Lyondellbasell Eagerly Anticipates the Sale of its Houston Crude Oil Refinery
- 13-Sep-2021 1:00 PM
- Journalist: Francis Stokes
LyondellBasell, headquartered in Houston for its US operations, is all set to sell its Houston based crude oil refinery after running into grave losses due to a significant decline in transportation fuel demand post COVID19 pandemic period. The Houston refinery has the capacity for processing 263,776 barrels of crude oil per day. With this move, LyondellBasell has also joined the list of companies (which include Royal Dutch Shell PLC and Philips 66) who are looking forward to selling their U.S.-based oil refineries.
LyondellBasell is a Dutch chemical and refinery giant with operations extended to the US and Britain. It is also the largest technology licensing company for polyethylene and polypropylene production. The company had tried putting the Houston based crude oil refinery on sale 4 years back as well, due to the damages from fire and frequent outages, but the plans were put on hold due to recuperation of the refinery later that year, and the disagreement on the deal amount from the bidders.
Once a major source of feedstock for the company’s downstream chemicals plants, the Houston refinery has been going under turbulence after Bassell’s purchase of Lyondell in 2007 and the company’s emergence from bankruptcy in 2011.
Crude oil is a liquid phase fuel that occurs naturally deep down in the reservoirs and is extracted by drilling the earth’s crust. Crude oil is refined to achieve products like diesel, gasoline, heating oil, and other important petrochemical products which are used in transportation, generating electricity, and producing performance chemicals like plastics.
As per ChemAnalyst analysis, transportation is the major end-user sector for crude oil in the U.S. The prices for refinery products are seeing continuous fluctuation in the U.S. market for the last five years. U.S. experienced a steep fall in crude oil prices in the pandemic period owing to the low vehicle use and purchases.
In 2020, the crude oil consumption in the U.S. stood at 18.12 million barrels per day that was 13% lower than its previous year’s consumption. The transportation sector owned the highest market share of 66% followed by the industrial sector which consumed 28% of the total crude oil. With the country’s growing inclination for fuels generated from renewable sources, the demand for crude oil is expected to improve only to a small extent which plays a major reason for big companies for wanting to let go of their refineries.