Hello, and welcome to the LyondellBasell Teleconference. At the request of LyondellBasell, this conference is being recorded for instant replay purposes. I would now like to turn the conference over to Mr. David Kinney, Head of Investor Relations. Sir, you may begin.

Thank you, operator. Before we begin the discussion, I would like to point out that a slide presentation accompanies today's call, which is available on our website at www.lyondellbasell.com/investorrelations. Today, we will be discussing our business results while making reference to some forward-looking statements and non-GAAP financial measures. We believe the forward-looking statements are based upon reasonable assumptions, and the alternative measures are useful to investors. Nonetheless, the forward-looking statements are subject to significant risk and uncertainty. We encourage you to learn more about the factors that could lead our actual results to differ by reviewing the cautionary statements in the presentation slides and our regulatory filings, which are also available on our Investor Relations website. Comments made on this call will be regarding our underlying business results using non-GAAP financial measures such as EBITDA and earnings per share, excluding identified items. Additional documents on our Investor website provide reconciliations of the non-GAAP financial measures to GAAP financial measures, together with other disclosures, including the earnings release and our business results discussion. A recording of this call will be available by telephone beginning at 1:00 p.m. Eastern Time today until March 3 by calling (877) 660-6853 in the United States and (201) 612-7415 outside the United States. The access code for both numbers is 13734290. Joining today's call will be Peter Vanacker, LyondellBasell's Chief Executive Officer; our CFO, Michael McMurray; Ken Lane, our Executive Vice President of Global Olefins and Polyolefins; Kim Foley, our EVP of Intermediates and Derivatives and Refining; and Torkel Rhenman, our EVP of Advanced Polymer Solutions. During today's call, we will focus on the fourth quarter and full year 2022 results, current market dynamics, and our near-term outlook. With that being said, I would now like to turn the call over to Peter.

Thank you, David, and welcome to all of you. We appreciate you joining us today as we discuss our fourth quarter and full year 2022 results. Let's begin with our safety results on Slide number 3. LyondellBasell's employees and contractors delivered an outstanding safety performance during 2022. Injury rates at our company have consistently been among the lowest for our industry. But last year, we reduced the rate of injuries across our global workforce by roughly 0.5 to 0.12 injuries per 200,000 hours worked. At our Bayport complex outside of Houston, our team finished 2022 with over 6 million consecutive safe work hours, a new company record. Simply put, a consistent focus on safe work is embedded in our company's DNA and provides a solid foundation for extending that shared focus across other dimensions of the company's culture. Let's now turn to Slide number 4 to discuss our financial results. 2022 was a very challenging year characterized by a war in Ukraine, evolving responses to the COVID pandemic, energy volatility, inflation, and rapidly changing monetary policies. At LyondellBasell, our portfolio of businesses continued to provide value for our global customers with products and solutions that are essential for modern society. In '22, LyondellBasell delivered earnings of $12.46 per share with EBITDA of $6.5 billion. Cash generation was exceptional and resulted in $6.1 billion of cash from operations; second only to our 2021 results. We ended the year with $6 billion of liquidity supported by a strong investment-grade balance sheet. Interim invested capital was 16%, far exceeding our cost of capital. In addition to our focus on safety, we are sharpening our strategic focus to maximize value for our customers, shareholders, and society under a range of scenarios. On Slide number 5, we outlined our progress on delivering value from this strategy over the past year. Our leadership in cost management and operational excellence enabled LyondellBasell to hold fixed costs well below inflation and quickly adjust operating rates in response to evolving market conditions. Our diverse global business portfolio provided outstanding cash generation during a challenging year. And at the same time, we positioned the portfolio for changing times with decisions to exit refining and sell our Australian polypropylene business. We established a new business unit, focused on establishing leadership in providing circular and low-carbon solutions for our customers. And we are advancing our supply chains, production capacity, and sustainable assets to serve rapidly growing markets for these circular and low-carbon products. Last quarter, we announced our increased focus on capturing value as we continue to manage costs. We expect our value enhancement program will generate at least $750 million in recurring annual EBITDA by the end of 2025. Our increased focus helped drive a 13 percentage point improvement in cash conversion in 2022. That further bolstered our capital structure and supported generous shareholder returns. On Slide number 6, I would like to highlight our recent decisions to accelerate progress on our climate targets and create more value by doing so. In order to meet the goals of the Paris Climate Agreement, climate scientists believe that global warming should be limited to no more than 1.5 degrees Celsius above pre-industrial levels. In December, we announced our decision to increase LyondellBasell's 2030 targets for reducing scope 1 and Scope 2 emissions to 42% and established a new Scope 3 emission reduction target of 30% relative to 2020 levels. Targets are now aligned with the science-based guidance and the 1.5-degree Celsius scenario. In addition, as we continue to make progress in sourcing favorably priced renewable electricity, we have increased our 2030 goal to procure at least 75% of our global power generation needs from renewable and low-carbon sources. Earlier this week, we announced our first 2 renewable power purchase agreements in Europe and 2 additional agreements in the United States. Altogether, we now have 8 agreements in place for 930 megawatts of renewable power capacity, which represents roughly one-third of our global needs. These agreements will prevent nearly 1 million tons of annual greenhouse gas emissions. All of this work supports our goal to become net zero in Scope 1 and Scope 2 emissions by 2050. At the same time, we continued to build global businesses that will sell at least 2 million tons of recycled and renewable base polymers by 2030. On Slide number 7, let's take a look at how we are building our Circle brands of recycled and renewable base polymers. During the fourth quarter, we announced progress in developing 4 new plastic waste sorting and recycling facilities in Houston, Germany, India, and China. These facilities provide a strong foundation for a robust global supply chain for plastic-grade feedstocks. And with our 3 product platforms, CirculenRecover for mechanical recycling, CirculenRevive for advanced recycling, and CirculenRenew for renewable-based feedstocks, LyondellBasell will be able to match feedstocks and products with the highest value solutions for our customers. The combination of our focus, detail, technologies, and global platforms provides LyondellBasell with powerful advantages to build the world's leading circular and low-carbon solutions business. Now with that, I will turn the call over to Michael first, and then to each of our business leaders who will describe our financial and segment results in more detail.

Thank you, Peter, and good morning, everyone. Please turn to Slide 8, and let me begin by highlighting our excellent cash generation from our business portfolio during 2022. LyondellBasell generated a total of $6.1 billion of cash from operating activities over the past year. Our cash on hand increased to $2.2 billion at the end of the fourth quarter. During 2022, we achieved cash conversion of 96%, 13 percentage points higher than our 2021 cash conversion. In the fourth quarter, cash conversion reached an outstanding rate of 203%. This efficient and robust cash generation allowed the company to return a total of $3.7 billion to LyondellBasell shareholders in 2022. Let's continue with Slide 9 and review the details of our capital allocation over the past year. Our approach remains focused on disciplined capital allocation and strong returns for our shareholders. During 2022, cash from operating activities fully funded dividends, share repurchases, and capital expenditures. We returned approximately 60% of cash from operating activities to shareholders. This included $3.2 billion in quarterly and special dividends and $420 million in share repurchases. In May, we increased our quarterly dividend by 5%. This represents our 12th consecutive year of annual dividend growth. We continue to invest in maintenance and growth projects with $1.9 billion in capital expenditures. A significant portion of this capital funded the final stages of construction of our world-scale PO/TBA plant. Startup activities remain on track for the end of this quarter. Our transformation efforts are working across our company to rigorously manage and track the progress of our value enhancement program. We look forward to sharing the progress of this program at our Capital Markets Day in March. Now I'd like to provide an overview of the quarterly results for each of our segments on Slide 10. LyondellBasell's business portfolio delivered $865 million of EBITDA during the fourth quarter. Our results reflected margins stabilizing at the low levels seen towards the end of the third quarter. Moderating energy and feedstock costs provided modest offsets for compressed margins in our olefins and polyolefins businesses. Overall, OMP demand remained low, particularly in Europe and China. Intermediates and Derivatives results sequentially declined on lower volumes due to the quarterly timing of oxyfuel vessel shipments. Margins at our oxyfuels and refining businesses remained above historical averages as demand for fuels remained strong due to increasing global mobility. High costs for utilities and raw materials coupled with low seasonal demand negatively impacted our Advanced Polymer Solutions segment. Across the portfolio, a noncash LIFO inventory valuation charge impacts pretax fourth quarter results by approximately $90 million. Fourth quarter LIFO charges were approximately $15 million for the O&P Americas segment, $50 million for the O&P EII segment, $15 million for the Technology segment and a $40 million benefit for the refining segment. As a reminder, volatility in natural gas prices impacts our costs for not only gas, but also steam and electricity. We estimate that a $1 per million BTU change in the price of natural gas impacts the energy cost of our directly operated assets by approximately $175 million per year across the company, with 80% of this impact in North America and 20% in Europe. These estimates do not include the impact of gas price on feedstock costs. Before I turn the call over to Ken and then to each of our business leaders, who will describe our segment results in more detail, let me address some of your annual modeling questions for 2023 on Slide 11. As our new world-scale PO/TBA plant ramps up, we expect to produce and sell about half of the asset's nameplate capacity in 2023. We remain confident that our value enhancement program can achieve recurring annual EBITDA of $150 million by the end of 2023 through the execution of about 1,000 projects. In order to achieve this benefit, we expect to incur a similar amount of one-time capital and operational cost of about $150 million, with the majority of these costs allocated to capital. Major planned maintenance for 2023 included a turnaround at one of our Midwest ethylene crackers in the O&P Americas segment, turnarounds at our acetyls assets, and 3 propylene oxide plant turnarounds within our I&D segment. Based on expected volumes and margins, we estimate that lost production associated with all of this maintenance downtime will impact 2023 EBITDA by approximately $290 million. While routine maintenance costs are expensed, maintenance costs arising from turnarounds of major production units are capitalized and included in our capital expenditure forecast. During the fourth quarter, we recognized costs related to the exit from our refining business, which impacted EBITDA by $73 million. As I mentioned last quarter, we expect the business will incur similar EBITDA impacts during each quarter of 2023. We will also recognize about $55 million each quarter for depreciation charges to reflect cost accrued for asset decommissioning that will be incurred after the asset shuts down. We expect that our capital expenditures will decline by about $300 million to approximately $1.6 billion this year with the completion of the PO/TBA plant and disciplined spending resulting from the current business environment. Approximately $500 million of CapEx is targeted towards profit-generating growth projects, with the remaining balance supporting sustaining maintenance. We expect that this year's capital requirements for the value enhancement program will be funded within our $1.6 billion CapEx budget. Other financial metrics worth noting include net interest expense, depreciation and amortization, pension-related estimates, and tax rates. We expect 2023 net interest expense will be approximately $405 million. Depreciation and amortization charges for 2023 are expected to be $1.4 billion, which includes approximately $202 million of additional refinery depreciation charges related to asset decommissioning. We plan to make regular pension contributions in 2023 totaling about $65 million with approximately $105 million of pension expense for the year. We expect our effective tax rate will be approximately 20%, and our cash tax rate will be lower than our ETR. With that, I'll turn the call over to Ken.

Thank you, Michael. Let's begin the segment discussions on Slide 12 with the performance of our Olefins and Polyolefins Americas segment. Fourth quarter O&P Americas EBITDA was $359 million. Prices and margins stabilized at the low levels we saw at the end of the third quarter. Market demand declined, and we also saw customer destocking during the quarter. That, combined with new polymer capacity resulted in well-supplied markets. We operated our assets at approximately 75% of nameplate capacity to match the reduced market demand and manage working capital. During January, we have seen modest improvements in domestic and export demand. Normalization of logistics constraints have facilitated increased export volumes. Also, moderating feedstock and energy costs are providing some margin tailwinds. As a result, we expect to operate our O&P Americas asset at an average of approximately 80% during the first quarter. Looking back at 2022, I want to highlight our progress on developing our Circulen business. We have established projects for classic waste sorting facilities that will be used to provide feedstock for our circular recover and certain Revive product lines. We are also moving forward with our usage of olefins feedstocks produced from renewable sources such as used cooking oil. During 2022, we processed 15,000 tons of renewable feedstocks at our Channelview, Texas cracker, to produce ethylene, propylene, and ultimately, polyethylene and polypropylene that we sold to customers at premium prices under our Circular brand. Last year, 4 of our U.S. manufacturing sites attained the ISCC Plus certification for certain grades of polyethylene and polypropylene. This enables LyondellBasell to offer customers mass balance certificates for these products and serve the market's rapidly growing demand. We are delivering these new circular products to our customers and proving that polymers can be more sustainable and used in any application where virgin polymer is used. Now please turn to Slide 13 to review the performance of our Olefins and Polyolefins, Europe, Asia, and International segment. In Europe, macroeconomic pressures were exacerbated by high inflation and energy costs that curtailed operations at our customers and pressured consumer demand. LyondellBasell operated our O&P assets at rates of approximately 60% during the fourth quarter. LIFO inventory charges were $50 million during the quarter. All of this combined to result in a fourth quarter EBITDA loss of $152 million. European energy costs have considerably moderated in January, and demand is showing some signs of improvement over the extremely low level seen in December. We have completed repairs and we started our integrated cracker in France at the end of 2022 and expect to operate our European assets at a rate of 80% during the first quarter. As in the Americas, we continue to focus on long-term strategies to support our Circulen and Low Carbon Solutions business in Europe and Asia. During October, we announced new partnerships for plastic waste sorting facilities in Germany and China, and a fully automated mechanical recycling facility in India. These partnerships will allow us to swiftly develop fit-for-purpose plants in each region to supply feedstocks for our circular products and serve the rapidly growing market for circular solutions. In November, we announced our decision to move forward with engineering to build our first commercial scale advanced recycling plant in Germany. This plant will utilize LyondellBasell's proprietary MoReTec technology to convert plastic waste from our waste sorting facility into pyrolysis oil that can be used as a feedstock to produce new plastic resins in a circular process. We are moving rapidly to build circular and low-carbon solutions for our industry at an unmatched scale.

Thank you, Ken. Please turn to Slide 14 as we take a look at our Intermediates and Derivatives segment. Fourth quarter EBITDA was $291 million. Styrene margins improved due to lower feedstock costs. Oxyfuel margins remained well above historical fourth quarter averages. Oxyfuel volumes declined as the timing of the vessel sailings resulted in unusually high third quarter volumes. We operated our assets at rates of approximately 75%. Our propylene oxide and styrene joint venture in the Netherlands is expected to restart this month after 3 months of downtime in response to volatile European energy costs and lower demand. We look forward to initial volumes from the new PO/TBA asset in Houston by the end of the quarter. We plan to operate our assets across the I&D segment at approximately 80% in the first quarter. In January, we are encouraged by unseasonably strong oxyfuel margins with low butane feedstock costs and strong oxyfuel blend premiums. We expect relatively stable margins for the segment for the first quarter. We developed multiyear maintenance schedules to ensure that our plants can safely and reliably serve our customers. As it works out, 2023 will be a heavy year for maintenance across several of our PO/TBA assets. Maintenance is scheduled for 2 of our 3 PO/TBA plants at our Bayport, Texas facility in the second and fourth quarters. Our PO/TBA facility in the Netherlands will also undergo maintenance from September through November. We expect the ramp-up in volumes of our new plant will be partially offset by lost production from this planned maintenance. Nonetheless, the incremental 2023 PO and TBA volumes should be sufficient to capture typical market growth. Now let's turn to Slide 15 and discuss the results of the Refining segment. Fourth quarter EBITDA included a LIFO inventory valuation benefit of approximately $40 million. Results increased on higher margins and slightly higher volumes following the third of the planned maintenances, offset by the disruptions of the December freeze. In the fourth quarter, the Maya 2-1-1 spread modestly increased to $48 per barrel, remaining well above historical averages. Despite unplanned downtime, we operated the refinery at 85% of capacity with an average crude rate of 229,000 barrels per day. In January, the Maya 2-1-1 spreads have also been unseasonally strong at more than $50 per barrel, driven by strong discounts for heavy crudes. We expect to operate the refinery at approximately 85% of capacity in the first quarter. Finally, I would like to recognize our team at the refinery for finishing the year with zero recordable injuries in 2022. This is the first time such a record has been achieved in the 104-year history of this facility. Our team is dedicated to safely and reliably operating these assets until we exit the business.

Thank you, Kim. Now let's review the results of our Advanced Polymer Solutions segment on Slide 16. Fourth quarter EBITDA declined to $3 million. Margins remain pressured by feedstock and energy costs as well as the $25 million noncash LIFO inventory valuation charge. Volumes fell on lower seasonal demand exacerbated by high power prices that impacted our European customers' businesses. In the fourth quarter, we embarked on a journey to transform the APS segment. Our goal is to sharpen our focus on customer service and product development to maximize value for our customers and for LyondellBasell. With increased autonomy and accountability, we are developing a more agile operating model with meaningful media and segment growth strategies. As part of this transformation, the Catalloy and polybutene businesses will be moved from APS and reintegrated into the O&P segment beginning January 1, 2023. This move will allow the APS team to sharpen their focus on the compounding business, distinct from the polymer business of Catalloy and polybutene, which serves our O&P value chain. From a portfolio point of view, we estimate APS will shift approximately $200 million of annual EBITDA between O&P Americas and O&P EAI segments very equally. We plan to provide additional information regarding the impact of this change in March. I strongly believe that our APS platform has a lot of potential, and I look forward to reporting on our team's progress in delivering on this transformation during our Capital Markets Day in March.

Thank you, Torkel. And to the entire LyondellBasell team, thank you again for all the hard work in delivering strong results during a challenging year. To close out on the segments, let's turn to Slide 17 and discuss the results for our technology business on behalf of Jim Seward. During the fourth quarter, reduced global polyolefin industry operating rates resulted in lower catalyst volumes, licensing revenue moderated due to the timing of milestones for revenue recognition. We estimate that the first quarter results for the Technology segment will be similar to fourth quarter 2022 as catalyst volumes improve, offset by moderating licensing revenue. Our technology team is hard at work advancing engineering on LyondellBasell's first commercial advanced recycling plant. This plant will leverage our proprietary MoReTec technology to extract sale from most consumer mixed plastic waste by closing the loop and producing feedstocks for our Italian crackers. Our technology provides distinct advantages by reducing energy consumption, improving yields through innovative process designs and catalysis. Let me now summarize our results and first quarter outlook with Slide 18. Despite significant challenges, our team is capturing value and moving forward on our strategic priorities. Most importantly, we are sharpening our focus on leveraging the scale of our clear portfolio to deliver resilient results. We remain focused on LyondellBasell's core values. Last year's outstanding safety performance speaks to the depth with which safety is ingrained in our corporate culture. Our goal is to expand our core petro foundations to encompass a more comprehensive passion for value creation. This week, we welcomed Trisha Conley to our Executive Committee as Executive Vice President, People and Culture. Trisha will play a pivotal role in leading LyondellBasell's vision and strategy to enhance employee experience, elevate our organizational performance, and create the best and most inspiring culture in our industry. In 2022, our businesses were pressured by the effects of the war, volatile energy costs, emergence from the pandemic, and monetary policy. We responded by matching our reduction with changing demand, leveraging our global business portfolio, and maximizing cash generation. Over the past year, our businesses generated over $6 billion of cash from operations and returned $3.7 billion to shareholders in dividends and share repurchases. Our focus and commitment to shareholder returns remain strong. The more substantial formed circular and carbon solutions business are laser-focused on meeting the needs of our customers, brand owners, and society. Our decarbonization goals are now aligned with science-based guidance, and we have made substantial progress towards our 2030 goal to procure 75% of our electricity from renewable and low-carbon sources. The Circular and Low Carbon Solutions business is well-positioned to address the challenges of sustainability and plastic waste. By building an end-to-end business with robust supply chains, proprietary technology for transforming materials, and our global manufacturing and marketing network, we're confident that we can build a large-scale and valuable leadership position in this exciting and expanding market. And our focus on sustainability is gaining recognition. In December, we were honored to be awarded the EcoVadis Gold Medal for sustainability performance with a 91st percentile ranking. The EcoVadis platform is valued by procurement professionals for assisting in the identification and evaluation of sustainable supply solutions. We expect modest improvements in the first quarter from moderating energy and feedstock costs, stable demand, and the absence of fourth quarter LIFO charges. Normalizing supply chains are enabling improved trade flows from our advantaged feedstock positions in North America and the Middle East. Nonetheless, we will continue to maintain focus and discipline to ensure that operating rates across our global portfolio are matched to market conditions. As the year progresses, we anticipate seasonal demand improvements during the second and third quarters. And we're keeping a close eye on China's emergence from COVID and potential benefits from increased economic activity during the second half of 2023. The most exciting challenge during my first 8 months as the CEO of LyondellBasell has been the process of identifying and building a compelling strategy that generates substantial value for our customers, suppliers, employees, communities, and shareholders over the next decade. We've shared some initial decisions with you already, but much more is ahead. As you will have recognized, we have waited until the Capital Markets Day, but started moving ahead with great focus and speed in the right direction. On Slide 19, we ask that you save the date for March 14, when we will share more details on our forward strategy at our Capital Markets Day in New York, and we hope that you can all join us virtually or in person. We are now pleased to take your questions.

Operator Instructions. Our first question comes from the line of P.J. Juvekar with Citi.

Yes. I have a quick question regarding China's reopening. What is the status of inventory at the ports in China? Additionally, could you provide some insight on your joint venture with Bora in China and the operating rates there?

Thanks, P.J. This is Peter. I'll address your question first and then Ken might add some insights. Regarding China, it's still too early to say we see a sustainable recovery. We think it will likely take another three to four months before that recovery materializes. Our expectations for China remain quite modest. However, we recognize that there has been an opening, and the government has altered its approach to COVID. Bora is still holding on, but the outlook isn't very positive due to the current situation and local market capacity utilization rates being at technical minimums. Ken?

Yes, that's right. We continue to operate the joint venture at technical minimums. In the past two weeks, we have observed a slight improvement in consumer demand, but it's still too early to determine if this trend will last. Margins remain under pressure, so we are still experiencing red load spread. Therefore, even with the uptick in demand, it has not yet resulted in better spreads. We are monitoring the situation very closely.

And the situation on PO is no different than on the situation of polyolefins?

Correct.

Our next question comes from the line of Steve Byrne with Bank of America.

I wanted to just drill into the EAI segment here. Is the EBITDA loss-making a result of just the fixed cost absorption of running at 60% or were cash margins negative in the region in the quarter? And Ken, you mentioned demand improving. Is that sufficient to drive operating rates from 60% to 80%. Do you think that margins will remain stable? Or do you see risk of that given others may restart with lower and lower energy costs as well?

Thank you, Steve. That's a good question. I would like to add that energy costs have moderated, although they're still at a very high level. While energy costs are higher compared to the United States, we've moved beyond the peak, which has been aided by the mild winter we've experienced in Europe so far. Now, I’ll turn it over to Ken to provide more insight into the market situation. Yes, thank you. I want to remind you that we had a LIFO charge of $50 million in the fourth quarter. Looking at the fourth quarter, we reached a very low point due to declining demand and high energy costs. However, energy costs moderated towards the end of the quarter, and we are seeing that trend continue into the first quarter. Additionally, our cracker was down during the fourth quarter, which contributed to our lower operating rates. Those repairs are now complete, and the cracker is back up and running. Similar to the situation in China, we are noticing some improvement in consumer demand, though I would still say it's early to declare success. We are definitely observing initial signs of improvement in consumer demand there. Overall, the margin environment is expected to improve primarily due to the factors Peter mentioned regarding energy costs.

Our next question comes from the line of Christopher Parkinson with Mizuho Securities.

Great. Could you just give your outlook on various regional operating rates and what's been happening across NGL and feedstocks? Could you just give us your latest update on the NGL front and what that just generally means for the progression of integrated energy margins throughout the year?

Thank you, Chris. Ken, do you want to?

Sure. I’ll address that. NGL production is steadily increasing, which we anticipate will provide a positive impact, particularly here in North America. The oil and gas ratio remains favorable for our portfolio, and we don’t expect any significant changes to that. We are hopeful for some strengthening in oil prices as we progress through the year, especially with the potential increase in demand resulting from China's reopening. Overall, I believe the current environment should be an improvement compared to the second half of last year regarding feedstock synergy within our portfolio.

And I think natural gas is coming down back to where it was in the first half of 2021.

Our next question comes from the line of John McNulty from BMO Capital Markets.

This is Bhavesh Lodaya for John. You highlighted improving operating rates in North America in the first quarter. As we think about 2023, what type of U.S. domestic demand growth do you expect? And then as we think about like a further recovery in operating rates back to like historical levels, how much of that depends on rising exports and reducing some of the logistic constraints out there?

It's a very broad question, so let me break it down into different parts. When we discuss the demand for mature goods amidst high inflation rates and rising interest rates, along with new house builds and sales remaining low, it's evident that we expect the demand for durable goods to remain depressed for the foreseeable future. Conversely, as seen in previous cycles, demand for nondurable goods is relatively stable and, in some areas, even strong. This has led us to provide guidance indicating that we are currently operating in the Americas at 80% utilization. Ken previously mentioned that European utilization rates are also at 80%. Regarding I&D, we have a start-up of the PO/TBA sands, as noted, beginning at the end of this quarter, which will increase propylene oxide volumes. However, we should not overreact to this situation because we also have scheduled shutdowns and turnarounds that coincide with the new facility start-ups. Stock is expected to grow slightly, but operating assets are currently at 80%, slightly higher than at the end of last year.

Our next question comes from the line of Jeff Zekauskas with JPMorgan.

A two-part question. When you think about the shutdown of your refinery at the end of 2023, does that mean that there are reduced operating rates in the fourth quarter of 2023? That is, do you have to really prepare to shut it down, or you get to the end of the year and you shut it down? Second question is, you gave a sensitivity to natural gas price changes. You said every dollar per MMBtu is $175 million. And you said 20% is in Europe. So that's roughly 35 million MMBtus. The European gas price today is maybe $17 an MMBtu. And last year, it averaged $37. So it's down $20. $20 times 35, $700 million. So is that the benefit for 2023 if gas prices in Europe stay where they are relative to last year? Have I done the calculation correctly?

Thank you, Jeff. Very good questions. I mean, talking about the refinery, as we have said, we want to shut down the refinery in Houston by the end of 2023. So that has not changed in our opinion. The rationale for that has not changed either. And of course, there is some preparation that needs to be done in order to be hydrocarbon-free by the end of the year. So Kim, if you want to add something on that question?

I would just tell the audience that we're working through the detailed plans of how to do that. As you alluded, you can do that with a slow ramp down or are you going to do that by just pulling the plug on the 31st, and we're working through the different scenarios to make sure that we have the most efficient and effective shutdown and clearing process.

Answer your second question, of course, if you just do the math, then you make up to that conclusion. But let's not forget that in Europe, our teams have done an excellent job by also increasing prices on one hand side, on the other hand side, also implementing energy surcharges. So you can't actually net that out the way you did, Jeff.

Our next question comes from the line of Frank Mitsch with Fermium Research.

Congrats, Michael and David on the Institutional Investor Magazine recognition, well deserved. Michael, you made good progress on working capital in 2022, and I'm wondering what the expectation is for 2023. And in terms of uses of cash, there was a breather on buybacks here in the fourth quarter. CapEx is coming down in '23. What are your thoughts in terms of a resumption of the buybacks?

So good question. So I think, first, I just I'd point out again that the cash generation in 2022 was extremely strong. Excellent execution by the businesses from a working capital perspective during the year. In the fourth quarter, in particular, longer-term perspective as well. Kind of turning to this year and looking forward, I would say that, I think, first and foremost, our capital allocation priorities remain unchanged. And you all know that we have a reputation for generating strong cash flow and returning to gain cash flow to our shareholders, and that expectation has not changed. Thinking specifically about 2023, I would point out that CapEx is going to be down materially. So expectations for capital is about $1.5 billion. It is going to be a tale of two halves for this year with an expectation that the second half gets stronger. As we move here into the first quarter, it's my expectation that working capital should be flattish. But as I look towards the balance of the year, I actually hope to consume some working capital with better sales and better pricing. And then remember, our growth investments are starting to pay dividends as well, in particular, with the start-up of PO/TBA. And so again, as I think about the full year, it's my expectation, and I'm looking at Peter and he's nodding at me, but we will continue to return meaningful cash to shareholders, including growing our recurring dividend.

Our next question comes from the line of Vincent Andrews with Morgan Stanley.

Shifting back to polyethylene. Could you give us what you anticipate a reasonable range of outcomes is for Chinese polyethylene demand growth during 2023? And how much of that you think will need to be sourced from the ex-China market? And if you also had a view on what their demand growth actually turned out to be in 2022, that would be helpful.

Yes. Thank you, Vincent. Ken is already close to that.

Yes, we are very close to that. Vincent, thank you for the question. Look, our view for the last 2 years is that the demand for polyethylene in China has been relatively flat. So when you talk about a range of outcomes for 2023, if you look historically, after 2 years like that, you would expect to see a significant snapback in growth, but it doesn't mean that that's a guarantee. So you could see anything from flat to plus 8%. It's very hard to call. That's why that's one of the markets that we watch very closely just because it is largely the price that are in the market. And will drive the absorption of all the new capacity that has come on. But we'll watch it closely and hope to see some more signs of recovery in the near future and more to come.

Our next question comes from the line of Aleksey Yefremov with KeyBanc Capital Markets.

I have a long-winded question. So U.S. ethylene and polyethylene capacity has a cost advantage. And there's a longstanding thesis that due to cost advantages, U.S. can export to anywhere in the world almost as much as necessary. It's not what's happening right now, right? You and the rest of the industry have lower capacity utilization. So why is there not an increase in export? Is it not economical or other logistical limitations that don't allow it? And could this change as we go through 2023 such that your utilization rates go up due to higher exports and there is no imbalance in the domestic market as a result?

Alex, this is Ken. I'll address that question. During the quarter, we observed an increase in exports both industry-wide and at LyondellBasell. This increase was partly due to improvements in overseas demand and a reduction in imports from regions like South America. Additionally, we experienced relief from some of the logistical issues that affected us in the first three quarters of the year, which began to improve in the fourth quarter. I believe this trend will continue into the first quarter, allowing us to return to more normal export levels for 2023.

Our next question comes from the line of Michael Sison with Wells Fargo.

This is Richard on for Mike. Just wanted to touch on the value enhancement program. You've identified $150 million in cost savings for 2023. I know we're probably going to get more details on the Capital Markets Day. But any details early on in terms of what you've able to identify where are the buckets of savings are coming from? And then also just the cadence of the savings through this year would be great.

Thank you, Richard. This is Peter. The value enhancement program is seeing significant progress. We have completed major sites in the United States and have also addressed two major sites in Germany since the start of the year. We are now expanding to additional sites in both the United States and Europe over the coming quarters. So far, we have identified over 3,000 projects, covering areas such as manufacturing, procurement, commercial excellence, and supply chain management. This represents a wide range of different initiatives. We will provide some examples at the Capital Markets Day to clarify further. Right now, we are focusing on projects that offer quick returns, rather than those aimed at increasing capacity, which makes sense given current market conditions. We have a continuous process for prioritizing projects based on their returns and what we observe in the marketplace. I encourage you to stay tuned for more specific examples on March 14th at the Capital Markets Day.

Our next question comes from the line of Duffy Fischer with Goldman Sachs.

I have two quick questions. First, regarding the increase in your operating rates across segments, does that include some inventory build for the summer season? Or do you see it as a sort of sell-through for Q1 as well? Secondly, concerning the polymers for the Americas, what is your plan for the division between U.S. sales and exports this year compared to next year? Will you need to significantly increase your export percentage with the new capacity in North America?

Thank you, Duffy. Let me split it up into two parts on your working capital question on the inventory question. First of all, Kim will give a bit of overview on the PO side. And then Kim can also talk about the olefins, polyolefins.

Thank you, Peter. So as it relates to the propylene oxide side, yes, we're building a slight bit of working capital as a contingency for the startup. But once the startup is successful, which we have tremendous confidence in, that inventory level will come down. And we expect throughout the year to operate at about 85% capacity based on the modest demand we see in propylene oxide right now.

I talk a little bit about O&P, and I want to just echo what Michael said. The teams have done an outstanding job in the fourth quarter managing our assets to be able to maximize cash flow and really focused on producing the products that we need to deliver with customers. We'll continue to do that going forward as we see markets improve, we will increase our operating rates to match that. And that may end up, as Michael said, in markets taking working capital, but that's a good thing because we're going to have a stronger business as a result. But I'm just very proud of the team and everything that they did to manage that during the fourth quarter, which was quite a difficult time. To your question around an increase in exports, we're going to continue to see an increase in exports, I think, in general from the United States market or from the Gulf Coast market, just with all the new capacity coming on. As a company, we have been increasing the portion of exports for us as we ramp up the capacity with the new assets. We're going to continue to see that happen. But clearly, our strategy around channels to market is to find the highest value customers and segments, and that tends to be closer to home. So we're always trying to find more business here, and we use the exports to really optimize the portfolio.

Our next question comes from Kevin McCarthy with Vertical Research Partners.

Can you discuss your view of the U.S. polyethylene contract pricing opportunities? It seems as though spot export prices have come up appreciably year-to-date, while producer inventory has been rationalized to some extent. So perhaps you can talk through what you're seeking currently and your level of confidence that will turn the corner and start to see contract prices move higher as the first quarter progresses?

Thank you, Kevin. Well, it's clear that we continue to have price increases out there in the U.S. market. And we're hopeful that these price increases, we see at least there is a good development in the marketplace. Ken?

Yes. So look, I'm confident we've seen strength in the export market that we did not see last year. So that's a good indication. And I think I mentioned this on the third quarter earnings call, we've sort of seen prices come down to a point of parity with export pricing. So as you see exports go up, you should see domestic prices moving up, and I'm confident then in the first quarter, we're going to see some increases here.

Our next question comes from the line of Joshua Spector with UBS.

Just on APS, I'd just be curious if you want to comment on what the normalized earnings of that residual business are. I mean, if you move $200 million over, I think even looking prepandemic, maybe there's $200 million in residual, like $250 million residual. Schulman used to be about $200 million, and you've got some synergies on top of that. So curious if you could give us some color there.

Definitely a very good question, Josh. And this is one of the reasons why we have repositioned this APS business as well because we are, of course, not happy at all with the results in the APS business. And yes, there are lots of factors that are rolling on market demand and higher costs that we have seen last year, energy costs, and feedstock costs. Therefore, we have decided to reposition this business. And would you like to run it as a separate company within LyondellBasell? Michael, do you want to add?

Yes. Peter, first, I just want to say and express that I'm excited to have the opportunity to lead the Advanced Polymer Solutions business through the transformation that we're embarking on. And I see a lot of potential in this business. And I put in place a team that I think really can deliver. The steps that we're taking, this Catalloy and polybutene, are where we really view this as a better fit in the O&P segment. This enables the new APS, which will be very focused on our core value-creating model of compounding and customer solutions for brand owners and OEMs. We did well on the integration and cost reductions, but our APS business needs a much more customer-centric operating model. And this is going to be part of the journey that we are now embarking on with the transformation. Our focused improvements in customer intimacy, technical support, and service levels will really allow us to fix this business and grow it in a profitable way. And I'm looking forward to sharing more about this transformation journey at the Capital Markets Day coming up.

Our next question comes from the line of David Begleiter with Deutsche Bank.

Peter, on your Circulen volumes, what are the price premiums you’re receiving and what types of margins are you realizing on these Circulen volumes?

Yes. Good question, of course. As we go into the markets with an entire portfolio, we have a reasonable part of the portfolio, we have the circular part of the portfolio, which is either mechanically recycled or advanced recycled. We are in the market – I mean, with the entire family. Yvonne will give more insights in our go-to market during the Capital Markets Day also with our aspirations that we have by having set up these strategic business units. Currently, this is a market which is extremely short. Demand is substantially higher than the supply in the market. So we’re completely sold out in the products that we have available. The premiums that we are getting are quite attractive. Yes. I’m not going to put a number on it as we speak. You’ve heard numbers, I mean, from other calls, and I can say we are at least on that level. That said, Yvonne will be more insights on the aspirations that we have during the Capital Markets Day.

Ladies and gentlemen, that concludes our time allowed for questions. I'll turn the floor back to Mr. Vanacker for any final comments.

Thank you very much, and thanks again. Very good questions, very thoughtful questions. And once again, I hope that you will join us on March 14 as we will then share how LyondellBasell will advance on our strategy and unlock substantial value over the coming years. As we have said in the prepared comments for this call, we have not waited until the Capital Markets Day. We have already put a lot of things into action. And the purpose of the Capital Markets Day is to go deeper into the more specifics on the different pillars of our new strategy. I wish you all a great weekend, and as usual, stay safe.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.