NPRA '05: Lyondell chief says chems can meet energy challenge

04 April 2005 17:35  [Source: ICIS news]

SAN ANTONIO, Texas (CNI)--Higher energy prices pose a continuing challenge for chemical companies, but a manageable one, the National Petrochemical & Refiners Association (NPRA) was told Monday.

 

Dan Smith, president and chief executive of Lyondell Chemical, assured NPRA’s International Petrochemical Conference (IPC) that despite higher energy prices, global demand for and reliance on chemicals will not diminish in future years.

 

Smith said the industry has seen a number of price spikes in the past two decades, but predictions of gloom and doom have proven mostly to be incorrect each time.

 

“We [the chemical industry] have proven that we can make money at $50/bbl oil,” Smith said, “and we have proven that we can lose money at $20/bbl oil.”

 

He added that continually rising natural gas prices also pose a challenge.

 

Although the US chemical industry is losing its historical price advantage of low gas prices, Smith predicted that the growing trade in liquefied natural gas (LNG) would ease supply woes and make that fuel a more global commodity.

 

Smith warned chemical firms to spend their profits carefully now, at the beginning of an upturn in industry profitability. He said the industry’s pattern of supply/demand cycles has not ended. “It’s a recipe for failure if you assume a 10-year cycle and a 5 year construction schedule [for a new plant].”

 

The Lyondell chairman said one sign of the industry’s promising future is the eagerness of private investment groups to buy chemical companies.

 

“Change is inevitable. Those companies which adapt most quickly are the ones who will succeed. The smart companies can define what they need to be successful and embrace change.”

 

*Sponsored by the National Petrochemical & Refiners Association (NPRA), the IPC runs through Tuesday.

 

(The CNI newsroom at NPRA’s IPC is in Salon C, Marriott Riverwalk Hotel; Tel. +1 210 299 6585.)

By: Patrick Crow
+1 713 525 2653

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