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Global oil and petchem companies deliver strong earnings in Q3

by Başak Ceylan - bceylan@chemorbis.com
  • 02/11/2021 (01:44)
Global oil and petrochemical companies announced strong financial results for the third quarter of 2021, marking a continuation of recovery from the impact of the pandemic. Several companies’ quarterly earnings returned to their pre-Covid-19 levels after the sharp drop in economic activity in the previous year.

The companies detailed their strategies on climate change and carbon neutrality, also known as net zero emissions, and highlighted their commitment to sustainability.

Chevron delivered the highest third quarter earnings of $6.1 billion since first quarter 2013. According to Mike Wirth, Chevron’s chairman and CEO, higher earnings were largely due to improved market conditions, strong operational performance and a lower cost structure. US downstream operations reported earnings of $1.08 billion in third quarter 2021, compared with $141 million a year earlier, while international downstream operations reported earnings of $227 million in third quarter 2021, compared with $151 million a year earlier.

ExxonMobil’s quarterly earnings increased by $7.4 billion versus 2020 to $6.8 billion on improved demand and strong operations. This also marked the highest since the last quarter of 2017. According to the company, reliable operations coupled with strong demand, as well global supply and logistics flexibility, brought a quarterly earnings of $2.1 billion for the chemicals division.

ExxonMobil’s cumulative low-carbon investments are anticipated to be approximately $15 billion from 2022 through 2027. The company also announced that it was also on track to achieve its 2025 emissions intensity reduction plans by the end of 2021.

LyondellBasell announced net income for the third quarter 2021 of $1.8 billion, up from $114 million from the year-ago quarter. The company’s third quarter EBITDA was $2.7 billion, indicating a nearly sixfold rise over the same quarter of 2020. According to Bob Patel, LyondellBasell CEO, the third quarter results reflected robust demand and tight market conditions, which supported strong margins.

“In September, we reaffirmed our commitment to address the global challenge of climate change by increasing our goals for reducing scope 1 and scope 2 CO2 emissions by at least 30% by 2030 relative to a 2020 baseline and achieving net zero from our global operations by 2050,” said Patel.

SIBUR’s revenue grew in all three of their business segments, driving total revenue higher by 11.2% quarter-on-quarter to RUB223.4 billion ($3.14 billion). The company’s adjusted net profit was RUB72.5 billion ($1.02 billion), up by 15.4% quarter-on-quarter. A recovery in global demand and positive pricing trends caused by a shortage of supplies were among key factors influencing quarterly earnings, Russia’s largest integrated petrochemicals company said.

SIBUR also said that it was taking active steps to reduce its own climate impact and adapt to climate changes, using a range of decarbonisation tools. The company plans to reduce its greenhouse gas emissions by 15% by 2025.

Repsol’s adjusted net income for the third quarter was €623 million, surpassing pre-pandemic levels. This indicated a significant increase compared with €7 million reported in the same period a year ago. This was also its highest level since 2018. The company’s income between January and September 2021 was €1.93 billion, higher than €1.46 billion reported in the same period in 2019, prior to the COVID-19 crisis.

Repsol highlighted the progress toward achieving its decarbonization targets in its financial report. Accordingly, the company is planning to achieve carbon neutrality by 2050 and 35% of the investments made by Repsol between 2021 and 2025 is expected to allocated to low-emission initiatives.

Shell posted adjusted earnings of $4.1 billion for the third quarter. That compared with $955 million over the same period a year earlier and $5.5 billion for the second quarter of 2021. Although Shell’s third-quarter earnings were weaker-than-expected, the company said that they generated record cash flow and maintained capital discipline during the quarter.

The Anglo-Dutch oil giant also announced their new target to halve absolute emissions from their operations by 2030. The company also pledged to become a net-zero carbon emissions company by 2050.

Thai SCGP announced its sales revenue during the first 9 months of this year at THB89 billion ($2.67 billion), an increase of 29%, with a profit of THB6.17 billion ($185 million), an increase of 24% from the same period of last year. The increase in sales stems from a greater and steady demand for packaging products among industries relating to needs of daily life; including frozen food, canned food and fruit, ready meals, beverages, health products, and household products as well as recovery of export markets in the US, Europe and other regions which also contributes to the growth of packaging use.

Italian Eni swung to an adjusted net profit of €1.43 billion from a loss of €153 million a year earlier. The quarterly profit also represented an increase of 54% versus the second quarter of 2021 and a return to pre-COVID levels. The company’s chemical business, managed by Versalis, reported a strong improvement when compared with 2020. Chemical earnings were up by €78 million from the third quarter of 2020, largely due to a global economic recovery.

Eni has recently launched its first Energy Compact, pledging to play a leadership role on climate targets at a global level. The company plans to achieve carbon neutrality by 2050.

TotalEnergies reported adjusted net income of $4.8 billion, up 38% compared to the second quarter 2021. The French company also generated an adjusted EBITDA of $11.2 billion during the third quarter. Despite an impact of rising energy costs, downstream division took advantage of high petrochemical margins and of the improvement in refining margins in Europe.

PKN Orlen’s revenues for the third quarter climbed by 52% year on year to PLN36.4 billion ($9.12 billion) in the third quarter of 2021, due to higher quotations of refining and petrochemical products resulting from higher crude oil prices and higher sales volumes. The Polish energy company’s net profit increased to PLN2.92 billion ($732 million) from PLN677 million ($169 million) reported in the same quarter of 2020.

SABIC’s revenue for the third quarter reached SAR43.7 billion ($11.6 billion), up by 3% compared to the previous quarter. Meanwhile, net income during the third quarter totalled SAR5.59 billion ($1.49 billion), a decrease of 27% compared to the second quarter of 2021. However, it represented a surge of around 412% from the same period last year. The Saudi major noted impairment provisions in certain capital assets amounting to SAR1.18 billion ($314 million) in the second quarter of 2021. Higher average selling prices and increase in the share of results of joint ventures and associates contributed to the quarterly earnings.

SABIC has recently unveiled its global strategy towards carbon neutrality at the inaugural Saudi Green Initiative (SGI), as part of its continued commitment to sustainability. SABIC aims to reduce greenhouse gas emissions by 2030 worldwide by 20% compared to 2018 and meet carbon neutrality from operations under its control by 2050.

BASF’s sales were €5.85 billion higher than in the prior-year quarter at €19.6 billion. Higher prices and a significant increase in volumes in almost all segments contributed to the quarterly revenues, the company said. Petrochemical sales volumes surged 127% compared with the third quarter of 2020.

Dow’s quarterly net sales were $14.8 billion, up 53% from the year-ago period and 7% from the previous quarter, with gains in all operating segments and regions. Dow’s packaging and specialty plastics segment net sales were up by 69% from a year-ago period at $7.7 billion while local selling prices increased by 63% year-over-year due to tight supply and demand dynamics.

"Looking ahead, Dow is well-positioned to increase earnings, cash flow and returns as we decarbonize our footprint and achieve our 2030 and 2050 carbon emissions reduction targets,” said Jim Fitterling, chairman and CEO of Dow.

LG Chem’s sales were at KRW10.6 trillion ($9.02 billion), up by 41.4% compared to the same period of previous year. Meanwhile, South Korean company’s operating profit amounted to KRW726.6 billion ($618 million), decreasing by 19.6% from the same period of previous year. LG Chem’s petrochemicals segment achieved its highest quarterly revenue at KRW5.63 trillion ($4.79 billion) amid strong demand during the third quarter.
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