LyondellBasell Delays Exit from Refining Business

Researched by Industrial Info Resources (Sugar Land, Texas)--For a while now, LyondellBasell (NYSE:LYB) (Rotterdam, Netherlands) has been preparing for an exit from petroleum refining in order to shift its focus to its Circular and Low Carbon Solutions business. But now LyondellBasell is delaying this exit by another year.

LyondellBasell put its 268,000-barrel-per-day (BBL/d) refinery on the outskirts of Houston, Texas, up for sale in 2021. However, the company reported that it had trouble finding a buyer willing to offer a fair value for the plant.

In 2022, LyondellBasell shifted its strategy, stating that it would close the refinery by the end of 2023. "After thoroughly analyzing our options, we have determined that exiting the refining business by the end of next year is the best strategic and financial path forward," said Ken Lane, interim chief executive at the time. LyondellBasell planned to operate the refinery until it closed, seeking potential transactions or alternatives for the site.

However, earlier this week, the company said it will keep the refinery operating in 2024, now with plans to exit operations no later than the first quarter of 2025.

LyondellBasell appears to have wholly abandoned pursuing the site's sale, with plans to repurpose it for other uses. In a company press release announcing the extension of the refinery's operations, LyondellBasell stated that one of its key strategies for future growth "is to build a profitable Circular and Low Carbon Solutions business. In support of this strategy, LyondellBasell is developing future plans for the Houston refining site."

Exactly what these plans are remains open to question. "Our plans to transform the site for future growth beginning in 2025 are aligned with our purpose of creating solutions for everyday sustainable living," said Peter Vanacker, LyondellBasell Chief Executive Officer.

The company said multiple options are being evaluated, including using recycled and renewable-based feedstocks, and green and blue hydrogen. The company now says the site will be used as the Houston hub for its Circular and Low Carbon Solutions business and that "growth projects under development would connect to existing assets in the Houston area and use existing infrastructure on the refining site including hydrotreaters, pipelines, tanks, utilities, buildings, and laboratories."

LyondellBasell says it remains fully committed to exiting its oil refining business but that delaying the refinery's closure will minimize workforce impacts as it continues to develop options for the site. The company says the delay will enable a smoother transition between shutdown and any retrofitting that may need to be done at the site.

The strongest possibility for the site seems to be to grow it into a recycled plastics facility. At the time the company announced that it would close the refinery, interim Chief Executive Lane said, "While this was a difficult decision, our exit of the refining business advances the company's decarbonization goals, and the site's prime location gives us more options for advancing our future strategic objectives, including circularity." Circularity refers to keeping plastics molecules in the value chain by recycling and reusing them. Subscribers to Industrial Info's Global Market Intelligence (GMI) Refining Database can click here for the related project report and click here for the refinery profile.

At an investor event earlier this year, Lane said LyondellBasell's Circular and Low Carbon Solutions business is focusing on two flagship hubs: "The first one is in Cologne, Germany, the second one is in Houston, Texas. Both of these have produced circular and renewable products, and we are expanding capacity in both of these hubs. With the closing of the refinery, we've got the opportunity to also grow and expand our Circular and Low Carbon Business." LyondellBasell has plans for a grassroot plastic-recycling plant on the outskirts of Cologne. Subscribers to Industrial Info's Chemical Processing Project Database can click here for more details.

Now, it seems, the establishment of a greener Houston hub will be a little longer in coming as LyondellBasell decides exactly what course it will take for the refinery.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).