Lyondell CEO Patel says Houston refinery may be sold 'in longer term'

HOUSTON (Reuters) - Lyondell Basell Industries Chief Executive Bob Patel said on Wednesday the chemical company may at some stage sell its 263,776 barrel per day (bpd) Houston refinery.

“In the longer term, I can’t help but think it’s more valuable as part of a refining system than as part of a chemical company,” Patel said in response to a question during a webcast from the JP Morgan Aviation, Transportation and Industrials Conference.

Patel did not define the time frame he was describing and the Lyondell presentation ended shortly after he talked about the refinery. The presentation almost exclusively focused on the outlook for the company’s chemical production.

He said the refinery had generated strong cash flows over the past five years that far exceed the investment needed to keep the refinery running well.

In a statement, Lyondell said Patel was stating a long-held view by the company of the refinery’s value and not a suggestion the refinery is being actively marketed for sale.

For decades Lyondell management has described the Houston refinery as a primary source of feedstocks for the company’s petrochemical plants, three of which are in industrial suburbs of Houston. The company also has plants in the Netherlands and Germany.

In 2005, Lyondell and minority partner Citgo Petroleum Corp [PDVSAC.UL] put the refinery up for sale to end a partnership that had unraveled after 12 years.

By the summer of 2006, bids for the plant reached between $5 billion and $6 billion before the sale was canceled and Lyondell bought out Citgo’s minority stake for $2.1 billion, or $19,000 per barrel of crude oil refining capacity.

Since that time, U.S. refinery values have fallen drastically with plants selling for less than $5,000 per barrel.

Patel took over as CEO in 2015 when James Gallogly, a former refining executive, stepped down. Prior to joining Lyondell in 2010, Patel worked for 20 years in management at Chevron Phillips Chemical Co [CHEPH.UL].

Reporting by Erwin Seba; Editing by Chizu Nomiyama, Alan Crosby and Bill Rigby