ExxonMobil will reduce 2020 capital spending by 30% and lower cash operating expenses by 15% in response to low commodity prices resulting from oversupply and demand weakness from the coronavirus disease 2019 (COVID-19) pandemic.
Capital investments for 2020 are now expected to be about $23 billion, down from the previously announced $33 billion.
The largest share of the capital spending reduction will be in the Permian Basin, but expansion plans for some chemical projects will also be adjusted. “Timing of expansion plans for select downstream and chemical facilities across the company’s portfolio will be adjusted to capture efficiencies, slow spending pace, and better align with a return in commodity demand,” ExxonMobil said. It did not specify which chemical projects would be affected.
ExxonMobil’s planned major chemical projects include a joint venture cracker complex with Sabic near Corpus Christi, Texas, that is scheduled for start-up in 2022 and a cracker complex in Guangdong, China, where start-up was planned for 2023. Major derivative projects included a 450,000-metric tons/year polypropylene unit at Baton Rouge, Louisiana, scheduled for 2021, as well as a 450,000-metric tons/year propylene-based elastomers plant and 350,000-metric tons/year linear alpha olefins unit at Baytown, Texas, with expected start-up in 2022.
“While COVID-19 has had a significant impact on the global economy, we are confident that trade, transportation, and manufacturing will recover,” said Darren Woods, ExxonMobil chairman and CEO. “ExxonMobil continues to invest in the projects that will position us to support economic recovery and capture value for our shareholders.”
The company said it is “maximizing production of products critical to the global response, including isopropyl alcohol, which is used to manufacture hand sanitizer, and polypropylene, which is used to make protective masks, gowns, and wipes.” ExxonMobil said it is also supporting efforts to redesign and accelerate production of reusable face masks and shields to help alleviate the shortage for medical workers and first responders.
Globally, ExxonMobil anticipates industry refinery output will decline in line with demand and available storage, and it will maintain the ability to return to normal operations as demand recovers.
“The long-term fundamentals that underpin the company’s business plans have not changed—population and energy demand will grow, and the economy will rebound,” Woods said. “Our capital allocation priorities also remain unchanged. Our objective is to continue investing in industry-advantaged projects to create value, preserve cash for the dividend, and make appropriate and prudent use of our balance sheet.”
By Robert Westervelt
Source: Chemical Week
Patrick joins Borouge International with more than three decades of international finance leadership across industrial, logistics, and chemical businesses. With 20 years’ CFO experience in publicly listed companies, he brings deep financial expertise and a disciplined approach to capital management.
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