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

During the third quarter of 2022 our results declined compared to the second quarter of 2022. Higher energy costs, new supply and weaker markets pressured global petrochemical margins. Global demand for our products utilized in consumer packaging remained stable, but demand from durable goods markets softened. In Europe, olefins, polyolefins and intermediate chemicals markets encountered significantly higher energy costs and weak demand. In response to these challenging conditions, we postponed the restart of our ethylene cracker in France until the first quarter of 2023 and reduced operating rates across our global asset base to match lower demand. In China, markets remained weak due to zero-COVID measures and tepid growth. In North America, new supply and inventory destocking led to declines in polyolefins prices. The impacts of higher energy, raw material, labor and transportation costs were reflected in our Advanced Polymers Solutions results. Our oxyfuels and refining businesses continued to earn margins above historical averages. Lastly we launched our value enhancement program, which we expect will generate $750 million in recurring annual EBITDA by the end of 2025.

During the first nine months of 2022 our results decreased compared to the first nine months of 2021, primarily due to lower results in our O&P—Americas segment driven by lower olefin margins, and in our O&P—EAI segment driven by lower volumes and margins across most businesses, lower income from equity investments and the unfavorable impacts of foreign exchange. These declines were partially offset by higher margins in our Refining and Intermediates & Derivatives segments.

During the third quarter and first nine months of 2022 we generated $1,414 million and $4,515 million in cash from operating activities, respectively. We remain committed to a disciplined approach to capital allocation. During the first nine months of 2022 we paid dividends of $2,859 million to shareholders, which included a special dividend and increased quarterly dividend, and repurchased $420 million worth of our shares.

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

			Three Months Ended												Nine Months Ended
			September 30,						June 30,												September 30,						September 30,
Millions of dollars			2022						2022												2022						2021
Sales and other operating revenues			$	12,250					$	14,838											$	40,245					$	33,343
Cost of sales			11,088						12,267												34,491						26,463
Impairments			—						69												69						—
Selling, general and administrative expenses			319						329												976						927
Research and development expenses			31						32												95						91
Operating income			812						2,141												4,614						5,862
Interest expense			(70)						(58)												(202)						(366)
Interest income			7						4												13						8
Other income (expense), net			4						(86)												(63)						27
(Loss) income from equity investments			(26)						22												25						389
Income from continuing operations before income taxes			727						2,023												4,387						5,920
Provision for income taxes			154						378												848						1,028
Income from continuing operations			573						1,645												3,539						4,892
Loss from discontinued operations, net of tax			(1)						(1)												(3)						(1)
Net income			572						1,644												3,536						4,891
Other comprehensive income (loss), net of tax –
Financial derivatives			23						102												213						132
Unrealized losses on available-for-sale debt securities			—						—												—						(1)
Defined benefit pension and other postretirement benefit plans			51						78												134						56
Foreign currency translations			(169)						(161)												(355)						(127)
Total other comprehensive (loss) income, net of tax			(95)						19												(8)						60
Comprehensive income			$	477					$	1,663											$	3,528					$	4,951

RESULTS OF OPERATIONS

Revenues—Revenues decreased by $2,588 million, or 17%, in the third quarter of 2022 compared to the second quarter of 2022. Average sales prices were lower for many of our products as sales prices generally correlate with crude oil prices, which decreased relative to the second quarter of 2022 coupled with lower demand across most of our segments and increased industry supply in our O&P*—*Americas and I&D segments. These lower prices led to a 12% decrease in revenue. Lower volumes driven by reduced demand resulted in a 3% decrease in Revenues. Unfavorable foreign exchange impacts resulted in a 2% decrease in Revenues.

Revenues increased by $6,902 million, or 21%, in the first nine months of 2022 compared to the first nine months of 2021. Average sales prices were higher for many of our products as sales prices generally correlate with crude oil prices, which increased relative to the first nine months of 2021. These higher prices led to a 22% increase in revenue. Higher volumes driven by improved demand resulted in a 3% increase in Revenues. Unfavorable foreign exchange impacts resulted in a 4% decrease in Revenues.

Cost of Sales—Cost of sales decreased by $1,179 million, or 10%, in the third quarter of 2022 compared to the second quarter of 2022. These decreases were primarily related to lower feedstock costs.

Cost of sales increased $8,028 million, or 30%, in the first nine months of 2022 compared to the first nine months of 2021. These increases were primarily related to higher feedstock and energy costs.

Operating Income—Operating income decreased by $1,329 million, or 62%, in the third quarter of 2022 compared to the second quarter of 2022. Operating income in our O&P*—Americas, I&D, Refining, O&P—* EAI, APS and Technology segments decreased $377 million, $345 million, $324 million, $207 million, $62 million, and $24 million, respectively.

Operating income decreased by $1,248 million, or 21%, in the first nine months of 2022 compared to the first nine months of 2021. Operating income in our O&P*—Americas, O&P—*EAI, APS and Technology segments decreased by $1,598 million, $998 million, $73 million and $27 million, respectively. These decreases were partially offset by increases in Operating income in our Refining and I&D segments of $868 million and $565 million, respectively.

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 decreased by $48 million, or 218%, in the third quarter of 2022 compared to the second quarter of 2022 and by $364 million, or 94%, in the first nine months of 2022 compared to the first nine months of 2021. The decrease in the third quarter of 2022 compared to the second quarter of 2022 was primarily driven by decreases in our O&P*—EAI segment primarily driven by lower margins for joint ventures in the Middle East and Europe. The decrease in the first nine months of 2022 compared to the first nine months of 2021 was primarily driven by decreases in our O&P—*EAI segment as a result of margin compression largely attributable to decreased spreads for our integrated cracker joint venture in China, which remained challenged by weak markets due to zero-COVID measures and logistical challenges.

Income Taxes—Our effective income tax rate for the third quarter of 2022 was 21.2% compared with 18.7% for the second quarter of 2022. The higher effective tax rate for the third quarter of 2022 is primarily attributable to decreased exempt income and return to accrual adjustments of 5.1% and 1.9% respectively. These increases were partially offset by a 5.3% decrease in our effective income tax rate due to changes in pre-tax income in countries with varying statutory tax rates.

Our effective income tax rate for the first nine months of 2022 was 19.3% compared with 17.4% for the first nine months of 2021. In the first nine months of 2021, we benefited from return to accrual adjustments primarily associated with a step-up of certain Italian assets to fair market value and benefits resulting from the Coronavirus Aid, Relief, and Economic Security Act, also known as “CARES Act” of 2.0% and 1.1%, respectively; such benefits did not impact our effective tax rate in the first nine months of 2022. These increases were partially offset by 1.4% decrease in our effective income tax rate due to changes in pre-tax income in countries with varying statutory tax rates.

Our income tax results are discussed further in Note 9 to the Consolidated Financial Statements.

Comprehensive Income—Comprehensive income decreased by $1,186 million in the third quarter of 2022 compared to the second quarter of 2022, and by $1,423 million in the first nine months of 2022 compared to the first nine months of 2021, primarily due to declines in net income. The activities from the remaining components of Comprehensive income are discussed below.

Financial derivatives designated as cash flow hedges, primarily our forward-starting interest rate swaps, led to a decrease in Comprehensive income of $79 million in the third quarter of 2022 compared to the second quarter of 2022, and an increase of $81 million in the first nine months of 2022 compared to the first nine months of 2021 due to periodic changes in the benchmark interest rates, combined with less notional outstanding during the third quarter of 2022.

Defined benefit pension and other postretirement benefit plans led to an increase in Comprehensive income of $78 million in the first nine months of 2022 compared to the first nine months of 2021, primarily resulting from pension settlements.

We recognized additional foreign currency translation losses in Comprehensive income of $228 million in the first nine months of 2022 compared to the first nine months of 2021, primarily due to the strengthening of the U.S. dollar relative to the euro.

See Note 7, 8 and 11 to our Consolidated Financial Statements for further discussions.

Segment Analysis

We use earnings from continuing operations 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 13 to our Consolidated Financial Statements.

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

			Three Months Ended												Nine Months Ended
			September 30,						June 30,												September 30,						September 30,
Millions of dollars			2022						2022												2022						2021
Sales and other operating revenues:
O&P*—*Americas segment			$	3,566					$	4,069											$	11,230					$	10,990
O&P*—*EAI segment			2,948						3,714												10,424						9,960
I&D segment			3,283						3,766												10,388						7,246
APS segment			1,294						1,425												4,127						3,892
Refining segment			2,752						3,788												9,260						5,359
Technology segment			173						194												548						586
Other, including intersegment eliminations			(1,766)						(2,118)												(5,732)						(4,690)
Total			$	12,250					$	14,838											$	40,245					$	33,343
Operating income (loss):
O&P*—*Americas segment			$	391					$	768											$	1,887					$	3,485
O&P*—*EAI segment			(86)						121												173						1,171
I&D segment			290						635												1,393						828
APS segment			38						100												226						299
Refining segment			98						422												668						(200)
Technology segment			82						106												281						308
Other, including intersegment eliminations			(1)						(11)												(14)						(29)
Total			$	812					$	2,141											$	4,614					$	5,862
Depreciation and amortization:
O&P*—*Americas segment			$	149					$	144											$	437					$	427
O&P*—*EAI segment			43						42												132						150
I&D segment			83						81												245						264
APS segment			26						25												80						83
Refining segment			9						2												11						58
Technology segment			8						10												28						34
Total			$	318					$	304											$	933					$	1,016
Income (loss) from equity investments:
O&P*—*Americas segment			$	19					$	29											$	81					$	94
O&P*—*EAI segment			(39)						(1)												(39)						263
I&D segment			(6)						(6)												(17)						32
Total			$	(26)					$	22											$	25					$	389

			Three Months Ended												Nine Months Ended
			September 30,						June 30,												September 30,						September 30,
Millions of dollars			2022						2022												2022						2021
Other income (expense), net:
O&P*—*Americas segment			$	—					$	(36)											$	(30)					$	5
O&P*—*EAI segment			(1)						(3)												(2)						10
I&D segment			(7)						(35)												(40)						2
APS segment			2						(7)												3						3
Refining segment			(1)						(6)												(7)						(8)
Technology segment			2						(4)												(2)						(1)
Other, including intersegment eliminations			9						5												15						16
Total			$	4					$	(86)											$	(63)					$	27
EBITDA:
O&P*—*Americas segment			$	559					$	905											$	2,375					$	4,011
O&P*—*EAI segment			(83)						159												264						1,594
I&D segment			360						675												1,581						1,126
APS segment			66						118												309						385
Refining segment			106						418												672						(150)
Technology segment			92						112												307						341
Other, including intersegment eliminations			8						(6)												1						(13)
Total			$	1,108					$	2,381											$	5,509					$	7,294

Olefins and Polyolefin*—*Americas Segment

Overview—EBITDA in the third quarter of 2022 decreased compared to second quarter of 2022 driven by a decline in olefins and polyolefins margins. EBITDA decreased in the first nine months of 2022 relative to the first nine months of 2021 primarily driven by lower olefins margins.

*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 and second quarters of 2022, and the first nine months of 2022 and 2021, approximately 65% to 75% 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												Nine Months Ended
			September 30,						June 30,												September 30,						September 30,
Millions of dollars			2022						2022												2022						2021
Sales and other operating revenues			$	3,566					$	4,069											$	11,230					$	10,990
Income from equity investments			19						29												81						94
EBITDA			559						905												2,375						4,011

Revenue—Revenues for our O&P*—*Americas segment decreased by $503 million, or 12%, in the third quarter of 2022 compared to the second quarter of 2022 and increased by $240 million, or 2%, in the first nine months of 2022 compared to the first nine months of 2021.

Third quarter of 2022 versus second quarter of 2022—Lower average sales prices resulted in a revenue decrease of 16% primarily driven by lower demand and an increase in industry supply for polyethylene and polypropylene. Revenue increased by 4% as a result of higher sales volumes for olefins.

First nine months of 2022 versus first nine months of 2021—Higher average sales prices for co-products resulted in a 1% increase in revenue primarily driven by higher demand combined with tight market conditions. Higher sales volumes resulted in a revenue increase of 1% as the first nine months of 2021 were impacted by the effects of unusually cold temperatures and associated electrical power outages that led to shutdowns of manufacturing facilities in Texas.

EBITDA—EBITDA decreased by $346 million, or 38%, in the third quarter of 2022 compared to the second quarter of 2022 and decreased by $1,636 million, or 41%, in the first nine months of 2022 compared to the first nine months of 2021.

Third quarter of 2022 versus second quarter of 2022—Lower olefins results led to a 22% decrease in EBITDA primarily due to lower margins driven by lower co-product prices along with a decline in the average sales price of ethylene. Lower polyethylene results led to a 17% decrease in EBITDA due to lower margins driven by lower average sales prices.

First nine months of 2022 versus first nine months of 2021—Lower olefins results led to a 33% decrease in EBITDA due to lower margins driven by higher feedstock and energy costs coupled with a decline in the average sales price of ethylene. Lower polyethylene results led to a 4% decrease in EBITDA. This change was driven by lower margins as a result of lower spreads partially offset by higher volumes. Lower polypropylene results led to a 3% decrease in EBITDA. Approximately 65% of this change was driven by lower margins as a result of lower spreads with the remainder due to a decrease in volumes due to unplanned downtime.

Olefins and Polyolefin*—*Europe, Asia, International Segment

Overview—EBITDA decreased in the third quarter of 2022 compared to the second quarter of 2022 primarily due to lower margins across all businesses and an increase in loss from equity investments. EBITDA decreased in the first nine months of 2022 relative to the first nine months of 2021 as a result of lower margins and volumes across all businesses, lower income from equity investments and the unfavorable impacts of foreign exchange.

During the first nine months of 2022, we had planned and unplanned maintenance resulting in ethylene cracker operating rates of approximately 70% of capacity compared to 95% of capacity during the nine months ended September 30, 2021.

Ethylene Raw Materials—In Europe, naphtha is the primary raw material for our ethylene production and represented approximately 70% of the raw materials used in the third and second quarters of 2022 and the first nine months of 2022 and 2021.

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

			Three Months Ended												Nine Months Ended
			September 30,						June 30,												September 30,						September 30,
Millions of dollars			2022						2022												2022						2021
Sales and other operating revenues			$	2,948					$	3,714											$	10,424					$	9,960
(Loss) income from equity investments			(39)						(1)												(39)						263
EBITDA			(83)						159												264						1,594

Revenue—Revenues decreased by $766 million, or 21%, in the third quarter of 2022 compared to the second quarter of 2022 and increased by $464 million, or 5%, in the first nine months of 2022 compared to the first nine months of 2021.

Third quarter of 2022 versus second quarter of 2022—Lower average sales prices resulted in a 14% decrease in revenue as sales prices generally correlate with crude oil prices, which on average, decreased compared to the second quarter of 2022, coupled with lower demand driven by higher energy costs. Unfavorable foreign exchange impacts resulted in a revenue decrease of 4%. Lower volumes resulted in a revenue decrease of 3% primarily due to lower demand.

First nine months of 2022 versus first nine months of 2021—Higher average sales prices resulted in a 19% increase in revenue as sales prices generally correlate with crude oil prices, which on average, increased compared to the first nine months of 2021. Unfavorable foreign exchange impacts resulted in a revenue decrease of 8%. Lower volumes resulted in a revenue decrease of 6% primarily due to lower demand along with planned and unplanned maintenance.

EBITDA—EBITDA decreased by $242 million, or 152%, in the third quarter of 2022 compared to the second quarter of 2022 and by $1,330 million, or 83%, in the first nine months of 2022 compared to the first nine months of 2021.

In the second quarter of 2022, we recognized a $69 million non-cash impairment charge in conjunction with the sale of our polypropylene manufacturing facility located in Australia, see Note 13 to the Consolidated Financial Statements for additional information. The charge resulted in a 43% increase in EBITDA for the third quarter of 2022 compared to the second quarter of 2022 and a 4% decrease in EBITDA for the first nine months of 2022 compared to the first nine months of 2021.

Third quarter of 2022 versus second quarter of 2022—Lower polyethylene and polypropylene results led to a 118% decrease in EBITDA primarily driven by lower margins as a result of higher energy costs and lower spreads due to decreased demand. Lower olefins results led to a 47% decrease in EBITDA primarily driven by lower margins as a result of lower ethylene and co-product prices. Increased losses from our equity investments led to a decrease in EBITDA of 25% mainly attributable to lower margins in the Middle East and Europe. Unfavorable foreign exchange impacts resulted in a 6% decrease in EBITDA.

First nine months of 2022 versus first nine months of 2021—Lower polyethylene and polypropylene results led to a 33% decrease in EBITDA. Approximately 65% of the change was driven by decreased margins resulting from higher energy costs and lower spreads with the remainder due to a decrease in volumes driven by lower demand. Lower olefins results led to a 21% decrease in EBITDA, which was equally driven by lower volumes due to planned and unplanned maintenance and lower margins resulting from higher feedstock and energy costs which outpaced increased ethylene prices. Lower income from our equity investments led to a decrease in EBITDA of 19% mainly attributable to lower spreads. Unfavorable foreign exchange impacts resulted in an 8% decrease in EBITDA.

Intermediates and Derivatives Segment

Overview—EBITDA decreased in the third quarter of 2022 compared to the second quarter of 2022, primarily driven by margin compression across most businesses. EBITDA increased in the first nine months of 2022 compared to the first nine months of 2021, primarily driven by oxyfuels and related products margin improvements.

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												Nine Months Ended
			September 30,						June 30,												September 30,						September 30,
Millions of dollars			2022						2022												2022						2021
Sales and other operating revenues			$	3,283					$	3,766											$	10,388					$	7,246
(Loss) income from equity investments			(6)						(6)												(17)						32
EBITDA			360						675												1,581						1,126

Revenue—Revenues decreased by $483 million, or 13%, in the third quarter of 2022 compared to the second quarter of 2022 and increased by $3,142 million, or 43%, in the first nine months of 2022 compared to the first nine months of 2021.

Third quarter of 2022 versus second quarter of 2022—Lower average sales prices resulted in a 14% decrease in revenue as sales prices generally correlate with crude oil prices, which, on average, decreased compared to the second quarter of 2022, coupled with lower demand and increased industry supply. Unfavorable foreign exchange impacts resulted in a revenue decrease of 2%. Sales volumes improved resulting in a 3% increase in revenue, largely due to the absence of planned and unplanned outages experienced during the second quarter of 2022.

First nine months of 2022 versus first nine months of 2021—Higher average sales prices resulted in a 36% increase in revenue as sales prices generally correlate with crude oil prices, which, on average, increased compared to the same period in 2021, coupled with lower industry supply. Sales volumes improved resulting in an 11% increase in revenue as the first nine months of 2021 were impacted by unusually cold temperatures and associated electrical power outages that led to shutdowns of our manufacturing facilities in Texas. Unfavorable foreign exchange impacts resulted in a revenue decrease of 4%.

EBITDA—EBITDA decreased by $315 million, or 47%, in the third quarter of 2022 compared to the second quarter of 2022 and increased by $455 million, or 40%, in the first nine months of 2022 compared to the first nine months of 2021.

In the second quarter of 2022, we recognized a non-cash pension settlement loss of $37 million, see Note 8 to the Consolidated Financial Statements for additional information. This loss resulted in a 5% increase in EBITDA for the third quarter of 2022 compared to the second quarter of 2022 and a 3% decrease in EBITDA for the first nine months of 2022 compared to the first nine months of 2021.

Third quarter of 2022 versus second quarter of 2022—Intermediate chemicals and oxyfuels and related products results decreased EBITDA by 31% and 14%, respectively, primarily driven by lower margins due to lower average sales prices. Propylene oxide and derivatives results led to an EBITDA decrease of 8%. Approximately 65% of the change was due to lower margins driven by higher energy costs and lower average sales prices with the remainder due to lower volumes resulting from lower demand.

First nine months of 2022 versus first nine months of 2021—Oxyfuels and related products results increased EBITDA by 48% primarily driven by margin improvement as a result of higher sales prices. Propylene oxide and derivatives results increased EBITDA by 6% which was equally driven by improved margins due to tight market supply and increased volumes due to higher demand. Unfavorable foreign exchange impacts resulted in a 5% decrease in EBITDA. Lower income from our equity investments led to a decrease in EBITDA of 4% mainly attributable to margin compression in Asia.

Advanced Polymer Solutions Segment

Overview—EBITDA in the third quarter of 2022 relative to the second quarter of 2022 was lower due to a decline in the results of both advanced polymers and compounding and solutions. EBITDA in the first nine months of 2022 relative to the first nine months of 2021 was lower due to a decline in compounding and solutions results partially offset by improved advanced polymers results.

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

			Three Months Ended												Nine Months Ended
			September 30,						June 30,												September 30,						September 30,
Millions of dollars			2022						2022												2022						2021
Sales and other operating revenues			$	1,294					$	1,425											$	4,127					$	3,892
EBITDA			66						118												309						385

Revenue—Revenues decreased by $131 million, or 9%, in the third quarter of 2022 compared to the second quarter of 2022 and increased by $235 million, or 6%, in the first nine months of 2022 compared to the first nine months of 2021.

Third quarter of 2022 versus second quarter of 2022—Foreign exchange impacts resulted in a revenue decrease of 4%. Average sales price decreased resulting in a 3% decrease in revenue as sales prices generally correlate with crude oil prices, which, on average, decreased compared to the second quarter of 2022. Sales volumes decreased resulting in a 2% decrease in revenue stemming from lower demand.

First nine months of 2022 versus first nine months of 2021—Average sales price increased resulting in a 18% increase in revenue as sales prices generally correlate with crude oil prices, which, on average, increased compared to the first nine months of 2021. Foreign exchange impacts resulted in a revenue decrease of 9%. Sales volumes decreased resulting in a 3% decrease in revenue stemming from constraints in automotive production as a result of component shortages.

EBITDA—EBITDA decreased by $52 million, or 44%, in the third quarter of 2022 compared to the second quarter of 2022 and by $76 million, or 20%, in the first nine months of 2022 compared to the first nine months of 2021.

In the second quarter of 2022, we recognized a non-cash pension settlement loss of $8 million, see Note 8 to the Consolidated Financial Statements for additional information. The loss resulted in a 7% increase in EBITDA for the third quarter of 2022 compared to the second quarter of 2022 and a 2% decrease in EBITDA for the first nine months of 2022 compared to the first nine months of 2021.

Third quarter of 2022 versus second quarter of 2022—Advanced polymers and compounding and solutions results led to an EBITDA decrease of 31% and 19%, respectively. Approximately 70% of the change for both advanced polymers and compounding and solutions was due to lower margins driven by higher costs with the remainder due to lower volumes resulting from lower demand.

First nine months of 2022 versus first nine months of 2021—Compounding and solutions results led to an EBITDA decrease of 20%. Approximately 60% of the change was due to lower volumes as described above with the remainder driven by margin compression. Advanced polymers results increased by 6% driven by margin improvements due to higher spreads. Unfavorable foreign exchange impacts resulted in a EBITDA decrease of 7%.

Refining Segment

Overview—EBITDA decreased in the third quarter of 2022 relative to the second quarter of 2022 due to lower margins and planned downtime. EBITDA increased in the first nine months of 2022 compared to the first nine months of 2021 due to higher margins.

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												Nine Months Ended
			September 30,						June 30,												September 30,						September 30,
Millions of dollars			2022						2022												2022						2021
Sales and other operating revenues			$	2,752					$	3,788											$	9,260					$	5,359
EBITDA			106						418												672						(150)
Thousands of barrels per day
Heavy crude oil processing rates			215						252												241						220
Market margins, dollars per barrel
Brent - 2-1-1			$	33.18					$	47.83											$	34.45					$	14.00
Brent - Maya differential			13.35						8.00												9.95						5.97
Total Maya 2-1-1			$	46.53					$	55.83											$	44.40					$	19.97

Revenue—Revenues decreased by $1,036 million, or 27%, in the third quarter of 2022 compared to the second quarter of 2022 and increased by $3,901 million, or 73%, in the first nine months of 2022 compared to the first nine months of 2021.

Third quarter of 2022 versus second quarter of 2022—Lower product prices led to a revenue decrease of 15% due to an average Brent crude oil price decrease of approximately $14 per barrel. Sales volumes declined resulting in a 12% decrease in revenue due to planned downtime.

First nine months of 2022 versus first nine months of 2021—Higher product prices led to a revenue increase of 62% due to an average Brent crude oil price increase of approximately $35 per barrel. Sales volumes increased resulting in a 11% increase in revenue due to improved demand as refined products markets recovered from the impacts of the COVID-19 pandemic and improved supply as the first nine months of 2021 were impacted by 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.

EBITDA—EBITDA decreased by $312 million, or 75%, in the third quarter of 2022 compared to the second quarter of 2022 and increased by $822 million, or 548%, in the first nine months of 2022 compared to the first nine months of 2021.

In April 2022 we announced our decision to cease operation of our Houston Refinery no later than the end of 2023. In the third quarter of 2022, we expensed accelerated lease amortization costs and personnel costs of $36 million and $48 million, respectively, see Note 13 to the Consolidated Financial Statements for additional information. These costs resulted in a 20% and 56% decrease in EBITDA for the third quarter of 2022 compared to the second quarter of 2022 and the first nine months of 2022 compared to the first nine months of 2021, respectively.

Third quarter of 2022 versus second quarter of 2022—EBITDA decreased approximately 38% due to margin declines as a result of a decrease in the Maya 2-1-1 market margin with the remainder due to lower volumes as a result of planned downtime.

First nine months of 2022 versus first nine months of 2021—Volumes increased as demand improved for refined products which resulted in a 15% increase in EBITDA. The remaining increase in EBITDA was driven by margin improvements due to an increase in the Maya 2-1-1 market margin.

Technology Segment

Overview—EBITDA decreased in the third quarter of 2022 compared to the second quarter of 2022 from lower licensing revenues together with lower catalyst margins and volumes. EBITDA decreased in the first nine months of 2022 relative to the first nine months of 2021 driven by lower licensing revenues and the unfavorable impacts of foreign exchange partly offset by higher catalyst volumes.

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

			Three Months Ended												Nine Months Ended
			September 30,						June 30,												September 30,						September 30,
Millions of dollars			2022						2022												2022						2021
Sales and other operating revenues			$	173					$	194											$	548					$	586
EBITDA			92						112												307						341

Revenue—Revenues decreased by $21 million, or 11%, in the third quarter of 2022 compared to the second quarter of 2022 and by $38 million, or 6%, in the first nine months of 2022 compared to the first nine months of 2021.

Third quarter of 2022 versus second quarter of 2022—Unfavorable foreign exchange impacts decreased revenue by 5%. Lower catalyst volumes resulted in a 4% decrease in revenue due to lower demand. Licensing revenues decreased by 1% as fewer contracts reached significant milestones during the quarter. Changes in average catalyst sales price resulted in a revenue decrease of 1%.

First nine months of 2022 versus first nine months of 2021—Unfavorable foreign exchange impacts resulted in an 9% decrease in revenue. Lower licensing revenues resulting from fewer contracts reaching significant milestones drove a 2% decrease in revenue. Changes in average catalyst sales price resulted in a 1% decrease in revenue. Higher catalyst volumes resulted in a 6% increase in revenue primarily driven by strong demand.

EBITDA—EBITDA decreased by $20 million, or 18%, in the third quarter of 2022 compared to the second quarter of 2022 and by $34 million, or 10%, in the first nine months of 2022 compared to the first nine months of 2021.

Third quarter of 2022 versus second quarter of 2022—Lower licensing revenues resulting from fewer contracts reaching significant milestones drove a 6% decrease in EBITDA. Lower catalyst margins resulted in an EBITDA decrease of 6% due to higher energy costs and lower catalyst volumes decreased EBITDA by 4% driven by lower demand. Unfavorable foreign exchange impacts resulted in a 4% decrease in EBITDA.

First nine months of 2022 versus first nine months of 2021—Lower licensing revenues resulting from fewer contracts reaching significant milestones drove a 10% decrease in EBITDA. Unfavorable foreign exchange impacts resulted in an EBITDA decrease of 9%. Higher catalyst volumes driven by stronger demand resulted in an EBITDA increase of 8%.

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			2022						2021
Cash provided by (used in):
Operating activities			$	4,515					$	4,616
Investing activities			(1,433)						(797)
Financing activities			(2,929)						(3,627)

Operating Activities—Cash provided by operating activities of $4,515 million in the first nine months of 2022 primarily reflected earnings adjusted for non-cash items and by the main components of working capital—Accounts receivable, Inventories and Accounts payable.

In the first nine months of 2022, the main components of working capital used $267 million of cash driven primarily by an increase in Inventories partially offset by a decrease in Accounts receivable and an increase in Accounts payable. The increase in Inventories was primarily due to inventory build following planned and unplanned outages. The decrease in Accounts receivable was driven by lower revenues across most businesses primarily driven by lower average sales prices and lower sales volume. The increase in Accounts payable was primarily driven by higher energy costs and higher raw material costs for our Refining and I&D segments.

Cash provided by operating activities of $4,616 million in the first nine months of 2021 reflected earnings adjusted for non-cash items and cash used by the main components of working capital.

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.

Investing Activities—Capital expenditures in the first nine months of 2022 totaled $1,417 million compared to $1,285 million in the first nine months of 2021. Approximately 50% and 60% of our capital expenditures in the first nine months of 2022 and 2021, respectively, was for profit-generating growth projects, primarily our PO/TBA plant, with the remaining expenditures supporting sustaining maintenance. See Note 13 to the Consolidated Financial Statements for additional information regarding capital expenditures by segment.

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 2022 and 2021, we received proceeds of $8 million and $309 million, respectively, from the liquidation of our investment in equity securities. Additionally, in the first nine months of 2021, we received proceeds of $346 million from maturities of certain available-for-sale debt securities.

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 constructed a new propylene oxide and styrene monomer unit in Zhenhai Ningbo, China which began production in January 2022. The joint venture is included in our I&D segment.

In July 2022, foreign currency contracts with an aggregate notional value of €500 million expired. Upon settlement of these foreign currency contracts, we paid €500 million ($501 million at the expiry spot rate) to our counterparties and received $614 million from our counterparties.

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.

Financing Activities—We made dividend payments totaling $2,859 million, which included a combination of a special dividend of $5.20 per share and an increased quarterly dividend, and $1,110 million in the first nine months of 2022 and 2021, respectively. Additionally, in the first nine months of 2022 and 2021, we made payments of $420 million and $78 million to repurchase outstanding ordinary shares, respectively.

In the first nine months of 2022 and 2021, we received net proceeds of $96 million and made net repayments of $103 million, respectively, related to the issuance and repurchase of commercial paper instruments under our commercial paper program.

In the first nine months of 2022, we received a return of collateral of $238 million related to the positions held with our counterparties for certain forward-starting interest rate swaps.

In the first nine months of 2021, we repaid $1,450 million, $325 million and $500 million outstanding under our $4,000 million senior unsecured delayed draw term loan credit facility due March 2022, 4% Guaranteed Notes due 2023 and 2.875% Guaranteed notes due 2025, respectively.

Liquidity and Capital Resources

Overview

We plan to fund our working capital, capital expenditures, debt service, dividends and other cash 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.

Cash and Liquid Investments

As of September 30, 2022, we had Cash and cash equivalents totaling $1,480 million, which includes $919 million in jurisdictions outside of the U.S., primarily held in countries within the European Union and China. There are currently no legal or economic restrictions that would materially impede our transfers of cash.

Credit Arrangements

At September 30, 2022, we had total debt, including current maturities, of $11,316 million. Additionally, we had $209 million of outstanding letters of credit, bank guarantees and surety bonds issued under uncommitted credit facilities to support trade payables and other obligations.

We had total unused availability under our credit facilities of $3,850 million at September 30, 2022, which included the following:

• $2,950 million under our $3,250 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. At September 30, 2022, we had $300 million of outstanding commercial paper, net of discount, and 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, 2022, we had no borrowings or letters of credit outstanding under this facility.

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 2022, our shareholders approved a proposal to authorize us to repurchase up to 34.0 million ordinary shares, through November 27, 2023, 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 2022, we purchased approximately 4.4 million shares under our share repurchase authorizations for $406 million.

As of October 26, 2022, we had approximately 31.7 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 11 to the Consolidated Financial Statements.

CURRENT BUSINESS OUTLOOK

In October, demand from consumer packaging, oxyfuels and refining markets remains strong. Nonetheless, persistent inflation and high energy costs coupled with weaker seasonal demand are likely to drive further margin compression across most of the company's businesses in the fourth quarter. Challenging conditions are expected to continue in European and Asian markets. To match the global demand outlook, we expect fourth quarter average operating rates of 75% for assets in our O&P*—Americas segment, 60% for European assets in our O&P—*EAI segment and 75% for assets in our I&D segment. The company remains watchful for market improvements in China.

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;

• our ability to successfully implement initiatives identified pursuant to our value enhancement program and generate anticipated earnings;

• 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 may be unable to shut down the Houston refinery within the expected timeframe or incur additional charges or expenses;

• 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.