Exxon Mobil Corp (XOM.N) anticipates that its earnings from motor fuels and chemicals will reach $16 billion by 2027, marking a $4 billion increase from the current levels. This projection is based on the rising demand in these sectors, as disclosed by company executives on Wednesday.
The largest U.S. oil company has experienced robust refining profits this year, driven in part by a significant expansion in refining capacity and a strategic focus on higher-margin chemicals. Exxon’s executives believe that gasoline demand will continue to rise, with a peak not expected until later in the decade, a longer timeframe compared to other industry forecasts.
Williams emphasized that while refining remains important, a significant portion of their operations will increasingly center on the chemical sector.
Jack Williams, Senior Vice President of Exxon, stated during a briefing at the company’s headquarters in Spring, Texas, “Towards the end of this decade, we anticipate a peak in gasoline demand, but it will be followed by a sustained plateau.”
Exxon has consolidated its previously separate chemicals and oil refining businesses and restructured its operations to efficiently pivot between fuels and chemicals based on which sector offers the greatest profitability.
This outlook differs from the International Energy Agency, which predicts a decline in the use of oil for transportation fuels after 2026, and the U.S. government’s assertion that U.S. gasoline consumption likely peaked in 2018.
Karen McKee, President of the Product Solutions unit at Exxon, expressed optimism about the merged refining, petrochemicals, and low-carbon business unit’s potential to adapt to market demand. She stated, “We believe this could potentially transform Exxon Mobil.”
Exxon’s Beaumont, Texas refinery expanded by 250,000 barrels per day (bpd) in January, reaching a capacity of 619,024 bpd.
This facility processes crude from Exxon’s West Texas oilfields primarily to produce diesel fuel, and it is currently performing exceptionally well.
As demand for fuel gradually decreases, Exxon plans to meet new market needs without further expanding refining capacity. According to Williams, “We will focus on upgrading existing units rather than increasing our throughput.”
Furthermore, Exxon’s Baytown, Texas refinery, with a capacity of 564,440 barrels per day (bpd), is located alongside a chemical unit, enabling the company to shift its focus from primarily producing fuels to chemicals.
