LyondellBasell Selling French Refinery
Lyondell has hired an investment banker to help it sell its refinery in Berre, France. Lyondell bought the refinery in 2008 from Shell for $700 million. The 105,000 bpd refinery “has not fulfilled economic projections made at the time of the acquisition,” the company says.
It isn’t like they gave it a lot of time to work. OK, who am I kidding? Lyondell’s refining segment, which also includes its 292,000 BPD refinery in Houston, lost $2.4 billion in 2008, and $360 million in 2009. It managed to pull in a $242 million profit in 2010 on $15 billion in sales. All of Lyondell’s business have greater operating profit margins than refining.
Lyondell is keeping the ethylene cracker, polyethylene, and polypropylene plants on the site. It so happens that I visited Berre in the late 1990s. A plant manager or someone—I’m not totally sure because he spoke only French—gave me a personal tour. We stood on a high promontory, he struck Napoleonic poses with his hand on his tummy and kept on saying “voilà.”
Anyhow, Elenac—the BASF/Shell polyethylene joint venture that is now a part of Lyondell–was constructing a plant at the site when I was there. I think there was something happening to a Montell polypropylene plant while I was there as well. My point is that the polyolefins plants are probably in good shape because they are relatively new.
I do wonder what Lyondell will do with the Houston refinery. It has been a part of Lyondell since the company was spun off of Atlantic Richfield in 1985. For most of those years, it was a joint venture with Venezuelan state oil company PDVSA and made gasoline for Citgo stations. Lyondell bought out PDVSA’s share of the JV in 2006.
The refinery gets crude under contact from PDVSA. Obviously, that isn’t a great position to be in. It got less than half of its supply from PDVSA in 2010. I recall it received much more of its feedstock from PDVSA a decade ago. Interestingly, that contract is up in July. I’m curious to see what happens.