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Oil producers boast record Q3 earnings but chemical margins under pressure

by Başak Ceylan -
  • 08/11/2022 (11:36)
Several global oil producers boasted record earnings for the third quarter of 2022, primarily driven by surging natural gas and fuel prices. As the recently announced financial results show, the five largest oil companies made $70 billion in profit last quarter. However, petrochemical margins were pressured downwards during the third quarter amid higher cost of sales and distribution costs.

Total rakes in nearly $10 million in profit

TotalEnergies reported adjusted net income of $9.86 billion, up significantly when compared with $4.77 billion for the same period in 2021 and $9.8 billion in the second quarter of this year. Meanwhile, the French group stated that monomer production was down 13% in the third quarter, mainly due to lower demand in Asia and unplanned shutdowns in France and Belgium.

BP’s Q3 results up significantly from 2021

BP’s underlying replacement cost profit was $8.2 billion, compared with $8.5 billion for the previous quarter. The third-quarter result was partly impacted by weaker refining margins, the British energy major stated. However, the recent figures marked a significant increase from the third quarter of 2021, when net profit was at $3.3 billion.

Chevron reports 2nd highest quarterly profit

Chevron reported its second-highest quarterly profit ever at $11.2 billion, which almost doubled the $6.1 billion from the same period last year. The company cited growing global demand for oil and gas, as well as higher domestic oil production, among key factors supporting the increase. According to Chevron, the third quarter Permian Basin oil production totalled over 700,000 bbl/day, up over 12% from last year’s quarter.

CPChem’s O&P income down in Q3

Olefins and polyolefins business of Chevron Phillips Chemical –a petrochemical company jointly owned by Chevron and Phillips 66– reported $105 million of adjusted pre-tax income in the third quarter, compared with $216 million in the second quarter. The decrease was caused by a sharp decline in PE margins, which was partially offset by lower turnaround costs.

Shell’s profit down from record level but still solid

Although Shell reported operating profits of $9.5 billion for the third quarter of this year, this was not at a record level seen during the first half of year. However, Shell remained on track to exceed its record annual profit of $31 billion in 2008 with a profit of $30.5 billion reported so far in 2022.

The key reason why the company’s third-quarter profit was slightly below the second quarter’s record high was largely weaker refining and gas trading. The London-listed oil giant also reported lower chemicals margins due to higher feedstock and utility costs.

All-time high Q3 profit from ExxonMobil

ExxonMobil’s third-quarter net profit of $19.66 billion was an all-time high, mainly thanks to strong volume performance, rigorous cost control and higher natural gas realizations offsetting lower crude realizations and weaker refining margins. At the same time, chemical products earnings were $800 million compared to $1.1 billion in the second quarter and also $1.2 billion lower compared to third-quarter 2021, largely due to lower margins and sales, which reflected softening market conditions.

Eni’s profit surges but Versalis’ earnings suffer

Eni’s adjusted net profit for the third quarter surged by 161% from a year earlier to €3.73 billion. According to Eni, robust performance of the company’s international businesses yielded in positive results during the third quarter, despite a decline in crude oil prices.

However, Eni said in the statement that the chemical business of Versalis reported a negative result of €177 million during the third quarter, down €202 million compared to the third quarter of 2021 amid weaker demand. According to the company, this was mainly due to higher oil-based feedstock costs and plant utilities expenses that are indexed to the price of natural gas.

Dow’s Q3 net income down around 55%

Dow –one of the three largest chemical producers in the world– reported a GAAP net income of $760 million for the third quarter, down from $1.70 billion in the third quarter of 2021. The company’s operating EBIT was also down from $2.9 billion in the year-ago period at $1.2 billion, mainly due to higher raw material and energy costs, as well as lower equity earnings.

Dow’s packaging and specialty plastics segment net sales in the quarter were down 5% from the year-ago period at $7.3 billion. On a sequential basis, the segment’s net sales decreased by 11% amid lower PE prices and reduced volumes due to continued global logistics constraints and dynamic market conditions in EMEA.

LyondellBasell’s net income more than halves

LyondellBasell Industries announced net income for the third quarter of $572 million, down from $1.64 billion in the previous quarter and $1.76 billion reported in the same quarter of last year. Third-quarter EBITDA was $1.1 billion, less than half of what the company reported for the second quarter and the third quarter of 2021.

The company stated that “higher energy costs, new supply and weaker markets” all weighed down on global petrochemical margins during the third quarter, adding that global demand from durable goods markets softened.

LyondellBasell also said that they postponed the restart of its ethylene cracker in France until the first quarter 2023 and reduced operating rates across its global asset base to match lower demand in Europe. According to the company, Chinese markets remained weak due to zero-COVID policy and tepid growth while new supply and inventory destocking led to declines in polyolefins prices in North America.

Aramco reports $42.4 billion in net income

Saudi Arabian state oil producer Aramco’s net income rose to $42.4 billion for the third quarter, beating forecasts with a 39% jump from $30.4 billion reported a year earlier. The company’s cash flow from operating activities were at $54.0 billion when compared to last year’s $36.3 billion.

“While global crude oil prices during this period were affected by continued economic uncertainty, our long-term view is that oil demand will continue to grow for the rest of the decade given the world’s need for more affordable and reliable energy,” Amin H. Nasser, president and CEO, said in the quarterly statement.

SABIC’s net income plunges by 77% q-o-q

On the other hand, SABIC –of which Saudi Aramco owns the majority stake– reported to a quarterly fall of 77% in net income during the third quarter at SAR1.84 billion ($490 million). This also indicated a drop of 67% when compared with the net income of SAR5.59 billion ($ 1.49 billion) in the third quarter of 2021.

“The decrease in net income is attributable to decline in selling prices which also contributed to the decline in results from associates and joint ventures,” the company said in a statement released on Saudi stock exchange Tadawul.
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