Differing estimates between would-be buyers and LyondellBasell Industries over the value of the company's Houston refinery resulted in Lyondell's inability to sell the plant last year, Chief Executive Bob Patel said on Friday to Reuters.
A sale of the plant, with a price tag of about $1.5 billion, would have marked Lyondell's exit from refining and emergence as solely a petrochemical producer. Lyondell has owned the refinery since 1985.
"So it's really at the end of the day our view of value versus the buyer's view of value," Patel told analysts on a conference call to discuss fourth-quarter results.
The refinery located along the Houston Ship Channel is considered desirable for its capability to process heavy, sour crude oil.
Lyondell retained Bank of America Merrill Lynch in 2016 to help sell the 263,776 barrel-per-day (bpd) refinery.
Would-be buyers, including Saudi Aramco, Valero Energy Corp and Suncor, were interested in the plant.
Saudi Aramco appeared to be the leading contender, sources said, but the company said it never bid on the plant.
Patel said the estimates of the refinery's value turned on the many outages it endured in 2016.
"Given sort of the challenges we had in the operation of the plant and if you'll recall in Q3 and 4 the outlook for the industry was being revised, as we were trying to get through all of that," he said.
Within two weeks of an April 8, 2016, fire on a coking unit, production at the refinery fell to 32 percent of capacity as distillation units were shut to replace piping thought to be at risk of failure.
Full production was not restored until the restart of the repaired coker in mid-July, but was reduced in the second half of the year by power outages and another fire.
On Friday, Lyondell said the refinery's 2016 production averaged 201,000 bpd and earnings before interest, tax, depreciation and amortization (EBITDA) from refining were $72 million, $447 million less than 2015.
Lyondell is working to improve the refinery's reliability, which includes a planned overhaul, currently under way, of the 90,000 bpd gasoline-producing fluidic catalytic cracking unit and the 120,000 bpd crude distillation unit.
No other major maintenance is planned for this year at the refinery, he said.
The FCCU and CDU maintenance will negatively impact first-quarter revenue by an estimated $80 million, Patel said.
