Crude prices have fallen back…
The 27-year LNG deal inked…
Exxon will postpone the start of expansion works at its Beaumont refinery in Texas because of still slow demand for fuels, Bloomberg reported, citing unnamed sources familiar with the situation.
The expansion was to be completed by 2022 but now the deadline has been moved to a year later. This will give Beaumont a capacity of some 619,000 barrels daily and will make it the largest oil refinery in the United States, overtaking the Port Arthur facility operated by Aramco.
The expansion was conceived of as a way to utilize Exxon’s growing production from the Permian: the company planned to add a 250,000-bpd unit specifically to process the light, sweet crude from the shale play. However, now the outlook for demand for this growing production is too negative to merit a refinery expansion. The Beaumont facility is currently running at reduced rates because of the slump in demand for gasoline in jet fuel.
Exxon slashed its capex for the year by 30 percent, cut operating expenses by 15 percent, and raised $12 billion in debt to boost its liquidity position. The company, according to Forbes calculations, stands to lose as much as $70 billion in revenues this year because of the weak oil demand and equally weak oil price reflecting the trend in demand.
Still, the expansion is far from canceled, with the Bloomberg source saying work continues and will pick up from January next year.
The Permian has become a top priority for Exxon, alongside Guyana, where the supermajor has made a string of discoveries tapping into billions of barrels of crude. In order to focus on these priorities, Exxon earlier embarked on a divestment plan seeking to offload assets worth some $25 billion.
Yet finding buyers has been difficult as most oil companies are selling to shore up their finances or, like Exxon, boost their liquidity.
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com:
Charles is a writer for Oilprice.com