This decision comes after two unsuccessful attempts to sell the plant and the closure of five US refineries over the past two years. Until recently, refining has been beset by high costs and low margins.
“After thoroughly analyzing our options, we have determined that exiting the refining business by the end of next year is the best strategic and financial path to take,” said Ken Lane, Chief Executive of int.
The refinery, which produces gasoline, diesel and kerosene, will remain in operation and the company will continue to seek potential transactions and/or alternatives for the approximately 700-acre site on the Houston Ship Channel.
Previously, the company recorded a non-cash impairment charge of $624 million as part of its decision to exit refining. Over the past ten years, Lyondell has twice tried to sell the 263,776 barrels per day refinery, but failed to reach a deal.
John Auers, executive vice president of Turner, Mason & Co, a Dallas-based energy consultancy, said Thursday’s announcement means “people are definitely going to be knocking on the door” to look into the refinery.
“The refinery could sell for a significant amount,” Auers said. “I certainly don’t expect her to close given that statement.”
Lyondell said the refinery, once the anchor of its supply chain as a regional chemical company, no longer matched its global petrochemical production.
The closure of the refinery offers opportunities for the company, Mr. Lane said.
“While this was a difficult decision to make, our exit from the refining business advances the company’s decarbonization goals, and the site’s prime location gives us more options to advance our future strategic goals, including circularity,” Lane said.
Circularity refers to the efforts of plastics manufacturers to increase the amount of finished plastics saved from landfills and reintegrate them into the chemical plant supply chain.
(This article corrects the $624 million impairment charge in paragraph 5)