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LyondellBasell to cut Houston refinery staff by 10% on pandemic losses

September 24/2020

MOSCOW (MRC) -- LyondellBasell Industries said on Tuesday that it plans to cut salaried staff at its Houston oil refinery because of losses during the COVID-19 pandemic, said Hydrocarbonprocessing.

The company confirmed the contents of an email seen by Reuters, in which executive vice president Torkel Rhenman said Lyondell wants "a reduction of approximately 10% of the refinery population." Refiners have posted large losses this year as air and road travel have cratered amid widespread lockdowns and work-from-home policies to combat the spread of the coronavirus.

Several U.S. refineries have closed or reduced operations this year. In August, Marathon Petroleum said it would permanently close two plants in response to lower fuel demand. Calcasieu Refining idled its Louisiana plant for economic reasons the same month.

"The refinery utilization rate is within two to four bad weeks of taking out the all-time record low of 66.7%," Robert Yawger, director of energy futures at Mizuho Securities USA, said in a note on Tuesday. Gasoline margins are threatening to go negative, he said, and leave the price of a barrel of gasoline below the cost of the oil used to produce it. Lyondell employs about 800 workers at its Houston refinery.

The planned job cuts would not apply to refinery workers covered by a union contract, which prohibits layoffs. In a letter to employees, Refinery Manager Greg Nevermann said that before imposing involuntary layoffs the company would offer enhanced retirement packages to eligible employees and offer reassignments to the chemical makers other locations.

Given the drop in demand and increase in industry refining capacity, we anticipate the outlook for the refinery will remain challenging for the next several years, Nevermann said in the letter, which was seen by Reuters. Lyondells cost-cutting, including cutting travel and outside consultants and deferring non-safety-related maintenance, has not succeeded in reducing losses, he wrote.

In July, Lyondell said the refinery lost USD107 million in the first six months of this year before interest, taxes, depreciation and amortization. During the same period of 2019 it posted earnings before interest, taxes, depreciation and amortization for the refining business of USD81 million.

The refinery dates to 1918. Between 1985 and 2007, the 263,776 barrel-per-day plant was an integral part of Lyondells operations, supplying feedstocks to its chemical units.

Following a merger with Basell in 2007 and emergence from bankruptcy in 2012, the company expanded chemical production plants around the world, making the oil refinery secondary to its petrochemical business.

As MRC reported previously, in early August, 2020, Chinas Bora LyondellBasell Petrochemical, a JV between the privately owned Bora Enterprise Group and the world's petrochemical major - LyondellBasell, has started up its new steam cracker at the Panjin complex in northeast China. The steam cracker, when fully operational, is able to produce up to 1 mln mt/year of ethylene.

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 13,000 employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, and improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road. LyondellBasell sells products into approximately 100 countries and is the world's largest licensor of polyolefin technologies.
Author:Anna Larionova
Tags:petroleum products, crude oil, PP, PE, propylene, ethylene, LyondellBasell.
Category:General News
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