Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

This discussion should be read in conjunction with the information contained in our Consolidated Financial Statements, and the accompanying notes elsewhere in this report. Unless otherwise indicated, the “Company”, “we”, “us,” “our” or similar words are used to refer to LyondellBasell Industries N.V. together with its consolidated subsidiaries (“LyondellBasell N.V.”).

OVERVIEW

Third quarter results reflect robust demand for our products and tight market conditions, which supported strong margins across most of our businesses. During the third quarter and first nine months of 2021 relative to the third quarter and first nine months of 2020, EBITDA increased largely due to margin improvements in our O&P—Americas, O&P—EAI, I&D and Refining segments. While results improved for our I&D segment, this segment was impacted by lost volume in connection with downtime in our acetyls business. Increasing mobility has improved demand and margins for transportation fuels produced by our Refining segment.

Strong business results and the benefits of recent growth investments enabled us to repay $2,378 million of debt during the first nine months of 2021 and an additional $650 million in October 2021. Additionally, we have resumed our share repurchase activity and purchased approximately 1 million shares for $89 million during the third quarter.

During the second quarter of 2021, we invested $104 million to purchase a 50% interest in a joint venture with the China Petroleum & Chemical Corporation which will construct a new propylene oxide and styrene monomer unit in China.

Results of operations for the periods discussed are presented in the table below:

			Three Months Ended September 30,												Nine Months Ended September 30,
Millions of dollars			2021						2020						2021						2020
Sales and other operating revenues			$	12,700					$	6,776					$	33,343					$	19,816
Cost of sales			10,109						5,885						26,463						17,647
Impairment of long-lived assets			—						582						—						582
Selling, general and administrative expenses			313						259						927						842
Research and development expenses			30						27						91						79
Operating income			2,248						23						5,862						666
Interest expense			(126)						(122)						(366)						(336)
Interest income			1						3						8						10
Other (expense) income, net			(12)						23						27						27
Income from equity investments			104						62						389						123
Income (loss) from continuing operations before income taxes			2,215						(11)						5,920						490
Provision for (benefit from) income taxes			452						(125)						1,028						(82)
Income from continuing operations			1,763						114						4,892						572
Loss from discontinued operations, net of tax			(1)						—						(1)						—
Net income			$	1,762					$	114					$	4,891					$	572

RESULTS OF OPERATIONS

Revenues—Revenues increased by $5,924 million, or 87%, in the third quarter of 2021 compared to the third quarter of 2020 and by $13,527 million, or 68%, in the first nine months of 2021 compared to the first nine months of 2020. Average sales prices in the third quarter and first nine months of 2021 were higher for many of our products as sales prices generally correlate with crude oil prices, which increased relative to the corresponding periods in 2020. These higher prices led to a 77% and 63% increase in revenue in the third quarter and first nine months of 2021, respectively. Higher sales volumes, driven by increased demand, resulted in a revenue increase of 10% and 3% in the third quarter and first nine months of 2021, respectively. Favorable foreign exchange impacts resulted in a revenue increase of 2% during the first nine months of 2021.

Cost of Sales—Cost of sales increased by $4,224 million, or 72%, in the third quarter of 2021 compared to the third quarter of 2020 and by $8,816 million, or 50%, in the first nine months of 2021 compared to the first nine months of 2020, respectively. This increase primarily related to higher feedstock and energy costs.

During the first nine months of 2020, we recognized an LCM inventory valuation charge of $163 million related to the decline in market pricing for many of our raw material and finished goods inventories since December 31, 2019. During the third quarter of 2020, we recognized an LCM inventory valuation benefit of $160 million largely driven by the recovery of market pricing for many of our raw material and finished goods inventories during the quarter.

Impairment of Long-Lived Assets—During the third quarter of 2020, we assessed the Houston refinery for impairment and determined that the asset group carrying value exceeded its undiscounted estimated pre-tax cash flows and fair value. As a result, we recognized a non-cash impairment charge in the third quarter of 2020 of $582 million.

Operating Income—Operating income increased by $2,225 million, or 9,674%, in the third quarter of 2021 compared to the third quarter of 2020 and by $5,196 million, or 780%, in the first nine months of 2021 compared to the first nine months of 2020. In the third quarter of 2021, operating income in our O&P–Americas, Refining, O&P–EAI, I&D and Technology segments increased by $1,094 million, $758 million, $309 million, $67 million and $43 million, respectively, relative to the third quarter of 2020. The increases were partially offset by a decline of $22 million in our APS segment in the third quarter of 2021 compared to the third quarter of 2020. In the first nine months of 2021, operating income in our O&P–Americas, O&P–EAI, Refining, I&D, APS and Technology segments increased by $2,831 million, $903 million, $731 million, $493 million, $196 million and $56 million, respectively, compared to the first nine months of 2020. Results for each of our business segments are discussed further in the Segment Analysis section below.

Income from Equity Investments—Income from our equity investments increased $42 million, or 68%, in the third quarter of 2021 compared to the third quarter of 2020 and by $266 million, or 216%, in the first nine months of 2021 compared to the first nine months of 2020. The increase was primarily due to increases in our O&P–EAI segment driven primarily by higher margins due to increased demand.

Income Taxes—Our effective income tax rate for the third quarter of 2021 was 20.4% compared with 1,136.4% for the third quarter of 2020. Our effective income tax rate for the first nine months of 2021 was 17.4% compared with -16.7% for the first nine months of 2020. Changes in our effective income tax rate were primarily driven by changes in pre-tax income as well as a tax benefit recognized on the non-cash impairment of our Houston refinery in the third quarter of 2020. Our income tax results are discussed further in Note 8 to the Consolidated Financial Statements.

Comprehensive Income—Comprehensive income increased by $1,443 million in the third quarter of 2021 compared to the third quarter of 2020 and by $4,683 million in the first nine months of 2021 compared to the first nine months of 2020. These changes were primarily due to higher net income partially offset by the net unfavorable impacts of unrealized changes in foreign currency translation adjustments. Financial derivatives activity increased comprehensive income by $421 million in the first nine months of 2021 compared to the first nine months of 2020, and decreased comprehensive income by $40 million in the third quarter of 2021 compared to the third quarter of 2020.

In the third quarter and first nine months of 2021, the cumulative after-tax effects of our derivatives designated as cash flow hedges were net gains of $35 million and $132 million, respectively. Pre-tax gains of $17 million and $117 million related to forward-starting interest rate swaps were driven by periodic changes in benchmark interest rates in the third quarter and first nine months of 2021, respectively. The fluctuations of the U.S. dollar against the euro and the periodic changes in benchmark interest rates, in the third quarter and first nine months of 2021, resulted in pre-tax gains of $63 million and $127 million, respectively, related to our cross-currency swaps. Pre-tax losses of $60 million and $128 million related to our cross-currency swaps were reclassified from Accumulated other comprehensive loss to Interest expense in the third quarter and first nine months of 2021, respectively. The remaining change pertains to our commodity cash flow hedges.

In the first nine months of 2020, the cumulative after-tax effects of our derivatives designated as cash flow hedges were net losses of $289 million. Included in this amount, were pre-tax losses of $430 million related to forward-starting interest rate swaps, driven by the significant decline in benchmark interest rates in the first nine months of 2020, primarily due to changes in the economy impacting late in the first quarter of 2020.

The predominant functional currency for our operations outside of the U.S. is the euro. Relative to the U.S. dollar, the value of the euro weakened in the third quarter and the first nine months of 2021, resulting in net losses reflected in the Consolidated Statements of Comprehensive Income. The net losses related to unrealized changes in foreign currency translation impacts include pre-tax gains of $72 million and $147 million in the third quarter and first nine months of 2021, respectively, which represent the effective portion of our net investment hedges.

In the first nine months of 2020, relative to the U.S. dollar, the value of the euro increased resulting in net gains in the Consolidated Statements of Comprehensive Income. The net gains related to unrealized changes in foreign currency translation impacts were partially offset by pre-tax losses of $60 million in the first nine months of 2020, which represent the effective portion of our net investment hedges. Additionally, during the first nine months of 2020 we recognized unrealized foreign currency translation losses of $75 million resulting from the decrease in the value of the Mexican peso and the Brazilian real.

Segment Analysis

We use earnings before interest, income taxes, and depreciation and amortization (“EBITDA”) as our measure of profitability for segment reporting purposes. This measure of segment operating results is used by our chief operating decision maker to assess the performance of and allocate resources to our operating segments. Intersegment eliminations and items that are not directly related or allocated to business operations, such as foreign exchange gains or losses and components of pension and other postretirement benefits other than service costs are included in “Other”. For additional information related to our operating segments, as well as a reconciliation of EBITDA to its nearest GAAP measure, Income from continuing operations before income taxes, see Note 12 to our Consolidated Financial Statements.

Revenues and the components of EBITDA for the periods presented are reflected in the table below:

			Three Months Ended September 30,												Nine Months Ended September 30,
Millions of dollars			2021						2020						2021						2020
Sales and other operating revenues:
O&P–Americas segment			$	4,408					$	1,840					$	10,990					$	5,065
O&P–EAI segment			3,458						1,982						9,960						5,908
I&D segment			2,894						1,538						7,246						4,465
APS segment			1,286						1,004						3,892						2,805
Refining segment			2,288						1,101						5,359						3,468
Technology segment			238						193						586						492
Other, including intersegment eliminations			(1,872)						(882)						(4,690)						(2,387)
Total			$	12,700					$	6,776					$	33,343					$	19,816
Operating income (loss):
O&P–Americas segment			$	1,403					$	309					$	3,485					$	654
O&P–EAI segment			361						52						1,171						268
I&D segment			247						180						828						335
APS segment			94						116						299						103
Refining segment			25						(733)						(200)						(931)
Technology segment			144						101						308						252
Other, including intersegment eliminations			(26)						(2)						(29)						(15)
Total			$	2,248					$	23					$	5,862					$	666
Depreciation and amortization:
O&P–Americas segment			$	142					$	134					$	427					$	391
O&P–EAI segment			47						55						150						161
I&D segment			103						79						264						223
APS segment			28						40						83						123
Refining segment			20						40						58						131
Technology segment			11						10						34						27
Total			$	351					$	358					$	1,016					$	1,056
Income (loss) from equity investments:
O&P–Americas segment			$	29					$	15					$	94					$	24
O&P–EAI segment			66						40						263						88
I&D segment			9						7						32						12
APS segment			—						—						—						(1)
Total			$	104					$	62					$	389					$	123

			Three Months Ended September 30,												Nine Months Ended September 30,
Millions of dollars			2021						2020						2021						2020
Other (expense) income, net:
O&P–Americas segment			$	(6)					$	16					$	5					$	19
O&P–EAI segment			—						1						10						5
I&D segment			(11)						1						2						1
APS segment			(1)						1						3						1
Refining segment			(4)						1						(8)						1
Technology segment			—						—						(1)						—
Other, including intersegment eliminations			10						3						16						—
Total			$	(12)					$	23					$	27					$	27
EBITDA:
O&P–Americas segment			$	1,568					$	474					$	4,011					$	1,088
O&P–EAI segment			474						148						1,594						522
I&D segment			348						267						1,126						571
APS segment			121						157						385						226
Refining segment			41						(692)						(150)						(799)
Technology segment			155						111						341						279
Other, including intersegment eliminations			(16)						1						(13)						(15)
Total			$	2,691					$	466					$	7,294					$	1,872

Olefins and Polyolefins–Americas Segment

Overview—EBITDA improved in the third quarter and first nine months of 2021 relative to the third quarter and first nine months of 2020 driven by olefin and polyolefin margin improvements.

*Ethylene Raw Materials—*We have flexibility to vary the raw material mix and process conditions in our U.S. olefins plants in order to maximize profitability as market prices fluctuate for both feedstocks and products. Although prices of crude-based liquids and natural gas liquids are generally related to crude oil and natural gas prices, during specific periods the relationships among these materials and benchmarks may vary significantly. In the third quarter and first nine months of 2021 and 2020 approximately 60% of the raw materials used in our North American crackers was ethane.

The following table sets forth selected financial information for the O&P–Americas segment including Income from equity investments, which is a component of EBITDA:

			Three Months Ended September 30,												Nine Months Ended September 30,
Millions of dollars			2021						2020						2021						2020
Sales and other operating revenues			$	4,408					$	1,840					$	10,990					$	5,065
Income from equity investments			29						15						94						24
EBITDA			1,568						474						4,011						1,088

Revenues—Revenues for our O&P–Americas segment increased by $2,568 million, or 140%, in the third quarter of 2021 compared to the third quarter of 2020 and by $5,925 million, or 117%, in the first nine months of 2021 compared to the first nine months of 2020. Higher average sales prices resulted in a 120% and 103% increase in revenue in the third quarter and first nine months of 2021, respectively, primarily driven by tight market conditions. Volume improvements resulted in a revenue increase of 20% and 14% in the third quarter and first nine months of 2021, respectively, due to improved demand in combination with industry-wide supply constraints.

EBITDA—EBITDA increased by $1,094 million, or 231%, in the third quarter of 2021 compared to the third quarter of 2020 and by $2,923 million, or 269%, in the first nine months of 2021 compared to the first nine months of 2020. Higher olefin results led to a 123% and 164% increase in EBITDA in the third quarter and first nine months of 2021, respectively. This increase was primarily due to margin improvements as higher ethylene and propylene prices outpaced increases in feedstock costs. Higher polyethylene results led to a 69% and 60% increase in EBITDA in the third quarter and first nine months of 2021, respectively, while polypropylene results led to a 43% and 36% increase in EBITDA in the third quarter and first nine months of 2021, respectively. These improvements were primarily due to polyolefin sales price increases which outpaced higher feedstock costs.

Third quarter of 2020 results include an LCM inventory valuation benefit of $70 million, or 15%, related to the reversal of an LCM inventory valuation charge recognized earlier in the year. These benefits were largely driven by recovery of market prices of ethylene and polymers.

Results also include a LIFO inventory charge of $61 million which was recognized in the third quarter of 2020. The absence of similar adjustments in the third quarter and first nine months of 2021 resulted in a 13% and 6% change in EBITDA, respectively.

Olefins and Polyolefins–Europe, Asia, International Segment

Overview—EBITDA increased for the third quarter and first nine months of 2021 relative to the third quarter and first nine months of 2020 mainly as a result of higher margins and equity income.

While the majority of the feedstock used in our EAI segment’s ethylene crackers is naphtha, in the third quarter and first nine months of 2021 and 2020 approximately 35% of the raw materials used in our crackers were advantaged feedstocks, which consisted primarily of butane and hydrowax.

The following table sets forth selected financial information for the O&P–EAI segment including Income (loss) from equity investments, which is a component of EBITDA:

			Three Months Ended September 30,												Nine Months Ended September 30,
Millions of dollars			2021						2020						2021						2020
Sales and other operating revenues			$	3,458					$	1,982					$	9,960					$	5,908
Income from equity investments			66						40						263						88
EBITDA			474						148						1,594						522

Revenues—Revenues increased by $1,476 million, or 74%, in the third quarter of 2021 compared to the third quarter of 2020 and by $4,052 million, or 69%, in the first nine months of 2021 compared to the first nine months of 2020. Average sales prices in the third quarter and first nine months of 2021 were higher across most products as sales prices generally correlate with crude oil prices, which on average, increased compared to the same period in 2020. These higher average sales prices were responsible for a revenue increase of 65% and 53% in the third quarter and first nine months of 2021, respectively. Volume improvements resulted in a revenue increase of 8% and 11% in the third quarter and first nine months of 2021, respectively, primarily due to strong demand in combination with tight market supply. Favorable foreign exchange impacts resulted in a revenue increase of 1% and 5% in the third quarter and first nine months of 2021, respectively.

EBITDA—EBITDA increased by $326 million, or 220%, in the third quarter of 2021 compared to the third quarter of 2020 and by $1,072 million, or 205%, in the first nine months of 2021 compared to the first nine months of 2020. Polyethylene results led to a 86% and 78% increase in EBITDA in the third quarter and first nine months of 2021, respectively, while polypropylene results led to a 72% and 64% increase in EBITDA in the third quarter and first nine months of 2021, respectively; these improvements were largely attributed to higher margins due to strong demand and tight markets. Higher olefins results led to a 55% and 16% increase in EBITDA in the third quarter and first nine months of 2021, respectively, primarily driven by higher margins attributable to increased ethylene and co-product prices which outpaced higher feedstock costs. Higher income from our equity investments led to increases in EBITDA of 18% and 34% in the third quarter and first nine months of 2021, respectively, mainly attributable to higher polyolefins margins associated with increased demand.

Results for the first nine months of 2020 included a $53 million LCM inventory valuation charge primarily driven by a decline in the price of naphtha and polymers. Results in the third quarter of 2020 included a $17 million LCM inventory valuation benefit related to the reversal of LCM inventory valuation charges recognized in the first half of 2020, largely driven by recovery of market prices of naphtha and polymers during the quarter. The absence of similar adjustments in the first nine months and the third quarter of 2021 resulted in a 10% and 11% change in EBITDA, respectively.

Intermediates and Derivatives Segment

Overview—EBITDA increased in the third quarter and first nine months of 2021 compared to the third quarter and first nine months of 2020, primarily driven by higher margins across most businesses due to tight market supply from industry outages coupled with strong demand recovery.

The following table sets forth selected financial information for the I&D segment including Income from equity investments, which is a component of EBITDA:

			Three Months Ended September 30,												Nine Months Ended September 30,
Millions of dollars			2021						2020						2021						2020
Sales and other operating revenues			$	2,894					$	1,538					$	7,246					$	4,465
Income from equity investments			9						7						32						12
EBITDA			348						267						1,126						571

Revenues—Revenues increased by $1,356 million, or 88%, in the third quarter of 2021 compared to the third quarter of 2020 and by $2,781 million, or 62% in the first nine months of 2021 compared to the first nine months of 2020. Higher average sales prices resulted in a 82% and 61% increase in revenue in the third quarter and first nine months of 2021, respectively, as sales prices generally correlate with crude oil prices, which on average, increased compared to the same periods in 2020. Sales volumes increased in the third quarter of 2021 resulting in a 6% increase in revenue, due to improved demand for oxyfuels and related products as well as intermediate chemicals. Sales volumes declined in the first nine months of 2021 resulting in a 1% decrease in revenue due to the impact of unusually cold temperatures and associated electrical power outages that led to shutdowns of our manufacturing facilities in Texas in early 2021. Favorable foreign exchange impacts resulted in a revenue increase of 2% in the first nine months of 2021.

EBITDA—EBITDA increased by $81 million, or 30%, in the third quarter of 2021 compared to the third quarter of 2020 and by $555 million, or 97%, in the first nine months of 2021 compared to the first nine months of 2020. Results for the third quarter and first nine months of 2021 declined 10% and 5%, respectively, due to site closure costs associated with the exit of our ethanol business. Propylene oxide and derivatives results increased by 55% and 58% in the third quarter and first nine months of 2021, respectively. This increase was primarily a result of higher margins due to strong demand recovery coupled with tight market supply resulting from industry outages. Intermediate chemicals results declined 7% during the third quarter of 2021, driven by lower volumes primarily in connection with downtime at our acetyls facilities in La Porte, Texas. Intermediate chemicals results increased 20% during the first nine months of 2021 due to improved margins driven by higher demand and tight market conditions. Oxyfuels and related products results increased 18% and 13% in the third quarter and first nine months of 2021, respectively, primarily driven by margin improvement as a result of improved demand and higher gasoline prices.

Results for the first nine months of 2020 included a $76 million LCM inventory valuation charge primarily driven by a decline in the price of various gasoline blending components, benzene and styrene since December 31, 2019. Results in the third quarter of 2020 included a $22 million LCM inventory valuation benefit related to the reversal of LCM inventory valuation charges recognized in the first half of 2020 driven by price improvements for various gasoline blending components since the second quarter of 2020. The absence of similar adjustments in the first nine months and third quarter of 2021 resulted in a 13% and 8% change in EBITDA, respectively.

Advanced Polymer Solutions Segment

Overview—EBITDA for our APS segment decreased in the third quarter of 2021 relative to the third quarter of 2020 primarily due to the absence of LCM inventory valuation benefits recognized in the third quarter of 2020. Results increased in the first nine months of 2021 relative to the first nine months of 2020, primarily due to higher compounding and solutions volumes.

The following table sets forth selected financial information for the APS segment including losses from equity investments, which is a component of EBITDA:

			Three Months Ended September 30,												Nine Months Ended September 30,
Millions of dollars			2021						2020						2021						2020
Sales and other operating revenues			$	1,286					$	1,004					$	3,892					$	2,805
Income (loss) from equity investments			—						—						—						(1)
EBITDA			121						157						385						226

Revenues—Revenues increased by $282 million, or 28%, in the third quarter of 2021 compared to the third quarter of 2020 and by $1,087 million, or 39%, in the first nine months of 2021 compared to the first nine months of 2020. Average sales price increased resulting in a 34% and 23% increase in revenue in the third quarter and first nine months of 2021, respectively, as sales prices generally correlate with crude oil prices, which on average, increased compared to the same periods in 2020. Sales volumes decreased in the third quarter of 2021 resulting in a 7% decrease in revenue stemming from lower automotive demand in the third quarter on prolonged shortages of semi-conductors across the industry. Sales volumes increased in the first nine months of 2021 resulting in a 10% increase in revenue stemming from higher automotive and construction demand over the nine month period. Foreign exchange impacts resulted in a revenue increase of 1% and 6% in the third quarter and first nine months of 2021, respectively, relative to the comparable periods in 2020.

EBITDA—EBITDA decreased by $36 million, or 23%, in the third quarter of 2021 compared to the third quarter of 2020 and increased by $159 million, or 70%, in the first nine months of 2021 compared to the first nine months of 2020.

Results for the first nine months of 2020 included a $29 million LCM inventory valuation charge primarily resulting from a decline in the price of polymers. Results in the third quarter of 2020 also include a $40 million LCM inventory valuation benefit related to the reversal of LCM inventory valuation charges recognized in the first half of 2020 resulting from recovery of market prices of polymers. The absence of similar adjustments in the first nine months and third quarter of 2021 resulted in a 13% and 25% change in EBITDA, respectively.

Compounding and solutions results led to an EBITDA increase of 28% in the first nine months of 2021, primarily due to higher volumes driven by higher demand. Increased advanced polymer results led to an EBITDA increase of 16% in the first nine months of 2021 due to higher volumes driven by increased demand for our products utilized in the automotive and construction end markets. During the third quarter of 2021, margin improvements in our advanced polymers business, driven by higher price spreads, resulted in an 8% increase in results. This increase was completely offset by lower compounding and solutions volumes due to constrained production in automotive, appliance and other end markets as a result of semiconductor shortages.

Refining Segment

Overview—EBITDA increased in the third quarter and first nine months of 2021 relative to the third quarter and first nine months of 2020 due to higher margins and the absence of a non-cash impairment charge recognized during the third quarter of 2020.

The following table sets forth selected financial information and heavy crude oil processing rates for the Refining segment and the U.S. refining market margins for the applicable periods. “Brent” is a light sweet crude oil and is one of the main benchmark prices for purchases of oil worldwide. “Maya” is a heavy sour crude oil grade produced in Mexico that is a relevant benchmark for heavy sour crude oils in the U.S. Gulf Coast market. References to industry benchmarks for refining market margins are to industry prices reported by Platts, a division of S&P Global.

			Three Months Ended September 30,												Nine Months Ended September 30,
Millions of dollars			2021						2020						2021						2020
Sales and other operating revenues			$	2,288					$	1,101					$	5,359					$	3,468
EBITDA			41						(692)						(150)						(799)
Thousands of barrels per day
Heavy crude oil processing rates			260						216						220						226
Market margins, dollars per barrel
Brent - 2-1-1			$	16.10					$	5.71					$	14.00					$	5.86
Brent - Maya differential			7.01						4.18						5.97						7.61
Total Maya 2-1-1			$	23.11					$	9.89					$	19.97					$	13.47

Revenues—Revenues increased by $1,187 million, or 108%, in the third quarter of 2021 compared to the third quarter of 2020 and by $1,891 million, or 55%, in the first nine months of 2021 compared to the first nine months of 2020. Higher product prices led to a revenue increase of 95% and 63% in the third quarter and first nine months of 2021, respectively, due to an average Brent crude oil price increase of approximately $30 and $25 per barrel in the third quarter and first nine months of 2021, respectively. Sales volumes increased in the third quarter of 2021 resulting in a 13% increase in revenue due to improved demand. In the first nine months of 2021, revenue decreased 8% as a result of a decline in volumes due to planned and unplanned outages, including the effects of unusually cold temperatures and associated electrical power outages that led to shutdowns of our manufacturing facilities in Texas in early 2021.

EBITDA—EBITDA increased by $733 million, or 106%, in the third quarter of 2021 compared to the third quarter of 2020 and by $649 million, or 81%, in the first nine months of 2021 compared to the first nine months of 2020. During the third quarter of 2020, we recognized a non-cash impairment charge of $582 million relating to our Houston refinery’s asset group with no corresponding charge in the third quarter and first nine months of 2021. The absence of a similar charge in the third quarter and first nine months of 2021 resulted in a 84% and 73% change in EBITDA, respectively. The remaining increase in EBITDA was primarily driven by margin improvements in the third quarter and first nine months of 2021. Margins improved due to an increase in the Maya 2-1-1 market margin resulting from higher demand for refined products. The first nine months of 2021 were also impacted by the absence of unplanned outages at our fluid catalytic cracking unit in 2021, which restricted the yield of higher-margin refined products in the first two quarters of 2020. This was partially offset by margin declines driven by unfavorable by-product crack spreads of $7 per barrel, higher costs of Renewable Identification Numbers (“RINs”) of approximately $1 per gallon and the absence of $60 million of favorable mark-to-market gains on hedges recognized in the first nine months of 2020.

We are currently weighing strategic options for our Refining segment, including a potential sale of our Houston refinery. While the refinery is a valuable asset, we believe that it may be even more valuable as part of a larger refining system. Any strategic option pursued for the Houston refinery remains subject to the approval of our Board of Directors and, assuming such approval is obtained, may require certain regulatory approvals or other closing conditions.

Technology Segment

Overview—EBITDA increased in the third quarter and first nine months of 2021 relative to the third quarter and first nine months of 2020 driven by higher licensing revenues and catalyst volumes.

The following table sets forth selected financial information for the Technology segment:

			Three Months Ended September 30,												Nine Months Ended September 30,
Millions of dollars			2021						2020						2021						2020
Sales and other operating revenues			$	238					$	193					$	586					$	492
EBITDA			155						111						341						279

Revenues—Revenues increased by $45 million, or 23%, in the third quarter of 2021 compared to the third quarter of 2020 and by $94 million, or 19%, in the first nine months of 2021 compared to the first nine months of 2020. Higher catalyst volumes resulted in a 8% and 6% increase in the third quarter and first nine months of 2021, respectively, primarily driven by strong demand. Changes in average catalyst sales price resulted in a revenue increase of 15% and 4% in the third quarter and first nine months of 2021, respectively. Licensing revenues increased by 3% in the first nine months of 2021. Favorable foreign exchange impacts increased revenue by 6% in the first nine months of 2021.

EBITDA—EBITDA increased by $44 million, or 40%, in the third quarter of 2021 compared to the third quarter of 2020 and increased by $62 million, or 22%, in the first nine months of 2021 compared to the first nine months of 2020. EBITDA improvements in the third quarter and first nine months of 2021 were driven by higher licensing revenue driven by more contracts reaching significant milestones. Favorable foreign exchange impacts resulted in an EBITDA increase of 1% and 5% in the third quarter and in the first nine months of 2021, respectively.

FINANCIAL CONDITION

Operating, investing and financing activities of continuing operations, which are discussed below, are presented in the following table:

			Nine Months Ended September 30,
Millions of dollars			2021						2020
Cash provided by (used in):
Operating activities			$	4,616					$	2,661
Investing activities			(797)						(2,307)
Financing activities			(3,627)						1,192

Operating Activities—Cash provided by operating activities of $4,616 million in the first nine months of 2021 reflected earnings adjusted for non-cash items, payments for employee bonuses, income taxes, income from equity investments, and cash used by the main components of working capital—Accounts receivable, Inventories and Accounts payable.

In the first nine months of 2021, the main components of working capital used $1,517 million of cash driven primarily by an increase in Accounts receivable and Inventories, partially offset by an increase in Accounts payable. The increase in Accounts receivable was driven by higher revenues across most businesses primarily driven by higher sales volumes along with higher average sales prices. The increase in Inventories was primarily due to an increase in raw material costs coupled with the replenishment of inventory levels to support anticipated business demands. The increase in Accounts payable was primarily driven by increased raw material costs.

Other operating activities in 2021 includes the effects of changes in income tax accruals, primarily driven by the increased pretax income, partially offset by income tax payments made during the period.

Cash provided by operating activities of $2,661 million in the first nine months of 2020 reflected earnings adjusted for non-cash items, payments for employee bonuses, income taxes, and cash provided by the main components of working capital.

In the first nine months of 2020, the main components of working capital provided $514 million of cash driven primarily by a decrease in Inventory. The decrease in Inventory was primarily driven by company-wide inventory reduction initiatives and lower raw material costs across most of our segments.

Investing Activities—We invest cash in investment-grade and other high-quality instruments that provide adequate flexibility to redeploy funds as needed to meet our cash flow requirements while maximizing yield.

In the first nine months of 2021 and 2020, we received proceeds of $309 million and $313 million, respectively, from our investments in equity securities and $346 million and $90 million, respectively, upon the maturity and sales of certain available-for-sale debt securities.

In the first nine months of 2020, we invested $270 million in debt securities that are deemed available-for-sale and $267 million in equity securities. Our investments in available-for-sale debt securities and equity securities are classified as Short-term investments.

In the first nine months of 2021, we made an equity contribution of $104 million to form Ningbo ZRCC LyondellBasell New Material Company Limited, a 50/50 joint venture with China Petroleum & Chemical Corporation. The joint venture will construct a new propylene oxide and styrene monomer unit in Zhenhai Ningbo, China. The joint venture is included in our I&D segment.

In the first nine months of 2020, we invested $472 million in cash for a 50% equity interest in the Bora LyondellBasell Petrochemical Co. Ltd joint venture. This joint venture began operations during the third quarter of 2020 and is included in our O&P—EAI segment.

In July 2021, foreign currency contracts with an aggregate notional value of €300 million expired. Upon settlement of these foreign currency contracts, we paid €300 million ($355 million at the expiry spot rate) to our counterparties and received $358 million from our counterparties.

Capital expenditures in the first nine months of 2021 totaled $1,285 million compared to $1,673 million in the first nine months of 2020. Approximately 60% of our capital spending in both periods was for profit-generating growth projects, primarily our PO/TBA plant, with the remaining spending supporting sustaining maintenance. We estimate capital spending will continue to increase in the fourth quarter of 2021 compared to prior quarters, while remaining flat on an annual basis compared to the prior year. See Note 12 to the Consolidated Financial Statements for additional information regarding capital spending by segment.

Financing Activities— In the first nine months of 2021 and 2020, we made payments of $78 million and $4 million to acquire approximately 1.0 million and 0.1 million, respectively, of our outstanding ordinary shares. We made dividend payments totaling $1,110 million and $1,053 million in the first nine months of 2021 and 2020, respectively.

In 2021, we repaid $2,275 million outstanding under our Term Loan due 2022, 4% Guaranteed Notes due 2023 and 2.875% Guaranteed notes due 2025.

In April 2020, LYB International Finance III, LLC (“LYB Finance III”), a wholly owned finance subsidiary of LyondellBasell Industries N.V. issued $500 million of 2.875% guaranteed notes due 2025 at a discounted price of 99.911%, $500 million of 3.375% guaranteed notes due 2030 at a discounted price of 99.813% and $1,000 million of 4.2% guaranteed notes due 2050 at a discounted price of 99.373%. Net proceeds from the sale of the notes totaled $1,974 million. We used the net proceeds from the sale of the notes for general corporate purposes, including to increase our liquidity and manage short-term debt maturities.

Additionally, in April 2020 we repaid $500 million of our Senior Revolving Credit Facility and $500 million of our U.S. Receivables Facility borrowed in March 2020 to increase our liquidity.

In May 2020, we terminated and cash settled $2,000 million in notional value of our cross-currency interest rate swaps, designated as cash flows hedges, maturing in 2021 and 2024. Upon termination of the swaps, we received $346 million from our counterparties.

In the first nine months of 2021 and 2020, we made net repayments of $103 million and received net proceeds of $194 million, respectively, through the issuance and repurchase of commercial paper instruments under our commercial paper program.

In the first nine months of 2020, we posted collateral of $238 million related to the positions held with our counterparties for certain forward-starting interest rate swaps.

Additional information related to the issuance of debt and commercial paper can be found in Note 6 to the Consolidated Financial Statements.

Liquidity and Capital Resources

Overview

We plan to fund our ongoing working capital, capital expenditures, debt service, dividends and other funding requirements with our current available liquidity and cash from operations, which could be affected by general economic, financial, competitive, legislative, regulatory, business and other factors, many of which are beyond our control. Cash and cash equivalents, cash from our short-term investments, cash from operating activities, proceeds from the issuance of debt, or a combination thereof, may be used to fund the purchase of shares under our share repurchase authorization.

We intend to continue to declare and pay quarterly dividends, with the goal of increasing the dividend over time, after giving consideration to our cash balances and expected results from operations. Our focus on funding our dividends while remaining committed to a strong investment grade balance sheet continues to be the foundation of our capital allocation strategy. In the near term, we are prioritizing debt reduction on our balance sheet.

Cash and Liquid Investments

As of September 30, 2021, we had Cash and cash equivalents and marketable securities classified as Short-term investments totaling $1,929 million, which includes $1,593 million in jurisdictions outside of the U.S., principally in the United Kingdom. There are currently no legal or economic restrictions that would materially impede our transfers of cash.

Credit Arrangements

At September 30, 2021, we had total debt, including current maturities, of $13,516 million, and $224 million of outstanding letters of credit, bank guarantees and surety bonds issued under uncommitted credit facilities.

We had total unused availability under our credit facilities of $3,004 million at September 30, 2021, which included the following:

• $2,104 million under our $2,500 million Senior Revolving Credit Facility, which backs our $2,500 million commercial paper program. Availability under this facility is net of outstanding borrowings, outstanding letters of credit provided under the facility and notes issued under our commercial paper program. A small portion of our availability under this facility is impacted by changes in the euro/U.S. dollar exchange rate. At September 30, 2021, we had $397 million of outstanding commercial paper, net of discount, no borrowings or letters of credit outstanding under this facility; and

• $900 million under our $900 million U.S. Receivables Facility. Availability under this facility is subject to a borrowing base of eligible receivables, which is reduced by outstanding borrowings and letters of credit, if any. At September 30, 2021, we had no borrowings or letters of credit outstanding under this facility. In June 2021, we extended the term of the facility to June 2024 in accordance with the terms of the agreement.

During the first nine months of 2021, we repaid $2,275 million outstanding under our Term Loan due 2022, 4% Guaranteed Notes due 2023 and 2.875% Guaranteed notes due 2025, and made net repayments of $103 million of our commercial paper. Additionally, in October 2021 we repaid $650 million outstanding under our Guaranteed Floating Rate Notes due 2023. We continue to prioritize debt reduction in 2021 and expect total reduction of our outstanding debt for the year to be up to $4 billion.

At any time and from time to time, we may repay or redeem our outstanding debt, including purchases of our outstanding bonds in the open market, through privately negotiated transactions or a combination thereof, in each case using cash and cash equivalents, cash from our short-term investments, cash from operating activities, proceeds from the issuance of debt or proceeds from asset divestitures. Any repayment or redemption of our debt will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. In connection with such repurchases or redemptions, we may incur cash and non-cash charges, which could be material in the period in which they are incurred.

In accordance with our current interest rate risk management strategy and subject to management’s evaluation of market conditions and the availability of favorable interest rates among other factors, we may from time to time enter into interest rate swap agreements to economically convert a portion of our fixed rate debt to variable rate debt or convert a portion of our variable rate debt to fixed rate debt.

Share Repurchases

In May 2021, our shareholders approved a proposal to authorize us to repurchase up to 34.0 million ordinary shares, through November 28, 2022 (“May 2021 Share Repurchase Authorization”), which superseded any prior repurchase authorizations. Our share repurchase authorization does not have a stated dollar amount, and purchases may be made through open market purchases, private market transactions or other structured transactions. Repurchased shares could be retired or used for general corporate purposes, including for various employee benefit and compensation plans. The maximum number of shares that may yet be purchased is not necessarily an indication of the number of shares that will ultimately be purchased. In the first nine months of 2021, we purchased approximately 1.0 million shares under our share repurchase authorization for $89 million.

As of October 27, 2021, we had approximately 32.2 million shares remaining under the current authorization. The timing and amounts of additional shares repurchased, if any, will be determined based on our evaluation of market conditions and other factors, including any additional authorizations approved by our shareholders. For additional information related to our share repurchase authorizations, see Note 10 to the Consolidated Financial Statements.

CURRENT BUSINESS OUTLOOK

We expect strong demand for our products to continue as vaccine rollouts drive further improvements in economic activity around the world. Over the next several quarters, we expect constrained consumer demand will extend strength in automotive, construction and other durable goods markets. While margins are likely to moderate due to increasing feedstock prices, energy costs and winter seasonality, we anticipate ongoing benefits from strong markets and tight industry supply.

We believe that our recent value-driven growth investments should benefit us over the coming years. With an improving outlook for cash generation, we remain committed to further strengthening our investment grade balance sheet through deleveraging in 2021. Additionally, we expect cash generation will continue to provide flexibility for opportunistic share repurchases.

ACCOUNTING AND REPORTING CHANGES

For a discussion of the potential impact of new accounting pronouncements on our Consolidated Financial Statements, see Note 2 to the Consolidated Financial Statements.

CAUTIONARY STATEMENT FOR THE PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify our forward-looking statements by the words “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions.

We based forward-looking statements on our current expectations, estimates and projections of our business and the industries in which we operate. We caution you that these statements are not guarantees of future performance. They involve assumptions about future events that, while made in good faith, may prove to be incorrect, and involve risks and uncertainties we cannot predict. Our actual outcomes and results may differ materially from what we have expressed or forecast in the forward-looking statements. Any differences could result from a variety of factors, including the following:

• the cost of raw materials represents a substantial portion of our operating expenses, and energy costs generally follow price trends of crude oil, natural gas liquids and/or natural gas; price volatility can significantly affect our results of operations and we may be unable to pass raw material and energy cost increases on to our customers due to the significant competition that we face, the commodity nature of our products and the time required to implement pricing changes;

• our operations in the United States (“U.S.”) have benefited from low-cost natural gas and natural gas liquids; decreased availability of these materials (for example, from their export or regulations impacting hydraulic fracturing in the U.S.) could reduce the current benefits we receive;

• if crude oil prices fall materially, or remain low relative to U.S. natural gas prices, we would see less benefit from low-cost natural gas and natural gas liquids and it could have a negative effect on our results of operations;

• industry production capacities and operating rates may lead to periods of oversupply and low profitability;

• we may face unplanned operating interruptions (including leaks, explosions, fires, weather-related incidents, mechanical failures, unscheduled downtime, supplier disruptions, labor shortages, strikes, work stoppages or other labor difficulties, transportation interruptions, spills and releases and other environmental incidents) at any of our facilities, which would negatively impact our operating results; for example, because the Houston refinery is our only refining operation, we would not have the ability to increase production elsewhere to mitigate the impact of any outage at that facility;

• changes in general economic, business, political and regulatory conditions in the countries or regions in which we operate could increase our costs, restrict our operations and reduce our operating results;

• our ability to execute our organic growth plans may be negatively affected by our ability to complete projects on time and on budget;

• our ability to acquire new businesses and assets and integrate those operations into our existing operations and make cost-saving changes in operations;

• uncertainties associated with worldwide economies could create reductions in demand and pricing, as well as increased counterparty risks, which could reduce liquidity or cause financial losses resulting from counterparty default;

• uncertainties related to the extent and duration of the pandemic-related decline in demand, or other impacts due to the pandemic in geographic regions or markets served by us, or where our operations are located, including the risk of prolonged recession;

• the negative outcome of any legal, tax and environmental proceedings or changes in laws or regulations regarding legal, tax and environmental matters may increase our costs, reduce demand for our products, or otherwise limit our ability to achieve savings under current regulations;

• any loss or non-renewal of favorable tax treatment under agreements or treaties, or changes in laws, regulations or treaties, may substantially increase our tax liabilities;

• we may be required to reduce production or idle certain facilities because of the cyclical and volatile nature of the supply-demand balance in the chemical and refining industries, which would negatively affect our operating results;

• we rely on continuing technological innovation, and an inability to protect our technology, or others’ technological developments could negatively impact our competitive position;

• we may be unable to meet our sustainability goals, including the ability to operate safely, increase production of recycled and renewable-based polymers, and reduce our emissions;

• we have significant international operations, and fluctuations in exchange rates, valuations of currencies and our possible inability to access cash from operations in certain jurisdictions on a tax-efficient basis, if at all, could negatively affect our liquidity and our results of operations;

• we are subject to the risks of doing business at a global level, including wars, terrorist activities, political and economic instability and disruptions and changes in governmental policies, which could cause increased expenses, decreased demand or prices for our products and/or disruptions in operations, all of which could reduce our operating results;

• if we are unable to comply with the terms of our credit facilities, indebtedness and other financing arrangements, those obligations could be accelerated, which we may not be able to repay; and

• we may be unable to incur additional indebtedness or obtain financing on terms that we deem acceptable, including for refinancing of our current obligations; higher interest rates and costs of financing would increase our expenses.

Any of these factors, or a combination of these factors, could materially affect our future results of operations and the ultimate accuracy of the forward-looking statements. Our management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or prior earnings levels.

All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section and any other cautionary statements that may accompany such forward-looking statements. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements.