal Dutch Shell, Chevron, Total and BP.
WOODS USED HIS REMARKS TO CHAMPION ’FREE AND FAIR TRADE’ AS ESSENTIAL FOR ECONOMIC GROWTH