The decision comes after two failed attempts to sell the plant and the closing of five U.S. refineries in the last two years. Refining until recently 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 forward,” said Ken Lane, interim chief executive.
The refinery, which makes gasoline, diesel and jet fuel, will remain in operation and the company will continue to seek potential transactions and/or alternatives for the roughly 700-acre site on the Houston Ship Channel.
The company earlier took a $264 million impairment charge as part of its decision to exit refining. In the past 10 years, Lyondell has twice mounted efforts to sell the 263,776 barrel-per-day refinery but failed to conclude a deal.
John Auers, executive vice president of Turner, Mason & Co, a Dallas-based energy consultancy, said Thursday’s announcement means “there will definitely be people knocking on the door” to look at the refinery.
“The refinery could sell for a significant amount,” Auers said. “I certainly don’t expect it to close given this statement.”
Lyondell said the refinery, once the anchor of its supply chain as a regional chemical company, no longer fit with its global petrochemical production.
Shutting the refinery provides opportunities for the company, Lane said.
“While this was a difficult decision, our exit of the refining business advances the company’s decarbonization goals, and the site’s prime location gives us more options for advancing our future strategic objectives, including circularity,” Lane said.
Circularity refers to efforts by plastics manufacturers to increase spare finished plastics from landfills and return them to the supply chain for chemical plants.