A Technology Leader, ExxonMobil Chemical Leveraging Feedstock Advantages to Deliver New Capacity for Servicing Growth in Developing Countries
As the largest US natural gas producer, ExxonMobil’s olefin feed
slate changing during next five years to advantaged ethane
ExxonMobil Chemical, the world’s fourth-largest chemical company,
continues to ensure its competitiveness in a low oil-price environment,
according to a new report from IHS Inc. (NYSE: IHS), the leading global
source of critical information and insight. This competitiveness, the
report says, is due largely to the status of ExxonMobil Chemical as a
world leader in proprietary technology, a geographically diversified
portfolio, its access to advantaged feedstocks, its ability to upgrade
co-products, and its strong refinery integration.
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IHS Chemical: Ethane to Reign as ExxonMobil Shifts Feed Slate Balances (2016-2021)(Graphic: Business Wire)
However, ExxonMobil Chemical’s product focus, similar to the chemical
businesses of other oil and gas majors, is comparatively narrow, with
relatively limited diversification. This, along with a decline in parent
company Exxon Mobil Corporation’s upstream earnings, may affect the
company’s growth and competitive positioning, according to the new
report, entitled the IHS
Chemical: ExxonMobil Chemical Competitive Company Analysis.
Exxon Mobil Corporation’s product portfolio ranges from oil and gas
exploration, development and production to refining, fuels marketing,
lubricants and specialties, and chemicals, IHS said. It is the
third-largest publicly traded, global oil and gas major with revenues of
$259 billion in 2015. Exxon Mobil’s earnings from the chemical segment
accounted for more than 24 percent of the total company’s earnings in
2015. (ExxonMobil Chemical is led by Neil Chapman, its president, who
will speak at the 2016
IHS Chemical World Petrochemical Conference, Wednesday, March 16, in
Houston).
“ExxonMobil Chemical has significant opportunities and competitive
advantages in terms of its proprietary technology, global scale, and an
integrated system that allows unique operational efficiencies,” said
Dave Witte, senior vice president of IHS and general manager of IHS
Chemical. “ExxonMobil Chemical’s feedstock diversity and flexibility,
for ethylene, in particular, are the key elements driving margins.
However, the company does have limited product diversification in its
propylene and benzene chains.”
“ExxonMobil Chemical continues to capitalize on U.S. feedstock and
energy costs, which are among the lowest in the world,” Witte said. “The
company is expanding its Baytown (ethylene), Texas, and Mont Belvieu
(PE), Texas, complexes, which are scheduled for completion in 2017. In
addition, the company started its second Singapore petrochemical complex
in 2013 to target the high-growth Asian market and is strategically
investing in new elastomer capacity in both Singapore and the Middle
East.”
One of the most significant investments for ExxonMobil Chemical, Witte
said, is the expansion of its export-based position at Mont Belvieu,
Texas. This ethylene – together with PE expansions -- will significantly
expand the export company’s capabilities. He described Exxon Mobil as a
“logistics juggernaut,” focused on expanding its market reach through
advanced logistical capabilities, and increasing commercial operations
in growth markets such as the Asia Pacific region.
“Currently, ExxonMobil Chemical can supply the Asian market through its
facilities in Singapore and China, but this U.S. expansion will provide
additional cost-effective options for exports to Asia and elsewhere,”
Witte said. ”ExxonMobil Chemical’s dominance in proprietary
technologies, combined with its scale and market channels, make it a
very attractive candidate for partnerships, particularly in Asia and the
Middle East,” he said.
Ethylene is the largest-volume chemical produced worldwide, and in terms
of manufacturing and market position, ExxonMobil Chemical resides at the
top end of global producers. In terms of ethylene production, ExxonMobil
Chemical ranks third globally behind SABIC and Dow Chemical,
respectively. The company has an ethylene production capacity (on a
shareholder basis) of nearly 8.8 million metric tons (MMT) annually in
2016, and that number will expand to more than 10 MMT by 2021, the IHS
report said.
IHS said Exxon Mobil also strives to capture the benefits of integration
(mostly around olefins and aromatics), which is also core to its
strategy. One way the company does that, the IHS report noted, is to
manufacture the bulk of its chemicals at facilities adjacent to its
refineries, which enables the company to benefit from integrated
operations and the sharing of services, maintenance and utilities.
Potential threats to the company’s continued growth could come in the
form of three key challenges, Witte said. “If petrochemical prices
decrease further, that will offset Exxon Mobil’s U.S. and Middle East
feedstock advantages, which is significant. Additionally, if the company
experiences constrained access to feedstock supplies in countries
outside of the U.S., where the government or national oil companies
control supplies, this could be a challenge. However, I think Exxon
Mobil Chemical’s biggest threat to growth may hinge on China’s economic
slowdown, the potential implementation of protectionist measures, and
the risks associated with geopolitical uncertainty in the Middle East.
These macro-risks are not only applicable to ExxonMobil, but
ExxonMobil’s large, but fairly narrow portfolio, could be more
substantively impacted as a result.”
To speak with Dave Witte, please contact Kat Kosior at katarzyna.kosior@ihs.com.
For more information on the IHS Chemical report, entitled IHS
Chemical Exxon Mobil Chemical Competitive Company Analysis, or the other
new Competitive Company Analysis reports to be offered in the series, please
contact Hannah.McNulty@ihs.com.
About IHS (www.ihs.com)
IHS (NYSE: IHS) is the leading source of insight, analytics and
expertise in critical areas that shape today’s business landscape.
Businesses and governments in more than 140 countries around the globe
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develop strategies with speed and confidence. IHS has been in business
since 1959, and became a publicly traded company on the New York Stock
Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is
committed to sustainable, profitable growth and employs nearly 9,000
people in 33 countries around the world.
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