LyondellBasell’s high percentage of US force majeures
Lane Kelley
13-Jun-2014
Focus story by
Lane Kelley
HOUSTON (ICIS)–Is LyondellBasell jinxed?
Another force majeure issued by the company this week makes it an obvious question, since LyondellBasell already had the highest percentage of such declarations filed in the US this year, according to ICIS analysis.
American chemical producers have issued force majeures this year covering at least 23 plants, according to a survey by ICIS, with LyondellBasell accounting for more than half of the plants (14).
Nine of the producer’s US plants make polyethylene (PE), two polypropylene (PP), and one each for vinyl acetate monomer (VAM) and butadiene (BD).
LyondellBasell issued its latest force majeure, on acetic acid made at its La Porte, Texas plant, on Tuesday, because of utilities and feedstock supply disruptions.
That one carried a double-punch, though, because it extended the VAM declaration issued by the producer in March that was expected to be lifted in May. Acetic acid is a major VAM feedstock.
LyondellBasell said via email on Friday that it does not comment on such operational matters.
But the company’s broad explanation for its plight, related by CEO Jim Gallogly in an April conference call, is that the first quarter brought $300m worth of problems that had to be solved: plant maintenance, weather-related raw material costs and shipping delays.
“The first quarter was not on our normal pace,” Gallogly said.
Contracts cover abnormal occurrences through force majeure clauses. The term is French for “greater force” and covers unforeseen events – acts of God, as it were – such as the lightning strike that knocked out power at a LyondellBasell plant in France last July. But the term’s meaning has been broadened to the point that a supply disruption or a compressor breakdown is now as majeure as a bolt of lightning.
“Pretty convenient, isn’t it?” observed a US methanol source on the current use of the term.
The website of the American Association of Legal Counsel calls force majeure clauses “a textual dump for every ‘what if’ that could ever possibly impact performance”. The organisation recommends avoiding the term because most uses stray too far from the original notion of a truly unavoidable event.
However, chemical producers buy insurance that covers force majeure events, so their financial considerations tend to take precedence over traditional word usage.
Numerous force majeures declared this year have cited equipment or mechanical failures.
Some have cited weather-related issues, which could qualify as unavoidable events, although weather issues for a plant in Texas this past winter were probably not as majeure as those faced by plants in the upper Midwest or Northeast.
|
Producer |
Chemical |
Plant location |
Date |
|
Solvay |
Hydroquinone |
Baton Rouge, La |
Jan 2014 |
|
Ineos |
Polyethylene |
La Porte, Tx |
Jan 2014 |
|
LyondellBasell |
HDPE |
Chocolate Bayou, Tx |
Feb 2014 |
|
LyondellBasell |
HDPE |
Clinton, Iowa |
Feb 2014 |
|
LyondellBasell |
HDPE |
Matagorda, Tx |
Feb 2014 |
|
LyondellBasell |
HDPE |
Victoria, Tx |
Feb 2014 |
|
LyondellBasell |
LLDPE |
La Porte, Tx |
Feb 2014 |
|
LyondellBasell |
LLDPE |
Morris, Ill |
Feb 2014 |
|
LyondellBasell |
LDPE |
Clinton, Ia |
Feb 2014 |
|
LyondellBasell |
LDPE |
La Porte, Tx |
Feb 2014 |
|
LyondellBasell |
LDPE |
Morris, Ill |
Feb 2014 |
|
Flint Hills |
Trimellitic anhydride |
Joliet, Ill |
Feb 2014 |
|
Flint Hills |
Purified Isophthalic acid |
Joliet, Ill |
Feb 2014 |
|
Flint Hills |
Maleic Anhydride |
Joliet, Ill |
Feb 2014 |
|
LyondellBasell |
VAM |
La Porte, Tx |
March 2014 |
|
DuPont/Kuraray |
VAM |
La Porte, Tx |
March 2014 |
|
LyondellBasell |
Butadiene |
Channelview, Tx |
March 2014 |
|
LyondellBasell |
Polypropylene |
Lake Charles, La |
March 2014 |
|
Ineos |
Ethylene |
Chocolate Bayou, Tx |
March 2014 |
|
TPC |
Butadiene |
Houston, Tx |
April 2014 |
|
LyondellBasell |
Polypropylene |
Bayport, Tx |
April 2014 |
|
Shell |
Phenol |
Deer Park, Tx |
May 2014 |
|
LyondellBasell |
Acetic acid |
La Porte, Tx |
June 2014 |
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