Big oil is called that because, well, it's big. These companies are also integrated, however, and for Royal Dutch Shell (NYSE:RDS-B) this is proving to be a problem right now. Chevron (NYSE:CVX), on the other hand, is not worried as it has been a leader in the downstream market for some time.

Refining problems
Big integrated oil companies, in their most basic form, are separated into two parts: upstream and downstream. The upstream side of the business produces the oil and gas, while downstream converts the oil and gas into usable products.

One of the most essential components of the downstream industry is refining, where crude oil is turned into fuel and other refined products. Once upon a time this was a lucrative business, and it still is within the domestic market.

However, the global refining industry has been struggling for some time. What's more, many European refiners are now reporting negative profit margins, meaning that they are essentially losing money. As a result, refining capacity has been declining.

Usually, a refinery capacity shutdown would lower supply, leading to price hikes. As the price of Brent and the cost of doing business within Europe both rise, refining margins are collapsing. Many refiners just can offload product at higher prices.

Shell has seriously suffered from this downturn. The company's CEO, Ben van Beurden, described the company's refining sector results as "unacceptable." Nevertheless, the company is stopping short of spinning off its refining division like ConocoPhillips did to increase returns.

That being said, Shell has divested some underperforming downstream assets, including refining and marketing businesses within Australia, Italy, Denmark, and Norway.

Still, the company has stated that the downstream business represents a key element of the Shell business model. As a result, it is here to stay. All in all, Shell plans to divest up to $15 billion in downstream assets, although some analysts believe that this figure could reach $30 billion when all is said and done.

Shell has nearly $300 billion in assets, so pruning the portfolio by $15 billion, or 5%, is not really going to make that much of a difference.

Well positioned
While Shell is struggling to maintain downstream profitability, Chevron is steaming ahead. It is often said that Chevron has some of the best downstream operations within the sector, and the company's recent downstream outperformance has shown this to be correct. Chevron has outperformed almost all of its peers on a margin per barrel of refined product basis since 2009.

Chevron's average downstream margin during the five years since 2009 has been just under $2 per barrel, while competitors have reported an average margin of approximately $1.50. There is a reason for this outperformance, though: the crowning jewel of Chevron's downstream empire, Chevron Phillips.

Chevron Phillips
Chevron Phillips produces chemical products. It would appear that while the traditional refining market has come under pressure recently, the more specialist chemicals refining market has actually outperformed. This is not to say that Chevron's peers do not have their own chemicals downstream segments; they do. However, they are nowhere near as efficient as those of Chevron Phillips.

Chevron Phillips has beaten all of its peers by a significant margin during the past five years with utilization running at over 90%, compared to the industry average of 86%. Further, Chevron Phillips' EBITDA/average asset returns have exceeded 30% during the past three years, 50% more than the 20% return reported on average by peers.

Foolish summary
Collapsing refining margins have had their impact on integrated oil companies like Royal Dutch Shell during the past few years, and this is unlikely to change anytime soon. However, Chevron has been able to outperform thanks to the company's one-of-a-kind chemicals division. Chevron Phillips is a really attractive asset for Chevron, providing the company with a stable income stream from the production and sale of chemical products.