Feedstock, Olefins and Aromatics
Chevron sees continued benefits from downstream integration – exec
ICIS News : 12-Mar-13 17:33
HOUSTON (ICIS)--Chevron is seeing continued benefits from its downstream integration with refining and chemicals, Mike Wirth, who heads the US energy major’s downstream and chemicals business, said on Tuesday.
“Our downstream and chemical business has been a good-return business. We do think the integrated model still works,” Wirth said during a webcast investor event. However, the company was more selective in where it is investing, he added.
Wirth was responding to an analyst who suggested that Chevron’s heavy focus on exploration and production put into question the long-term future of the company’s downstream businesses.
Wirth said that Chevron’s refineries are very competitive. At the same time, the line between upstream and downstream are becoming blurred, he said, pointing to Chevron’s gas-to-liquids (GTL), liquefied natural gas (LNG) and other processing plants that “look a lot like refineries”.
Chevron’s downstream portfolio was shifting towards attractive chemicals and lubricants products, especially in Asia, while reducing exposure to refining and to fuels marketing, Wirth said.
In chemicals, all of Chevron’s cracking capacities – through its Chevron Phillips Chemical (CP Chem) joint venture with Phillips 66 – are located in the feedstock-cost advantaged regions of North America and the Middle East, Wirth said.
Furthermore, Chevron operates a high-return specialty chemicals business with its wholly-owned Oronite lubricants and fuels additives business, he said.
“Chevron is the only major lubricants company with an integrated business, from base oils to additives and finished lubricants”, and Oronite is the only additives company with world-scale manufacturing plants in all key regional demand centres, Wirth said.
When Chevron’s new base oil plant in Pascagoula, Mississippi, comes online in late 2013, the company will be the world’s largest supplier of premium base oils, he added.
Its downstream strategy “remains sound” with a smaller and more focussed portfolio of assets that have the scale, flexibility and complexity to be competitive at any point in the refining and petrochemicals business cycle, Wirth said.
However, the downstream business would become a “smaller piece of the pie”, given the opportunities Chevron is pursuing in its upstream businesses, he added.
By Stefan Baumgarten
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