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Phillips 66 says capital spending could fall in 2020

February 21/2020

MOSCOW (MRC) -- US oil refiner Phillips 66 said on Wednesday its 2020 capital spending budget could fall as much as 10% below this years plans, which include USD300 million for a West Coast marketing campaign, according to Hydrocarbonprocessing.

Executives at the fourth-largest US refiner by capacity said in a presentation to Wall Street analysts that next years outlays would range from USD3 billion to USD3.5 billion, compared with the estimated USD3.3 billion to USD3.5 billion this year.

"Phillips 66 has a consistent, proven strategy to create value for shareholders," Chief Executive Greg Garland said in New York. "Our strategic priorities of growth, returns and distributions are supported by a strong foundation of operating excellence and a high-performing organization."

The 2019 capital budget was boosted in part by USD300 million to pay for a retail-fuels joint marketing campaign with an undisclosed partner on the West Coast, executives said. Phillips markets fuels under the Phillips 66 and Union 76 brands.

"The transaction has not yet been finalized," said Phillips 66 spokesman Dennis Nuss. "We can confirm additional details once the transaction is closed."

At the high end of next years spending, the company would have "USD1.5 billion to USD2.5 billion for share repurchases, ahead of our expectations of USD1.2 billion," Credit Suisse analysts said in a note on Wednesday. "Another strong dividend increase for 2020 indicated (we expect a 10% hike)."

During the presentation, which was webcast, analysts questioned whether the capital budget fully reflected spending for major oil pipeline and other projects being constructed.

Garland said two major pipelines being developed were financed by shippers. Phillips 66 discloses its financing arrangements to credit rating agencies, he added, saying: "Were completely transparent."

Phillips 66s budget will include work on gasoline-producing fluidic catalytic cracking units (FCCU) at its Sweeny, Texas, and Ponca City, Oklahoma, refineries in 2020.

At the 265,000-barrel-per-day (bpd) Sweeny refinery south of Houston, Phillips 66 plans to continue modernizing the two FCCUs. Work at the 207,000-bpd Ponca City refinery in northern Oklahoma will focus on improving the yield from the FCCUs.

Also for 2020, the company is planning projects to produce diesel fuels from renewable resources at the 120,200-bpd Rodeo, California, refinery in the San Francisco Bay area and at the 221,000-bpd Humber, England, refinery.

As MRC reported earlier, Phillips 66 took the gasoline-making FCCU at its Bayway refinery in Linden, New Jersey, offline at midnight EST last Thursday due to a leak. There was no timeline for the restart.

We remind that US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,093,260 tonnes in 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments rose from both domestic producers and foreign suppliers. The estimated PP consumption in the Russian market was 1,260,400 tonnes in January-December 2019, up by 4% year on year. Supply of almost all grades of propylene polymers increased, except for statistical copolymers of propylene (PP random copolymers).
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, PP random copolymer, propylene, ethylene, petrochemistry, Chevron Phillips, Phillips 66, Russia, USA.
Category:General News
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