ExxonMobil Announces Shutdown of Cracker Unit in France! Focus on Developing Core Energy

On December 15, according to plasteurope, ExxonMobil announced that it would stop operations at its Notre-Dame-de-Gravenchon production facility in France, and the shutdown may include the cracker unit.

A big bet on the core energy business!

The cracking device is the beginning of the chemical industry and the key to determining the extension of energy resources to the downstream chemical industry chain. This time, ExxonMobil’s suspected shutdown of the cracker may have a lot to do with its core energy business.

As the world's largest non-governmental oil and gas producer, Exxon's acquisition totaling US$59.5 billion in October this year ushered in the "era of big acquisitions" in the oil industry. The market generally believes that Exxon’s largest acquisition since 1998 will boost the wave of massive mergers and acquisitions in the U.S. oil and gas industry:

On October 23, the second major merger and acquisition order in the U.S. energy industry appeared: Chevron, the second largest oil and gas producer in the United States, announced that it would acquire Hess, the fourth largest oil company in the United States, in an all-stock transaction worth US$53 billion.

On December 11, the third blockbuster deal in the U.S. energy industry occurred: Occidental Petroleum announced that it had completed an acquisition agreement and planned to acquire the U.S. shale oil producer CrownRock for $12 billion to expand its control of the largest shale oil field in the United States. The acquisition is expected to be completed in the first quarter of 2024.

On December 13, Buffett's Berkshire Hathaway spent a total of approximately US$588.7 million to acquire nearly 10.5 million shares of Occidental Petroleum Corporation.

The above three mergers and acquisitions and the support of stock investor Buffett all mean that American oil giants represented by Exxon are still making heavy bets, firmly believing that oil and natural gas will remain the core of the global energy world in the next few decades.

Is Exxon’s golden age coming?

When it comes to the profit prospects of large multinational energy companies like ExxonMobil, crude oil prices matter more than anything else. Today, a barrel of WTI crude oil still sells for about the same price as a year ago, and OPEC's production cuts have played an important role in stabilizing prices.

Indeed, Riyadh and Moscow recently announced that they would extend voluntary oil supply cuts of around 1.3 million barrels per day that were due to expire this summer. This, of course, has raised concerns that supply shortages in the oil market will lead to falling inventory levels, with the International Energy Agency warning that OPEC production cuts are "plunging world oil markets into a deep deficit." Driven by OPEC, Exxon Mobil faces stronger profit prospects.So far, it can be said that oil prices have been an important catalyst for Exxon's profit growth in the third quarter. Its upstream profit in the third quarter of 2023 was US$6.1 billion, an increase of US$1.5 billion from the previous quarter, and the profit increased by 94% month-on-month.

On the other hand, hedge funds and other alternative asset managers have become aware of the supply-demand imbalance in the oil market and are betting that prices will continue to rise, exacerbating the upward momentum.