Significant investment for Exxon Mobil Chemical is expansion of its export-based position at Mont Belvieu, Texas
Exxon Mobil Chemical, the world’s fourth-largest chemical company, is leveraging its logistics prowess and investing in strategic American export-oriented facilities to ensure its competitiveness in a low oil-price environment, according to a new report from IHS Inc.
ExxonMobil Chemical’s product focus, similar to the chemical businesses of other oil and gas majors, is comparatively narrow, with relatively limited diversification.
One of the most significant investments for Exxon Mobil Chemical is the expansion of its export-based position at Mont Belvieu, Texas. This ethylene – together with PE expansions – will significantly expand the export company’s capabilities.
“Currently, Exxon Mobil Chemical can supply the Asian market through its facilities in Singapore and China, but this U.S. expansion will provide additional cost-effective options for exports to Asia and elsewhere,” said David Witt, a senior research at IHS.
”Exxon Mobil Chemical’s dominance in proprietary technologies, combined with its scale and market channels, make it a very attractive candidate for partnerships, particularly in Asia and the Middle East,” Witt said.
He described Exxon Mobil as a “logistics juggernaut,” focused on expanding its market reach through advanced logistical capabilities, and increasing commercial operations in growth markets such as the Asia Pacific region.
Potential threats to the company’s continued growth could come in the form of three key challenges, Witte said. “If petrochemical prices decrease further, that will offset Exxon Mobil’s U.S. and Middle East feedstock advantages, which is significant.
“However, I think Exxon Mobil Chemical’s biggest threat to growth may hinge on China’s economic slowdown, the potential implementation of protectionist measures, and the risks associated with geopolitical uncertainty in the Middle East. These macro-risks are not only applicable to Exxon Mobil, but Exxon Mobil’s large, but fairly narrow portfolio, could be more substantively impacted as a result,” said Witte.
This, along with a decline in parent company Exxon Mobil Corporation’s upstream earnings, may affect the company’s growth and competitive positioning, according to the new report, entitled the IHS Chemical: ExxonMobil Chemical Competitive Company Analysis.
Additionally, if the company experiences constrained access to feedstock supplies in countries outside of the U.S., where the government or national oil companies control supplies, this could be a challenge.