MOSCOW (MRC) -- Marathon Petroleum Corp signaled on Tuesday that a sustained rally in natural gas prices could take a toll on earnings, sending the largest US refiner's shares down 4%, according to Hydrocarbonprocessing.
The warning comes after US natural gas prices soared more than 60% in the third quarter - translating into higher costs since natgas is used to power refining operations - as sky-rocketing global rates keep demand for US liquefied natural gas exports elevated.
"For every USD1 change in natural gas prices, we anticipate there is an approximate USD360 MM impact to annual EBITDA to our R&M (Refining and Marketing) segment," Chief Financial Officer Maryann Mannen said.
"Based on current prices, we estimate that in the fourth quarter, higher natural gas prices have the potential to impact our business by an incremental USD0.30 per bbl," Mannen added.
Marathon said there was still some uncertainty around supply-demand dynamics heading into the fourth quarter, but lower inventories and strong holiday travel could be supportive.
"Looking at next year, if global product inventories remain tight and demand continues to recover, we would expect the refining sector to rebound in 2022," Chief Executive Officer Michael Hennigan said.
Total throughput, or amount of crude processed, rose to 2.8 MM barrels per day (bpd) in the third quarter from 2.5 bpd in the year-ago period. The refiner expects fourth quarter total refinery throughput to be 2.79 bpd.
As MRC reported earlier, in May, 2021, US refiner Marathon Petroleum Corp said its board had approved the conversion of the Martinez refinery in California to a renewable diesel plant. Besides, the company made a final investment decision regarding this project. Martinez, once complete, will be one of the largest renewables facilities in the country.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,638,370 tonnes in the first eight months of 2021, up by 10% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.
Marathon Petroleum Corporation (MPC) is a leading, integrated, downstream energy company headquartered in Findlay, Ohio. The company operates the nation's largest refining system. MPC's marketing system includes branded locations across the United States, including Marathon brand retail outlets.