Doug Pike – VP – Investor Relations Jim Gallogly – CEO Karyn Ovelmen – CFO Sergey Vasnetsov – SVP – Strategic Planning and Transactions.

Arun Viswanathan – RBC Capital Markets Bob Koort – Goldman Sachs David Begleiter – Deutsche Bank. Jeff Zekauskas – JPMorgan Chase Kevin McCarthy – Bank of America Merrill Lynch Laurence Alexander – Jefferies P.J.

Juvekar – Citigroup Nils Wallin – CLSA Frank Mitsch – Wells Fargo Securities John McNulty – Credit Suisse Vincent Andrews – Morgan Stanley John Roberts – UBS Investment Bank, Research Division Hassan Ahmed – Alembic Global.

Hello, and welcome to the LyondellBasell teleconference. At the request of LyondellBasell, this conference is being recorded for instant replay purposes. Following today’s presentation, we will conduct the question-and-answer session. (Operator Instructions) I'd now like to turn the conference over to Mr. Doug Pike, Vice President, Investor Relations.

Sir, you may begin..

Hello and welcome to LyondellBasell's Third Quarter 2014 Teleconference. And I'm joined today by Jim Gallogly, our CEO; Karyn Ovelmen, our CFO; and Sergey Vasnetsov, our Senior Vice President of Strategic Planning & Transactions.

But before we begin the business discussion, I'd like to point out that a slide presentation accompanies today's call and is available on our Web site at www.lyb.com. I'd also like for you to note that statements made in this call relating to matters that are not historical facts are forward-looking statements.

And these forward-looking statements are based upon assumptions of management, which are believed to be reasonable at the time made and are subject to significant risks and uncertainties. And actual results could differ materially from those forward-looking statements.

And for more detailed information about the factors that could cause our actual results to differ materially, please refer to the cautionary statements in the presentation slides and our financial reports, which are available at www.lyb.com/InvestorRelations.

A reconciliation of non-GAAP financial measures to GAAP financial measures, together with any other applicable disclosures, including the earnings release, are currently available on our Website, at www.lyd.com.

And finally, I'd like to point out that a recording of this call will be available by telephone beginning at 2 PM Eastern Time today until 11 PM Eastern Time on November 24th by calling 800-947-6627 in the United States and 1203-369-3974 outside the United States. And the pass code for both numbers is 3675.

Now during today's call, we'll focus on third quarter results, the current environment and the near-term outlook. And with that being said, I would like turn the call over to Jim..

Thank you for joining our earnings call. As Doug mentioned, a set of presentation slides accompanies this call and is available on our Website. Let’s first take a look at Slide Number 4 during the third quarter we generated EBITDA of $2.04 billion. This led to income from continuing operations of $1.26 billion and diluted earnings per share of $2.46.

These results marked out best quarter ever and the second consecutive quarter of record results. I would like to summarize a few highlights. Olefins and Polyolefins Americas achieved EBITDA of almost $1.2 billion. The first time this has been achieved.

European Olefins continued their above industry operating rates in the EAI segment again delivered EBITDA an excess of $300 million. During the quarter, we declared a regular interim dividend of $0.70 per share and repurchase to approximately 12 million shares. The strength of our results maybe best reflected in our last 12 months EBITDA and earnings.

During the period, we generated EBITDA of approximately $7.2 billion, net income of $4.6 billion and had earnings per share of $8.49. We will discuss individual business details later in the call.

Turning to slide number 5, you will see that our year-to-date safety performance is in line with results from the last several years and remains among the best in the industry. Operating safely is our first priority and always will be. Our goal is zero injuries and zero process incidents.

I would now like to turn the call over to Karyn to discuss our financial performance..

Thanks, Jim. Please turn to Slide number 6, which charts third quarter and last 12 month segment EBITDA. As Jim said, we are pleased to be recording our second consecutive quarter of record results. Within the segments, the O&P Americas business established a new record EBITDA of nearly $1.2 billion.

This marks the first time the business has exceeded $1 billion of EBITDA after almost $1 billion during second quarter. Compared to the second quarter, third quarter results benefited from strong ethane prices material cost and higher sale volumes. In O&P-EAI, our EBITDA of $323 million was $24 million higher than the second quarter.

This quarter results continue to trend of strong earnings and further demonstrates the progress made by our European team. Intermediates and Derivatives EBITDA of $383 million declined $47 million versus the second quarter. Derivatives continued to benefit from healthy demand and constraint supply in the market to do competitor advantages.

Our CP reserves decline primarily from lower volumes margins were compressed as a result of higher ethylene and persistently high bending raw material cost. Refining posted results in second quarters with EBITDA of $110 million or $27 million lower than the second quarter.

In addition to a declining (inaudible) during the quarter are results for impacted by scheduled maintenance on our (inaudible) units. Now segment EBITDA of $41 million was lower than the second quarter due to lower licensing revenue. During the quarter we introduced $45 million non-cash lower cost to market inventory charge.

This is generated from the decline in inventory evaluation. GAAP accounting requires is to flow through the P&L. There was somewhat majority of our inventory value based on 2010 market values. Slide 7, slide 7 provides the picture of our cash generation and use. During the third quarter, we generated $1.8 billion from our operations.

Our cash and short term securities balance decreased by approximately $600 million. We devoted $1.6 million to share repurchase and in dividends. Capital expenditure remains consistent with our full year guidance of approximately $1.6 billion.

Our cash and securities balance at the end of the quarter stood at $2.9 billion lower than the prior year by $1.5 billion as we continued to fund one of the largest share repurchase programs in the industry. Please turn to slide 8.

During the past 12 months, we generated $5.7 billion in cash from operations and raised approximately $1 billion from bond issuances. We devoted $6.7 billion for share repurchases and dividends. Another $1.5 billion went towards capital investment with approximately 50% towards growth projects.

Before I turn it over to Jim I also want to highlight that during the quarter we took steps to initiate a commercial paper program. This program is low cost way to increase flexibility within our cash management program. The program size enables borrowing up to $2 billion we anticipate starting the program at more modest levels.

The commercial paper program has been rated by Moody and S&P at prime 2 and A2 respectively. I will turn things back to Jim for a further discussion of our business results..

Thanks, Karyn. Let’s discuss segment performance beginning on Slide number 9 with Olefins and Polyolefins Americas. Third quarter EBITDA was approximately $1.2 billion a record quarter and $175 million higher than the second quarter. This segment realized the LCM inventory charge.

Olefins results grow the upside increasing by approximately $220 million from the prior quarter. Much of this upside was driven by higher ethylene prices resulting from tight industry supply driven by industry down time.

During the third quarter, our average price of ethylene increased by $0.08 per pound versus an industry benchmark that increased by nearly $0.05 per pound. We managed this by capitalizing unfavorable marketing conditions and sold approximately 15% of our total ethylene volume at strong spot prices during the quarter.

Additionally the cost of NGLs declined during the quarter. Ethylene accounted for approximately 75% of our ethylene production and an NGL represented 89%. Restart of our La Porte ethylene site following plant maintenance also contributed to the results to volume upside. Within Polyolefins, the polyethylene result increased by approximately $50 million.

The polyethylene spread over ethylene decreased by approximately $0.07 per pound. The spread declined was the result of the significant increase in our price of ethylene. Polyethylene prices increased late in the quarter leading to $0.01 per pound increase in the quarterly average price.

Demand for polyethylene continued to be strong and volume increased approximately 9%. We are seeing the full benefit from the expansion completed earlier in the year. Exports represented approximately 14% of the volume. Polypropylene results improved by approximately $10 million and 11% higher for sales volume.

We restarted our La Porte ethylene plant on July 20, falling at second quarter turnaround. You will recall that this restart was delayed and resulted in 20 days of down time during the third quarter.

We estimate that this impacted the third quarter production and subsequent sales by approximately 100 million pounds following the restart, La Porte ran at 106% of its original capacity for the remainder of the quarter. Five other ethylene plants produced at 96% of capacity during the quarter.

Late in September, our team started up the new furnaces at the La Porte plant. This adds 800 million pounds of annual ethylene capacity to our ethylene system or approximately 8%. This new capacity is the first in the series of expansions project that will add nearly 2.5 billion pounds to annual capacity.

Current global economic and crude market volatility is limiting visibility on future industry conditions. So far fall in crude oil prices have not materially impacted the US market. We continue to benefit from ethylene industry down time resulting in tight industry conditions and depressed ethylene demand.

NGL supply and inventory remains abundant and US ethylene industry continues to be significantly advantaged in the global market. However, the oil prices persists this should tight US Olefins margins overtime.

It should also be mentioned that we typically see declines in polyolefins demand around the holiday season, wind and weather usually impacts NGL prices as well. Let's turn to slide number 10 and review performance in the olefins and polyolefins Europe, Asia, and international segment.

Third quarter EBITDA was $343 million an increase of $24 million from the second quarter. Olefins results improved approximately $35 million versus the second quarter. A lower cost of Naphtha was responsible for most of the margin increase.

Approximately 55% of our ethylene production was sourced from advantage raw materials such as propane, butane and condensates. This was in line with the second quarter result. Overall, the feedstock advantage benefited results by approximately $70 million versus Naphtha.

Year-to-date, we estimate that advantage feedstock has contributed approximately $180 million over Naphtha cracking. Our ethylene plants operated at approximately 95% of capacity significantly above reported industry rates and consistent with our second quarter rate.

We believe the ability to run European asset hard with advantage feedstock is a distinct advantage over industry competitors. Polyolefins EBITDA results increased by approximately $15 million both polyethylene and polypropylene margins improved slightly. Seasonal demand and buying patterns contributed the volume declines of approximately 4%.

In buying polypropylene compounds and polybutene-1 EBITDA declined by approximately $15 million. Volumes declined following typical seasonal patterns and other industry schedules. Results for joint ventures declined from second quarter by $7 million. Scheduled and unscheduled maintenance contributed to the decline.

October demand has been relatively consistent with the third quarter. However, it's difficult to experience holiday related slow down later in the fourth quarter. During the fourth quarter, advantage feedstock or smaller contributor then during the summer months. We would expect to see a higher proportion of Naphtha cracking in this period.

Now please turn to slide number 11 for discussion of our intermediates and derivative segment. Third quarter EBITDA was $383 million approximately $47 million lower than the second quarter. Propylene oxide and derivative results increased by approximately $25 million versus the second quarter result.

We continue to benefit from tight propylene oxide and derivative market conditions following down time at our European competitor introduced facility. PO derivative margins increased as result. Combined P&L and derivative volumes increased to approximately 4%. Intermediate chemicals performance declined by approximately $50 million.

Result from lower by approximately $35 million. Margins declined as a result of rise in ethylene cost and persistently high benzene cost. Our methanol assets operated at 74% of capacity during the quarter as we continue to experience issues. We will conduct scheduled maintenance at the Channelview methanol plant during the first quarter of 2015.

Additionally results were impacted by unplanned down time in our ethylene oxide facility. Neither asset operated standards. Oxy fuels results declines by approximately $20 million. Sales declines in favor of piracy for chemical sales. Decline in gasoline prices lowered margins. However, we benefited from an increased octane premium.

Looking ahead to the fourth quarter, thus far conditions in our propylene oxide and derivative businesses are relatively unchanged. We anticipate that the incident at the competitor's propylene oxide will continue to benefit us. During the fourth quarter of propylene glycol business typically benefits from the beginning of the winter season.

Conversely, we typically experience the seasonal decline in our oxyfuel results. However, through last week, we have not yet experienced the decline. During the fourth quarter we are conducting plan maintenance on one of our Bay Porte POTBA plants. We have taken actions to minimize the fourth quarter impact.

Let's move to slide number 12 for our discussion of refining segment. Third quarter EBITDA was $110 million a decline of $27 million from the second quarter. During the third quarter, the Maya 2-1-1 spread averaged $24.35 per barrel down $2.66 from the $27.01 spread from the second quarter.

Due to favorable crude purchasing, our response in the refining spread declined by about half of the Maya benchmark. Crude throughput averaged 264,000 barrels per day during the third quarter. This throughput increase versus the second quarter contributed approximately $10 million to third quarter results.

Fuel products yields declined versus the second quarter due to the scheduled hydrodesulfurization catalyst change that I mentioned during our last earning call. RIN cost was relatively unchanged versus the second quarter. Canadian elite crude represented approximately 25% of our third quarter throughput.

Exports accounted for less than 5% of finished product fuel sales. October benchmark spread have averaged approximately $21 per barrel. Thus far RIN cost for the quarter a relatively unchanged. We anticipate receiving our first shipments of Canadian crude via the recently completed plant against south pipeline during the fourth quarter.

There is no significant refining maintenance planned during the fourth quarter. Our technology segment EBITDA totaled $41 million or $30 million lower than the second quarter. This decrease in EBITDA is a result of lower licensing revenue during the quarter.

This decrease represents typical fluctuation in the business and is not indicative of the change in underlying performance. Now please turn to slide number 13. During the third quarter, we delivered record EBITDA and earnings for the second consecutive quarter making this our best quarter ever.

We also added second consecutive quarter making this our best quarter ever. We also added 800 million pound of annual ethylene capacity at our La Porte site. Additionally we continue to purchase shares under repurchase program purchasing approximately 12 million shares during the quarter.

We finished the quarter with 504 million shares outstanding, a reduction of 73 million shares or approximately 30% since the program began. In the early of the fourth quarter, we have seen a significant decline in crude oil prices. Decline in crude oil prices typically impact global chemical prices and margins overtime.

Of course, decline in crude oil also lower some of our costs so the net impact is difficult to estimate. Many markets seem tight at present. So that should mitigate some of the impact. During the fourth quarter we typically experienced seasonal declines in oxyfuels and polyolefins results.

However, neither was significantly impacted during the first weeks of October. On our balance sheet headwinds, we should benefit from the recent ethylene capacity expansion at La Porte, we also expect the benefit from Canadian crude deliveries through the south pipeline.

I would like to spend a few minutes now discussing the new projects that we are developing and announced during the quarter. The first is new green field POT bay facility to be located along the US gulf coast. We plan to deliver this plant by 2019.

World scale facility will benefit from our proprietary POTBA technology and low cost natural gas based feedstocks. The project will increase our own PO capacity are approximately 35%. We also announced that we are evaluating to further expansion of Channelview ethylene facility.

This project potentially adds another 550 million pounds per year ethylene capacity in 2017. Based on 2013 industry benchmark margins, we completed this project could add annual EBITDA in the range of $200 million. Engineering work is already underway.

In total our US ethylene expansion projects will add approximately 2.5 billion pounds to our annual capacity. This is equivalent to a new olefins plant. Most of this additional capacity will be available about 2 years ahead of our competitors new green field plants and at a fraction of the cost. These advantages are significant.

It must be remembered that even at recent gas prices US-based ethylene production continues to an advantage of approximately $0.30 per pounds over Naphtha base production according to IHS benchmarks. Time will tell out price stay at this depressed level but the fundamentals of story remain intact and a growth projects are already coming on line.

I would also like to spend a minute discussing the new retirement. At the first day that I arrived at the company, I said that I didn’t join the team to simply help chapter 11 instead, I joined help create the world's greatest petrochemical company. I truly believe this was an achievable goal with the right strategy and the commitment to excellence.

We have been relentless in pursuing our back to basics strategy and we are realizing our goals. As you know our first priority was to achieve leading environmental health and safety performance and plant reliability. While we can always do better, we are now setting the benchmarks. We also worked to achieve financial strength.

Today the company's balance sheet is very strong. The company is fiscally fit. Controlling costs is part of our culture. We pride ourselves on flat to falling cost every year. As for growth, we have talked a lot about being the early bird. We have proven that identifying and capturing market opportunities quickly.

Our US expansion program is a great example of this. We are coming online sooner and that lower cost in our competition. We have robust expansion plans driven by our advantage positions. We have been taking steps over the last few years prepare for to retirement.

Through the formation of the management board, five executives now help me running the company's day-to-day operations. They review the same proposals and we strategize and make decisions together. We have an excellent team at all levels in the organization. The team has achieved the goal as I said when I arrived at the company.

By my score card, we may well be the best petrochemical company in the world. After five and half years of non-stop work, it's time for me to retire. Our supervisory board of directors has established a committee to choose my successor.

I will continue to serve as CEO and chairman at the management board to ensure an orderly transition pending the selection of my replacement. I am confident that there will be a seamless transition. Allow me to conclude my prepared remarks by saying that our team is busy. We are on top of all the details.

We recognized that while our past results may have been impressive, our future results are what really matters. We are committed to return -- to you our shareholders land of soil has a very bright future. We are now please to take questions Jessica..

Our first question does come from Arun Viswanathan with RBC Capital Markets. Your line is now open..

Hey guys thanks for taking my question. Sorry about that. I guess maybe you can just help us understand some of the comments in the press release a little bit more detail and how you look at it given past history, so crude house come down, you acknowledged that.

We expect over the next three or six months or year or so as far as ethylene margins is there a relationship that’s really closely tight together or is it loser and then do you expect any kind of demand response into your products?.

Okay. Let me take those kind of in order Arun. First oil price, having said that that happened quickly, oil prices sometime bounce right back so it's a bit difficult to tell at this point where oil prices will stabilize. They were much higher during much of the year so we will see what happens on that front.

There is overtime a relationship between the price say WTI and the price of our products and that there will be some clearing prices in Asia and to certain extend in Europe. General rule of thumb is $10 a barrel, may compete overtime to about $0.05 a pound on Naphtha base ethylene.

Having said that you also have to factor in supply-demand ratios at this point in time supply is extremely tight in United States. We have had as you saw from our extremely good O&P Americas results, very, very strong ethylene pricing and margins.

Spot prices for ethylene were over $0.70 a pound at certain points in time and we sold 15% of our capacity into that market. A number of our competitors are still down and the market is still extremely tight. So under those conditions prices don't fall very quickly. Polyethylene seems to be quite tight right now and is not available like that.

Orders don't get fill by some of our competitors. We have seen very strong demand, order books are full, so supply-demand in America seems pretty tight. In Europe is that same tightness seems to be there. We haven’t seen cancellation of orders on the fall in crude prices like sometimes happens. It's seems to be pretty solid.

I think because inventory levels have been very, very short in the convertors. So that kind of dynamic the market seems to be reasonably tight still. In Asia, prices have come down a bit but definitely not in line with fall in Naphtha prices at this point. Over time, we will see what happens in supply-demand. As I mentioned so far so good. .

Okay and then – so I guess based on that point then, do you expect the operating rates globally to be -- in the sense that could there be any kind of demand response from lower oil flowing through to increased polyethylene demand globally overtime?.

Well, demand rates could come down but usually that’s seen in Asia. We don't have any capacity there.

In Europe we ran at 95% olefins capacity the last two quarters in the row well above the industry operating rates have been kind of in the mid 80s and in United States we have all been running flat out, expect that to stop because we’ve got a advantage so in terms of assets of company we are running hard and you’ve seen that reflected in our numbers..

No, I’m sorry I was just asking if you think that lower oil could actually opening to respond or resulting in increase demand -- for your products?.

That’s difficult to say, there is always that theory there that could increase demand a bit but in our sense it takes more money in consumer’s pocket but again for our company we don’t expect that to have much impact because we are running our assets hard already in Europe and the United States.

We don’t need that to continue that needs globally in Europe or Asia. Yes. We don’t export much out of Europe and United States exports have been mostly South America, in Mexico about 15% so we are basically domestic in the sense of Europe production and U.S. production. So we don’t need Asia to recover that much to do well..

Okay. Thanks, I’ll turn it over..

Our next question does come from Bob Koort with Goldman Sachs, your line is open..

Hi Jim, congratulations on a terrific run. Good luck on your retirement..

Thank you..

I was curious what you thought about supply chain across your product lines and I guess maybe you can help me gauge the concern that your underline demand itself still probably reasonably good out there with the price drop in oil, there might be a lot of procurement managers out there looking at (inaudible) gaining some future discounts and so, do you think we could get a big head fake in the fourth quarter where destocking amplifies concerns about economic vitality or do you think most of the customer inventory levels are pretty lean and limited ability to do that..

Bob, I think the customer inventory should pretty lean.

Usually, we see that pattern by now in the month and I have been watching order books very closely would have expected that in Europe first and we just haven’t been seen in the United States because of the number of outages of Ethylene, Polyethylene has been particularly short and I didn’t expect it here in the quarter we didn’t see yet but so far we haven’t been seen much of that and the volumes have resell in the Asia through the middle east and all have been moving pretty nicely so I just think there supply chain is tided at this point.

Even of course U.S. economy is doing well and that should be a plus of sorts..

Great. Thank you..

Our next question comes from David Begleiter with Deutsche Bank. Your line is open..

Thank you. Good morning. Hey Jim, any concern that oil moves lower it will impact -- in U.S.

which will impact and propane supply down the road?.

Well, there is always some chance of that.

I have sent lot of my career in the oil business but you have to recognize that lot of these rigs already been booked for multiple months and sometimes years, I expect they will continue to drill if you look at the rig counts and all -- kind of steady as she goes, there is always a little curtailment as people run over the capital budget at the end of the year but then they’re starting to spend and gain hard at beginning of the year.

Gas prices aren’t that different where they have been and oil prices should down some but I think most of that drilling continues and still looks okay as far as we can see. And of course a bigger question is the people think this is a short term thing or longer term thing.

Final plan I want to make is that as far as ethane goes we are very, very long you have seen propane prices come down and there is still 30% ethane rejection going on so we are nothing worried about that..

Can you just on the refinery how should we think about the impact of flying in self and crude on your refinery margins?.

Yes, well, typically sell for a significant discount even after transportation, sometimes equity $7 to $10 a barrel to get ultimately we would expected that volume of Canadian crudes out to 30%-35% we just have to see how quickly we can ramp it up but it should be a nice plus for us.

The $65 a barrel and how -- to give you an example where this today..

Very good, thanks a lot..

Our next question comes from Jeff Zekauskas with JPMC, your line is open..

Thanks very much.

I guess my first question is for Karyn, the interest cost came down from $89 million to $79 million sequentially and the tax rate was relatively low at around 25.5%, how did you do that and are the interest, the lower interest payments sustainable?.

Interest expense yes, couple of things there one is increased interest income associated with our marketable securities and we saw that earlier than the year as we would have been on the three months investment cycle to increase our returns associated with our cash sitting on our balance sheet.

So that was about $3 million of that, I know there are close to $4 million related to our swaps that we entered into periods. So essentially the fixture floating interest rates convert fixed rate debt into floating debt, capitalize on the current low interest rate environment.

So that overall impact from that is about $4 million and then from a tax perspective really it was of our earnings so those associated with non-U.S. earnings in terms of the mix that we had coupled with that was increase in the text benefit associated with some of our own internal financing and structuring and then of course some impact.

Our tax rate for the full year 2014 is expected to be approximately 27% and so that’s decline in the third quarter when we look at that fourth quarter you can anticipate moving up to around 28%..

Okay.

And then from my follow-up, I was wondering Jim if you thought that there was a difference OpEx strategy in this oil price decrease and that we haven’t really seen announced cuts in production and I was wondering if you thought that or I was wondering if you thought there was a difference in the strategy and what might be the motivation behind the difference in the strategy, it’s a worst one?.

I’m not sure, sides on that but have been reported previously that Saudi Arabia would likely cut production in the event of price falls and there was press to the effect and then more recently there is a little news about maybe some production cuts, so I’m little uncertain exactly where they are going to go, one thing to remember is that a dollar has been increasing and strengthened we have to look at relative bind power that they get from say $80 crude versus a $100 crude in the past when the dollar was weaker.

So there is some about that -- in the price otherwise we just have to see what happens all the time, I think sometimes it’s more important to watch what happens and what’s….

Thanks very much..

Our next question comes from Kevin McCarthy with Bank of America. Your line is open..

Yes, good morning. Jim you’ve recently announced another expansion at Channel View the £550 million for 2017.

I was just wondering if you could comment on how you think the returns for that expansion will compare to your earlier expansion at Channel View in ’15 or perhaps the La Porte expansion there you just completed and what are the key assumptions as it relates to two energy and cost that you are breaking into those expansion projects?.

Yes Kevin, I think you will see that that project also has extreme and strong returns, I saw another competitor quoted number for an expansion just in the last week or so and the number surprised that how high it was we are doing some retrains and pretty simple work on the backend of the Channel View asset the things that we have done at La Porte and proved the concept, so fairly inexpensive de bottleneck obviously the work that we have done at La Porte and the earlier worked done on Channelview’s furnace expansions where we actually have additional purchase to at each location, so this is different, this is kind of a debottleneck of the backend and some pretty simple pounds at a very nice robust cost.

Now, we have to wait for a turn around, the engineering is in progress that’s why the 2017 date we already had these ideas in the past but the major turnaround to make it cost effective or optimally effective having said all of that I’m sure like bringing on that £800 million once like we just did so that was great timing and we’ll be able to move that product in the market add some beautiful margins and spot price is still high..

As a second question Jim, what you see your outlook for propylene and derivatives like polypropylene, let’s say over the next 6 to 12 months, it seems like there is a lot volatility there those on propane sheets dark and then monomer and the polymer just curious as to what is driving that in your view and how sustainable it is?.

Polypropylene margins are kind of up and down, the volumes have improved from time to time. We moved out of our flux unit, our metathesis unit and the spot sales for a while because there made somewhat sense at the high prices and then now we are back in to double-dimmer mod and making propylene because at the propylene price.

So we are very flexible on that kind of thing and knowing response to markets, we used to have a tagline of being the world’s largest polypropylene producers but you can see that that is earnings one where the other we have a lot of volume but that’s not with no sense, I would like to comment on propane a bit that in the crack again the prices have come down, it’s a positive story but I have said in the past we are not continue to say the propane will overtime continue to modulate around cost accrued inviolate advantage right now and doesn’t pay to exporters much of it at this moment in time that’s there is plenty of export capacity in -- and some of that increasing, so propane isn’t the big story I think.

I think it’s still cheaper thing but propane from time to time contributing. And we did say that propane is in our crack in the last two quarters in Europe because it does get exported there and does help us on a relative basis so compared to naphtha..

Okay. Thank you very much..

Our next question comes from Laurence Alexander with Jefferies. Your line is open..

Good morning. Quick question on the use of stocks in Europe.

You had a pretty good track record for the last couple of quarters, is there how much further can you push that or is this sort of the run rate in terms of the amount that you can shift over the mix?.

What we are doing the few things, so minor capital projects in Europe that bump add up a little bit more, it’s more favorable in the summer months then reduced in the winter months in our propane is really cheap right now some of that can extend down and there some exports happened that’s the plus for us so right now it’s been 35% or so which is pretty significant.

I think it’s a nice plus and a biggest story there that was differential operating rates we are short monomer in our system so we are running extremely hard at 95% of main played and that much money in the bank..

And then is there as part of dislocation happening with the arrival of the (inaudible) to secure longer term discounts or should these be viewed as sort of conditions strange your margins will move with that..

Yes, I think in the United States at this point in time there isn’t a need to try to do that, in Europe so far we have not done long term contracts with regard, certain deals sometimes with foreign producers because they recognize that it could get little bit competitive they would like to secure market outlets and so we have been able to negotiate some deals there for Europe but longer term we are kind of moving with the market more than not.

.

Thank you..

Our next question does come from P.J. Juvekar with Citigroup. Your line is open..

Thank you Jim. On the gulf coast there is a lot of new ethylene capacity announced but not enough polyethylene capacity.

So do you expect ethylene to go long in maybe profit shift to polyethylene?.

P.J. I don't really think there is going to happen. We look at our balances all the time. We are long ethylene, we are obviously adding some additional polyethylene capacity. We expanded Matagorda. We have got the new announced billion pound plant. We will look at who is trying to buy from us.

Some of those people who are out there announcing new plants are really trying to negotiate different supply contracts, not all of that is going to come on. We are watching the balances, we are trying to make sure that we are in the right spot on all of that but I think we are well positioned.

I don't think all of that is going to move the polyethylene. Historically it hasn’t done that. I have been in the business a lot of years. I know I am retiring now but I don't expect that to change dramatically..

Okay. Thank you. And one of the reasons you didn’t build a new cracker was that labor was tight on the gulf coast but now that you have announced a new PO plant, which would presumably use a same labor force so why PO plant and then can you tell us how much it's going to cost you? Thank you..

Yes, I am not going to give an estimate right now because we haven’t finalized those numbers. We have preliminary numbers but I am not ready to release those.

Your point is valid that that labor market is still going to be tight but as you probably seen PO is a extremely tight, and well this POTB plant won't have the margins of our really early ethylene expansions the margins look very nice. The other thing to remember is that it's a POTBA plant.

And while PO is going to be short we think and obviously very short right now because this is supply by competitors the TBA molecule going into the oxyfuels we think is going to be extremely important. That's volume of octane becomes more and more important and the margins have been good.

We have customers who are demanding that extra product and so we feel pretty good about it.

Also point out that a lot of that olefins construction 17, 18 we are going to be in that part way on this plant but we are bit on the back end of that with the 2019 so we will try to modularize few other things to keep the cost down but yes we are building it in the time when labor cost are going to be little bit higher..

Thank you..

Our next question does come from Nils Wallin with CLSA. Your line is open..

Good morning and thanks for taking my question.

The first is in this lower oil environment, assuming that oil kind of stays where it is does that change to value you are seeing in repurchasing shares over the next few years?.

Nils, first I am not going to assume it stays that low. What happens on that, it's fairly a short list phenomena so far and we will see how that develops overtime but we still have a significant ethylene advantage in the United States, obviously our shares came down fairly dramatically with the reduction of oil price.

So I think it's even better buying opportunity, we like our share repurchase program and we think we have a bright future. So our (inaudible) continuing with that. .

Understood. Thanks.

And then just with respect to the La Porte plant coming on stream, and then the normal sort of seasonal weakness one we have seen in the fourth quarter, how would those two play out with is the La Porte capacity enough to offset it or just offset it 50%, is their way to quantify what you see the impact of the plant in the fourth quarter..

Well we expect to be able to sell every pound of ethylene that we can make.

We have been able to demonstrate that’s the case in the last couple of years and polyethylene seasonally comes down in United States but we have also been able to sell those pounds so sometimes it impacts margins so far as of today the market is extremely tight in the United States so we will see what happens later on price starts to show up in our margins but so far so good..

Thanks very much. .

Our next question comes from Frank Mitsch with Wells Fargo Securities. Your line is open..

Yes. Good morning and congratulations on another record and it sounds as if the first three weeks in October we are still operating it at record margin levels for the business.

Jim in following up in your point, does oil stay down here, another industry leader recently opined it getting back to $100 within the year and if that’s actually the case, do we get back to margins kind of where we are right now.

Can you, what your thoughts are on this period of market profitability, is it something that could be sustained back when we get oil back to triple digits?.

Frank, the first, I won't be so bold to predict oil price, I wasn’t very good when I was an EMP guy and I probably haven't got any better, when you look at the track record oil has been more above 100 and under in recent time. So we will see where that goes.

In terms of where the margins are in the third quarter we had exceptionally tight supply-demand issues competitors that had unplanned averages that were significant, that continues into the fourth quarter. In addition there has been some turnaround activities.

There is a lot of capacity down right now and so those of us who can run are great spot prices, we will be getting into contract discussions, contract price discussions shortly but again supply, demand is very, very tight. It's for good margins and contract has been still considerably under spot.

There – it's good supply dynamics coming into the fourth quarter in the United States so your first part of the comment about how we are doing so far in the quarter that kind of record level, so far so good. .

All right. Terrific and 15% of sales of ethylene on the spot market seem very high or rather high to me. You mentioned before, unit and then I guess from La Porte starting up that maybe didn't have those contracted, can you put that 15% into perspective for us.

Where do you typically on that and in future times where margins are good, can you get back to that or do you believe that you are going to have your volumes already contracted for?.

Well, we don't have all of our volumes contracted for. We have got the ability to flex with that Metathesis unit and so we spun that thing around early quickly into the spot market because there were some people desperate for pounds and we are happy to sell them those pounds so 15% was pretty bold.

We didn’t get that extra 800 million pounds until the end of the quarter. And so it didn’t have that much impact on the quarter itself. That's kind of the fourth quarter item..

All right. Thank you..

Our next question does come from John McNulty with Credit Suisse. Your line is open..

Good morning and thanks for taking my question.

So with regard to some of the cold olefins facilities that are still playing in Asia at this point can you comment as to your thoughts on if oil prices do stay at this levels, how much jeopardy are those projects potentially in and does it really change how we should be thinking about the ability for some of that capacity to come into the markets?.

Well, that's very, very high capital cost production and then once it's on, it does have some feedstock advantage in theory. The oil prices you have to double think about whether that make sense or not, and of course always remember that there is a lot of capacity going in the United States.

It's still very, very significantly advantage that that's going to compete on the coast. Some of that stuff is more inland.

So we will see how that all develops but it's people a bit of pause in China developing, projects at that kind of capital cost and even on the export of ethane you got to go build ships and do all of that and you start looking at that dynamic, it's better to have assets like we do that are cheap capital that are coming on now that are most guarantee that brilliant return.

I think that strategy is working well for us..

Great.

Thanks and then maybe one follow-up, it does seem like the US projects which is still pretty much all the huge economics even with oil where it is but do you see any chance that because of the drop in oil, that maybe they rush to get all these projects up which is causing some of the inflation that you are talking about earlier in the call maybe that rush subsides a little bit, maybe drawing out the cycle little bit longer and also maybe putting a little bit of relief into the labor and engineering markets how should we think about that?.

Well, the projects are already started. They will still be trying to get those projects done as quickly as possible and I don't think it's more to oil price because again folks who do these kinds of projects aren’t looking at three week or even three month type oil price. So they are more interesting what they view the longer term to be.

So they are going to continue to progress those projects as quickly as they can but having said that cost are definitely higher and productivity definitely lower. So we will just see how quickly they get them on stream.

We are feeling very good about having the Porte running now and couple of furnaces at Channelview or you know coming along very, very nicely with the push part of the year start-up and corporate is moving along nicely. So being early is a good thing.

I think the project is as I have said before, that others have announced maybe a bit later than people expected to definitely more expensive than they originally forecast..

Great. Thanks very much for the thoughts..

Our next question comes from Vincent Andrews with Morgan Stanley. Your line is open..

Thanks very much. Thanks for taking my question.

Jim could you talk about where you see global operating rates for ethylene today and then you normalize, averages coming back what do you think will be in 2015 and 2016?.

Well, today I think it depends on the geography in the United States if you can run your running but people haven’t been running very well. I have seen some industries number that have an eight better in front of them instead of nine and that just shows how capacity has been down.

We have been running our system obviously the 106 -- 96 we are running hard in United States that should continue well into the future. I don't expect that to change with advantage we have. In Europe, I think people in the mid 80s is about right.

In Europe at this moment, time depending up on which region you are in, is bit short here and some plan averages and some turnaround. So it's recently tight right now compared to where it's been. We have been in the high 90s in Europe because we are in Asia 80% kind of level maybe a little higher than that. So we will just see.

Next year, we will see how the economy goes and that could push it up some I have seen some people forecasting getting in the 90% range. We will just see. .

So your view is not that we are going to wind up in the 90% plus range over the next couple of years, taking wait and see approach.

Which is it?.

It depends on the economy. If the economy start to come back you will see that numbers soon and if it doesn’t its couple of years away probably..

And maybe last question on this, what is the right GDP going forward?.

The right multiplier let me ask you who is running, you know it's the big issue is still how many plants are down that aren’t expected to be down in United States (inaudible) that margin really is. We have seen spectacular margins lately and there is a continued that probably not but having said that it continues to be strong you bet.

I am not going to issue single number out there and say that's about what it's going to be but we still say it's very, very strong and I think you should assume that we will have that same correlation the global GDP on rates that we have seen in the past. .

Okay. Thanks very much and congratulations again on your retirement..

Thank you. .

Our next question comes from John Roberts with UBS. Your line is open..

Yes, and congratulations on your retirement as well.

Jim in Europe, IHS chemical recently talked about raw materials being in free fall, do you think in November you will pick up some margin in Europe because of the rapid drop in raw material cost and then in December, if volume slow will you run full out even if the inventory pull down you have enough cost advantage you think in Europe to keep your crackers running no matter what..

Well, whenever Naphtha prices and other feedstocks fall, we typically see some margin expansions because the way prices settle at the beginning of the month, I think recently there have been some indications that maybe there could be a better margin expansion because of tightness in certain of the hubs.

We don't get the crackers much typically crackers much of the favorite feedstock in the winter months as we do in the summer. So we will see how that goes. We are watching the polymer volumes but as I said, so far those are holding up and as of this moment time we are running our crackers hard still.

There is some seasonality toward the end of year at the holidays, that's very, very typical in Europe. I would be surprised if that didn’t happen again. But so far everything is shaping up okay..

Okay. Thank you. .

I am afraid we are just about out of time so I think we will just take one more call. I apologize to those we couldn’t take today. .

Our last question does come from Hassan Ahmed with Alembic Global. Your line is open..

Morning Jim. You know in the quarter there were a couple of unplanned, particularly within the IND side of things and yield facility and you also talked about Methanol facility as well.

Could you just give us a sense of the EBITDA impact of that?.

Yes Hassan, PO has a good quarter volume strong, and pricing solid because of the competitor outage. That's going to continue for a while. People expect that to be well in the next year if not the whole of next year and so that well for the PO business. Frankly we can run up to our standards and some of the other assets.

We restarted the methanol plant and I mentioned that we ran it at about 75% operates, this is the company who likes to set benchmark in most of our assets and so far that asset has not delivered. We have got to turn around plan for early next year to fix some of that.

We have had an SGR issue kind of about every quarter we have to take a little bit of down time. We are working on permanent fix on that and then we had some issues on the methanol unit. So we hope to line ourselves out on that run. The EO unit had an issue too. We had some unexpected down time.

That unit has been extremely reliable up to this point in time but we had an exchange, we did some pretty clever things to get it back on line. It's running now and so that's corrected itself for now. But that down time in addition to the price fall is why we missed.

So it’s a bit tough but there is some capacity also down in Europe which it should snug it, we will see what happens on benzene, olefins prices has gone up. Good thing for us generally but it hurt out margins. So I would expect, frankly in my view had a miss because we didn’t run very well and that's who we are..

Fair enough. Fair enough. And, recently spoke at an event where I guess you were asked about your views and I think there was some confusion with some people thinking that you sounded more positive, some people sort of thinking to the contrary.

So could you just tell us where you are in terms of process?.

Yes we are still studying. I don't – I wouldn’t say I am more positive, less positive on it at all. I think obviously the transaction that's been in the market has performed well.

We are different company of different tax position, different size, variety of things that influence that but we are watching studying some more and obviously we can't file anything today but we have had and the team is busy at work making sure we understand all the implications of the potential and we’ll go from there..

Superb. Thanks so much Jim..

Okay. Let me make a few closing comments then. We just finished another great quarter of best ever and what we know we have oil price volatility, we know what to do about that.

For instance in the United States we had the blow out and spot prices we step quickly into that market there shut down our flux unit and put a lot of cash in the bank we historically have operated our assets very close to name plates sometimes you recall that we ran our crack which is over 100% for whole annual period about a year ago, we know how to control our cost it’s absolutely part of whom we are as a company we talk about flat to following cost every year.

We’ve been early in delivering our growth projects if it related it’s by weeks it’s not by months it’s not by years and we bringing those projects in at a point in time that’s wonderful in terms of margins.

We’ve got a great balance sheet, we’ve been buying back our shares, we think there is another buying opportunity today with the prices that are down. And so we feel extremely good about our future.

I have announced my retirement I’d like to thank all of you for the support that you have given me through the years, I commented that I came to help to create the best petrochemical company in the world, we are getting there. A bit more work to do but we are getting there. Thank you..

That does conclude today’s conference. Thank you for participating, you may disconnect at this time..