AFPM ’12: LyondellBasell focused on costs but looks to grow - CEO

02 April 2012 21:51  [Source: ICIS news]

SAN ANTONIO, Texas (ICIS)--LyondellBasell continues to focus on costs but also on growth, CEO Jim Gallogly said on Monday.

“We have earned the right to grow,” he said on the sidelines of the AFPM International Petrochemical Conference (IPC), noting that the company had just been given an investment grade rating by debt rating agencies only two years after emerging in the US from Chapter 11 bankruptcy protection.

Gallogly also made the remark about growth last year as cash flow from the business increased and the company was able to pay down and restructure more debt, and talk more openly about its expansion plans.

Ratings agency Standard & Poor’s said on 26 March: “The upgrade reflects our opinion that LyondellBasell should continue to benefit during the next several years from an improved competitive position and strong operating results, stemming in part from the availability of low-cost natural gas in the US.”

Under Gallogly’s leadership, Netherlands-registered LyondellBasell has restructured its refining and chemicals operations. Performance of the Houston refinery in the US has been enhanced and the company’s refinery at Berre in France has been closed.

Last year it achieved production volume records at more than 30 of its sites and lifted capital spending to $1bn (€750m) with attention paid to small projects which, it says, will generate high returns. This year, spending is planned to rise to $1.4bn.

“We are still looking at our costs overall,” Gallogly said on Monday, referring to on-going restructuring in Europe. “We need to be gaining efficiencies on all fronts.”

“We are going to be the top performing petrochemical company in the industry,” he said.

The LyondellBasell CEO, who has had an extensive career in oil and gas exploration and production, refining and chemicals, reiterated that he believes that petrochemical producers are more likely to band together to build ethanecondo crackers” and derivatives plants to take advantage of US shale gas reserves than to go it alone.

Sharing the equity of large-scale ventures would mitigate the risks associated with shale gas ethane cost and supply and help give those companies that do not have the technology the derivatives off-take.

“All of us our trying to run as much ethane as possible,” he said of the changed feedstock slate of US crackers, given increased availability of attractively priced natural gas liquids (NGLs). “It makes your ethylene cheap but also co-products more expensive.

“The whole economics of cracking in the US are very favourable,” he said.

($1= €0.75)

By: Nigel Davis
+44 20 8652 3214

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