What am I missing? I’ve always heard that a major integrated oil company needs chemicals as a hedge for low oil prices as that spread drives higher chemicals margins. I get that the European sites won’t benefit from this because of the cultural and policy insanity there destroying the framework for industrial profitability, but in the US Geismar is proving this point. Pennsylvania polymers has had the delays, cost overruns, flare issues, furnace blow up, emissions fines, community hatred but besides that it’s gone great. Deer Park has the most expensive ethylene on the gulf coast but at least they also had a major fire. Ok maybe I’ve answered my own question. I mean what lucky company wouldn’t want to buy up all this lol.
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wael took out loans in Q4 2025 to keep up the dividend and stock buybacks
in my opinion, financial incentives to his compensation are in place that mean he will do anything, no matter how bad it is for the longer term health of the company, to continue them.
that would include selling for bottom dollar
Selling chemicals at the bottom of the cycle?
Would be very d-mb of us to do it… We held through the downturn, need to get ready to make money during the upcoming bo-m.
@2vw it is a crime how many refineries Shell either sold or shutdown around 2018-2022. They would be in a much better place if they kept some of those refineries and allowed Trading to launder the money to pay less taxes.
The US alone has built almost 10 ethylene plants since 2010. We flooded the market with cheap ethane from fracking bo-m. BvB thinking that shell chemicals was the “growth engine” for Shell 10 years was embarrassing for a CEO to say. He thought that way because he came up through chemicals and it was purely an emotional decision. We wasted money on chemicals. Petchem is not a hedge against low oil. Refining is. We fu---d it up because Huibert didn’t understand asset based trading with physical assets. Fu--ing shortsighted fu--s. Both of them. Trading and refining now are transparent to EC. We are moving in the right direction which is keep remaining refineries, keep Deepwater and explore, need to consider acquisitions, divest chemicals, then thrive.
I used to hear the same thing about refineries but we sold them cheaply or even turned them off with no buyers under Ben Van Bearden.
It sure would be nice if the leadership team could explain these decisions instead of an anonymous forum. One would think that there is more to a company than make sure every single department makes money at all times for the reasons states in the OP.
Also, I have it on good authority that vitol loves what they’re able to do with our ditched assets on their trade floor.
China is flooding the market with polyethylene. Up until a few years ago chemicals were the hedge for all NA oil companies because China would absorb excess supply. Now that China is creating the excess supply, NA chemicals are doomed unless they can operate (or will operate) on razor thin margins.
No one wants to buy chemicals assets because global margins are bad. I know people don’t like McK but they have a not so bad analysis here.
https://www.mckinsey.com/industries/chemicals/our-insights/global-chemical-industry-trends
Time is different now and chemicals won’t hedge or even make any money for foreseeable future. High asset affects the valuation and Wael doesn’t like that.