LyondellBasell launches review of European assets

LONDON (ICIS)–LyondellBasell has launched a strategic review of the bulk of its operations in Europe, the producer said on Wednesday, based on its strategy to focus on assets perceived to have long-lasting competitive advantage.

The producer will conduct a review of its European olefins, polyolefins, intermediates and derivatives businesses, driven by its move announced last year to reinvest in its strongest performing operations.

“At the 2023 Capital Markets Day, we stated our intent to concentrate our portfolio around businesses with long-lasting competitive advantage and to reinvest around those advantaged areas generating superior returns at meaningful scale. These criteria have not changed,” said Lyondell CEO Peter Vanacker.

The strategy announced at the 2023 investor day was based around three pillars: prioritizing growth spending on businesses where the company “has leading positions in expanding and well-positioned markets”, growing circular solutions earnings to $1 billion/year by 2030, and shifting from cost controls to a broader idea of value creation.

Energy-intensive industries in Europe have been challenged by the sharp increase in gas prices seen since Russia’s invasion of Ukraine, which remain substantially above pre-war and pre-pandemic norms despite falling dramatically since the nadir of winter 2022.

Described by former BASF chief Martin Brudermuller earlier this year as a “systemic” change to the European operating environment, the higher cost of operating Europe has prompted a number of reviews by large global players.

BASF is looking to cut €1 billion off the annual operating costs of its Ludwigshafen, Germany, complex. The company tapped plant sale specialists International Process Plants this week to explore the sale of its Ludwigshafen ammonia, methanol and melamine units, idled in 2023 due to high production costs.

Dow also announced plans to review underperforming and smaller assets. A significant proportion of any cuts had been expected to land in Europe, although the US major has not given an update on the process since it was announced in early 2023.

Indorama Ventures is also currently reviewing six assets out of its “West” portfolio for potential shutdown.

While global gas pricing has come down, the cost of shipping gas will always be higher than sending it through a dedicated pipeline, as was the case with the Russia-derived natural gas that made up around half of the EU’s energy consumption prior to the war.

As part of its stated intent to continue developing its sustainable and circular business, investments in a commercial-scale MoReTec plant, LyondellBasell’s proprietary technology to convert plastic waste into liquid raw materials, and the development of a circularity hub in the Cologne, Germany region, will continue as planned, the company said.

“The company will prioritize its investments to align operations with our circularity and net zero ambitions,” Vanacker added. “We understand that strategic assessments can create uncertainty for our employees and customers, but we are committed to operate our assets safely and reliably throughout this process.”

LyondellBasell European prodcution

Product	Capacity (kt)
Ethylene	1,805
HDPE	1,260
LDPE	740
MTBE	810
Polypropylene	2,175
Propylene	990
Propylene Oxide	785
Styrene	680
TBA	970

Update re-leads, adds detail throughout

Additional reporting by Graeme Paterson, infographics by Yashas Mudumbai