Lyondell reiterates intent to buy Sasol's half of US joint venture

LyondellBasell wants to buy Sasol's half-interest in a joint venture involving a cracker and two polyethylene plants at Sasol's Lake Charles, Louisiana, complex, interim CEO Ken Lane said Jan. 28.

"We've commented before that it's our desire and intent to own the other half of that joint venture," he said during the global petrochemical producer's Q4 2021 earnings call.

He said LyondellBasell was happy with the partnership, but the two companies' mutual interests "are going to have to be aligned" to conclude a deal.

"Timing is a little bit hard to predict," Lane said.

Sasol did not respond to a request for comment Jan. 28.

LyondellBasell in 2020 acquired a 50% stake in the three plants for $2 billion and took over their operations. That includes a 1.5 million mt/year cracker, a 470,000 mt/year linear low density PE plant, and a 420,000 mt/year low density PE unit.

Sasol retained ownership of other facilities at the complex, including a 460,000 mt/year legacy cracker and a 380,000 mt/year ethylene oxide/monoethylene glycol plant.

The companies agreed when they forged the joint venture in Q4 2020 that LyondellBasell had the potential to buy Sasol's interest in the three plants. In October 2020, when the deal was announced, former LyondellBasell CEO Bob Patel said that potential was "not formulaically kind of hardwired into the agreements," but Sasol indicated that over a period of time it would focus on other derivatives at the site.

Lane said further Jan. 28 that LyondellBasell would continue to peruse opportunities that provide good returns, but he couldn't comment further on acquiring Sasol's stake in the joint venture.

LyondellBasell reported net income of $726 million, down 15% from $855 million in the year-ago quarter. Excluding a write down or related to the company's refinery and other items, Q4 2021 net income was $1.207 billion.

Lane, head of LyondellBasell's global olefins and polyolefins business, has served as interim CEO since Patel retired at the end of 2021. Neste CEO Peter Vanacker will take the helm as LyondellBasell's CEO at the end of Q2 2022.

CFO Michael McMurray said during the call that margins for olefins and polyolefins declined in Q4 2021 amid lower pricing, and ethylene volumes remained unchanged as the company built inventory ahead of Q1 2022 turnarounds.

He said the company's 1.5 million mt/year cracker at La Porte, Texas, will shut in Q1 2022 for planned work. LyondellBasell's 471,000 mt/year cracker in Berre, France, and its 305,000 mt/year cracker in Wesseling, Germany, will shut in Q3 and Q4, respectively, for maintenance.

McMurray also said US polyethylene prices saw declines in Q4 after rising earlier in 2021 amid tight supply, but upstream cracker turnarounds in the first half of 2022 in the US and Europe amid continued strong demand were seen supporting PE prices in Q1.