LyondellBasell Maintenance Puts Crimp in Earnings

Researched by Industrial Info Resources (Sugar Land, Texas)--LyondellBasell Industries NV (NYSE:LYB) (Houston, Texas) reported third-quarter 2016 net income of $953 million, compared to $1.19 billion in third-quarter 2015. Planned and unplanned outages helped put a crimp in the company's earnings. Industrial Info is tracking $5.31 billion of capital and maintenance projects belonging to LyondellBasell.

"While our chemical and polymer operations generally ran well, there was planned downtime in these operations and unplanned downtime in our refining segment," said LyondellBasell CEO Bob Patel in a conference call regarding the earnings. "Based upon industry benchmark margins, the value of third-quarter lost production due to planned and unplanned outages across the company is estimated to have been approximately $285 million."

However, the planned maintenance load looks like it will be lessened in the coming year. "During 2017, our planned maintenance schedule is much lighter than 2016, and we will be positioned to benefit from our investment in system upgrades, reliability and expansions," said Patel in a statement.

The company also discussed growth projects in its conference call. Chief Financial Officer Thomas Aebischer said, "Our maintenance and growth capital investments were approximately $590 million during the third quarter, with a significant portion of these investments focused on our Corpus Christi ethylene expansion and a turnaround at our Morris, Illinois, facility."

LyondellBasell is wrapping up an approximately $800 million expansion of its ethylene unit in Corpus Christi, Texas. The company has doubled its existing 1.7-billion-pound-per-year ethylene facility through upgrades and modifications to supporting equipment, including a feedstock conversion to liquefied petroleum gas (LPG). "The Corpus Christi ethylene facility is currently being commissioned after the turnaround and expansion. We expect the plant to be operating at the expanded capacity during the month of November," said Patel. Construction on the project began in the third quarter of 2014.

In Morris, Illinois, the company performed turnarounds on its ethylene, low-density polyethylene (LDPE) and linear low-density polyethylene (LLDPE) units during the quarter. Industrial Info has tracked these projects since 2013 and 2014. LyondellBasell also kicked off a program of capital upgrades at the plant during the turnarounds. These upgrades are expected to be completed by the end of the year.

On the whole, while LyondellBasell's third-quarter results may have been lower than what was seen in the same period last year, executives gave every indication that downtime for maintenance during the just-passed quarter would result in smoother operations and production in the coming quarter and throughout next year.

Industrial Info's Global Ethylene Platform helps identify, pursue, and track opportunities associated with maintenance turnaround work for more than 395 operational ethylene production units. Subscriptions include access to project and plant platform information, unit profiles, and unit turnaround reports that are updated routinely on a strict quality-control schedule. Research for plant details, turnaround schedules and project activities are performed using our direct phone-verification methods to ensure accuracy of all platform information.

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