LyondellBasell response to changing interregional...

Martijn Vogelzang

Sales Director Licensing & Technical

Services

3rd Petrochemical Conclave of Indian Oil

Delhi, 7 February 2014

LyondellBasell response to changing interregional feedstock economics

lyondellbasell.com

Topics for Discussion

• Shale development and natural gas production

• U.S. petrochemical renaissance

• LyondellBasell’s response

• Brief introduction to LyondellBasell

23rd Petrochemical Conclave Indian Oil, Delhi, 7 February 2014

lyondellbasell.com

Shale Play Development

Source: EIA - May, 9 2011

Experience

Infrastructure

Chemical capacity

Extensive resource development in many US regions

Map of US Shale Gas & Shale Oil Plays2009 2020

Shale formations

Horizontal drilling

Hydraulic fracturing


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Natural Gas NYMEX Price Breakevens by Play

At current gas prices, most plays are well below target return thresholds.

NGL Rich

Gas

Dry Gas

Source: Credit Suisse as of Jan. 17, 2013.


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Natural Gas Production

35

40

45

50

55

60

65

70

75

200

400

600

800

1,000

1,200

1,400

1,600

2007 2008 2009 2010 2011 2012 2013

(Rig Count) (BCF / Day)

Rig Production Efficiency ClimbingUS - Energy Supply

Ratio of Published Projections

Gas Rig

Count

Sources: Baker Hughes as of September 2013.

Natural Gas

Production

Source: EIA - Total Energy Supply and Disposition Summary – Reference Case – 2013 vs. 2010

100%

125%

150%

175%

200%

2010 2012 2014 2016 2018 2020

Natural Gas Liquids

Although gas rig count has decreased, natural gas production and NGLs have

increased


lyondellbasell.com

Sources: Third party consultants

Natural Gas

Ethane

Propane

Crude Oil

0%

100%

200%

300%

400%

2003 2005 2007 2009 2011 2013

Hu

nd

red

s

(indexed to 2003)

Indexed Commodity Prices

• U.S. chemical prices

are generally aligned

with global crude oil

price

• US petrochemical

production costs

aligned with regional

(U.S.)

ethane / propane

prices

Low Price Feedstock Advantage

Energy costs can represent 70 – 80% of the as delivered cost of most

petrochemical products

63rd Petrochemical Conclave Indian Oil, Delhi, 7 February 2014 6

lyondellbasell.com

Source: Third party consultants.

Evolution of US Nat Gas Value Chain: Value Migration to Downstream

20

40

¢60

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

(¢ / lb)

Ethane Premium to Fuel Value("Frac Spread")

20

40

¢60

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Ethylene Margin

(¢ / lb)

4

8

$12

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Natural Gas Price

($ / MMBTU)

Midstream

(Fractionation & Pipelines)

Chemicals

(Ethylene Crackers)

Upstream

(Natural Gas E&P)


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15

30

45

60

NE AsiaNaphtha

U.S.Propane

U.S.Ethane

2010 2011 2012 2013

(¢ / lb)

US Regained its Position as a Low Cost Producer

U.S. petrochemicals became highly advantaged on the global cost curve

World Ethylene Cost Curve

0.20

0.40

0.60

0.80

1.00

1.20

$1.40

85 141 210 247 311

Global Supply (cumulative in billions of pounds)

Pro

du

cti

on

Co

sts

($

/ p

ou

nd

)

Middle EastChina

China

Western

Europe

Other

NE Asia

Middle East

United States

United StatesOther

NE AsiaWestern

Europe

2011

2005

Cost of Ethylene Production

Sources: Third party consultants.


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And causes a “Traffic Jam” in the US Gulf Coast

Feedstocks

• Logistics of NGLs delivery to

consumption region

• Difference in export options

• Need for NGL storage

Construction Costs and Timing

• Availability of qualified resources

• Impact on return on capital

• Derivative strategy

Product Market

• Domestic markets can’t support

new product capacity, will be

dependent on export markets

Environmental /Political

• Carbon taxes, fracking bans, water

shortages, etc.


lyondellbasell.com

(3,000)

0

3,000

6,000

9,000

12,000

1990 - 1995 1995 - 2000 2000 - 2005 2005 - 2010 2010 - 2015E 2015E - 2020E

Net North American Ethylene Capacity Additions

Sources: Third party consultants as of September 2013.

Unprecedented level of new ethylene capacity addition will challenge industry

resources

(thousands of metric tons)


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How does LyondellBasell respond in USA…

ProjectCost

($Million)Start-up

Potential Pre-Tax Earnings

($ Million/year)

Increase Ethane Capability ~$25 2012 $120 - $140

Midwest Debottlenecks ~$25 2012 $30 - $40

PE Debottleneck ~$20 Early 2014 $10 - $20

LaPorte Expansion ~$420 Mid 2014 $300 - $350

Channelview Expansion ~$200 Early 2015 $90 - $110

Corpus Christi Expansion ~$530 Late 2015 $300 - $350

Total ~ $1,200 ~ $850 - $1,000

Complete In Construction Permit Pending

LYB major expansion projects will be complete by 2015 ahead of the new

ethylene crackers in 2017 - 2019


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And in Europe…

600

1,200

$1,800

2000-2009 2010-2012

($ / metric ton)

Source: Third party consultants.

(1) Potential growth value is based on historic third party consultant margins.

Size: 70,000 MT butadiene increase

Timing: 2013

Cost: ~$100 million

Potential Growth Value(1): ~$50 - $75 million / yr

5%

10%

15%

Ethane Light Naphtha

NW Europe Butadiene - Naphtha Spread

Butadiene / Ethylene Production Yield


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Conclusions

• Shale gas has created a U.S. energy renaissance

• Shale gas value transitioning from upstream energy to

downstream petrochemicals

• Exciting new possibilities and challenges are ahead for the

U.S. petrochemical industry and LyondellBasell


lyondellbasell.com

LyondellBasell Fast Facts

Tarragona, Spain

• One of the world’s largest plastics,

chemicals and refining companies with

revenues of $44 billion and $6.3 billion

EBITDA (2013)

• Global reach that addresses worldwide

customer needs

• 58 manufacturing sites in 18 countries

on five continents

• Sales in more than 100 countries

• The global leader in polyolefins

technology, production and marketing

• Participation in 16 significant

manufacturing joint ventures, 11 of

which are outside of Western Europe

and the United States, primarily in

regions that have cost-advantaged raw

materials or high growth rates Brindisi (Italy), Spherizone plant


lyondellbasell.com

40%

80%

120%

2009 2010 2011 2012

(Indexed to 2009)

94%

95%

96%

97%

98%

99%

100%

LYB A B C D E F G H

Outstanding HSE Results Leads to Strong Reliability and Financial Performance

Note: Based on LYB and third party consultant estimates. Peers include Chevron Phillips, Dow, ExxonMobil Chemical, Formosa, Ineos, Nova, Shell and Westlake.

Operational Excellence

Cost Reduction

Capital Discipline

Portfolio Management

Performance Driven Culture

Technology Driven Growth

15

40%

80%

120%

2009 2010 2011 2012

(Indexed to 2009)

0.2

0.4

0.6

2009 2010 2011 2012

(Injuries per 200,000 hours worked)

Average = 96.5%

Safety Incidents

Environmental Incidents

Avg. U.S. Ethylene Cracker

Reliability 2002 - 2012

LYB 2012 = 99.5%

Process Incidents


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0 2,000 4,000 6,000 8,000 10,000 12,000

Enichem

CP Chem

NPC Iran

Reliance

Braskem

Formosa

Ineos

TOTAL

CNPC

IPIC Group

SABIC

Dow

ExxonMobil

SINOPEC

LyondellBasell

HDPE LLDPE LDPE PP

LyondellBasell Is The Leading Polyolefins Producer

Capacity

Ranking (1) U.S. W. Europe

Olefins #1 #7

PE #3 #1

PP #1 #1

Source: CMAI 2010, LyondellBasell

1. Capacity ranking includes LyondellBasell wholly owned capacity and proportional share of JV capacity as of December 31, 2010.

KT

Most of these top

producers operate one or

more of LyondellBasell

licensed processes


lyondellbasell.com 17

World PP installed capacity by technology 2016

Data taken from Townsend Polypropylene Report 2011

Total PP Capacity: 73 mio t/a

LyondellBasell share: 40%



World PE installed capacity by technology 2016

Total PE Capacity: 118 mio t/a

LyondellBasell share: 16%

Data taken from Townsend Polyethylene Report 2011



A comprehensive portfolio of technologies for license - Polyolefins


lyondellbasell.com

LyondellBasell’s Technology Business:Llicensing, Catalysts and Technology services

Technology Services:

• Unique professional services group

• Supporting technology transfer:

• Process design

• Project support

• Training and plant start-up

• Long-term technical exchange

relationship & improvementsLicensing

Catalysts

Technol. Services

Catalysts

• Nobel prize winners for

discovery of basic

polypropylene and

polyethylene polymers

• Leader in the development,

production and sale of

advanced catalyst systems

Process Technology

• Developed and implemented

technology for the world’s first

commercial production of

polypropylene, high pressure and low

pressure polyethylene

• Leading licensor and user of

polypropylene and polyethylene

technologies



Disclaimer and Trademarks

Glacido, Hostalen, Lupotech, Metocene, , Spherilene, Spheripol, Spherizone, Superflex, Trans4m and Vacido are trademarks owned and/or used by the LyondellBasell family of companies.

Glacido, Hostalen, Metocene, Spheripol, Spherizone and Trans4m are registered in the U.S. Patent and Trademark Office.

All information (“Information”) contained herein is provided without compensation and is intended to be general in nature. You should not rely on it in making any decision. LyondellBasell accepts no responsibility for results obtained by the application of this Information, and disclaims liability for all damages, including without limitation, direct, indirect, incidental, consequential, special, exemplary or punitive damages, alleged to have been caused by or in connection with the use of this Information. LyondellBasell disclaims all warranties, including, but not limited to, the implied warranties of merchantability and fitness for a particular purpose, that might arise in connection with this information.

Before using a product sold by one of the LyondellBasell family of companies, users should make their own independent determination that the product is suitable for the intended use and can be used safely and legally. SELLER MAKES NO WARRANTY; EXPRESS OR IMPLIED (INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE) OTHER THAN AS SEPARATELY AGREED BETWEEN THE PARTIES IN WRITING. This product(s) may not be used in the manufacture of any US FDA Class III Medical Device or Health Canada Class IV Medical Device and may not be used in the manufacture of any US FDA Class II Medical Device or Health Canada Class II or Class III Medical Device without the prior written approval by Seller of each specific product or application.

Users should review the applicable Material Safety Data Sheet before handling the product.

LyondellBasell does not sell PB-1 for use in pipe applications intended for use in North America, and requires its customers not to sell products made from PB-1 into pipe applications for North America.



Disclaimer

The statements in this presentation relating to matters that are not historical facts are forward-looking statements. These forward-looking statements are based upon assumptions of management which are believed to be reasonable at the time made, and are subject to significant risks and uncertainties. Actual results could differ materially based on factors including, but not limited to, the ability to comply with the terms of our credit facilities and other financing arrangements; the costs and availability of financing; the ability to maintain adequate liquidity; the ability to implement business strategies; availability, cost and price volatility of raw materials and utilities; supply/demand balances; industry production capacities and operating rates; uncertainties associated with the U.S. and worldwide economies; legal, tax and environmental proceedings; cyclical nature of the chemical and refining industries; operating interruptions; current and potential governmental regulatory actions; terrorist acts; international political unrest; competitive products and pricing; technological developments; risks of doing business outside of the U.S.; access to capital markets; and other risk factors. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in our financial reports, which are available at www.lyondellbasell.com on the Investor Relations page.


http://www.lyondellbasell.com/

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