Douglas J. Pike - Head of Investor Relations James L. Gallogly - Chairman of Management Board, Chief Executive Officer and President Karyn F. Ovelmen - Chief Financial Officer and Executive Vice President

David L. Begleiter - Deutsche Bank AG, Research Division Christopher J. Nocella - RBC Capital Markets, LLC, Research Division Duffy Fischer - Barclays Capital, Research Division Vincent Andrews - Morgan Stanley, Research Division Neal Sangani - Goldman Sachs Group Inc., Research Division P. J. Juvekar - Citigroup Inc, Research Division Kevin W. McCarthy - BofA Merrill Lynch, Research Division Nils-Bertil Wallin - CLSA Limited, Research Division Michael J. Ritzenthaler - Piper Jaffray Companies, Research Division Frank J. Mitsch - Wells Fargo Securities, LLC, Research Division Hassan I. Ahmed - Alembic Global Advisors Donald Carson - Susquehanna Financial Group, LLLP, Research Division Robert Walker - Jefferies LLC, Research Division John Roberts - UBS Investment Bank, Research Division

Hello, and welcome to the LyondellBasell Teleconference. At the request of LyondellBasell, this conference is being recorded for instant replay purposes. [Operator Instructions] I'd now like to turn the conference over to Mr. Doug Pike, Vice President, Investor Relations. Sir, you may begin.

Thank you. Well, hello, and welcome to LyondellBasell's Third Quarter 2013 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 and 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 website at www.lyondellbasell.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. 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. Now, 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.lyondellbasell.com/investorrelations. Reconciliations 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.lyondellbasell.com. Now finally, I'd like to point out that a recording of this call will be available by telephone beginning at 2:00 p.m. Eastern Time today until 11:00 p.m. Eastern Time on November 29 by calling (866) 667-5779 in the United States and (402) 220-6423 outside the United States, and the passcode for both numbers is 5421. Now during today's call, we're going to focus on third quarter 2013 performance, current environment and brief review of active projects in the near-term outlook. With that being said, I'd like to 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 take a look at Slide #4 and review a few financial highlights. The third quarter continued the trends of the first half of the year. We generated $1.53 billion of EBITDA. This led to income from continuing operations of $854 million and diluted earnings per share of $1.51. I would like to highlight the bar charts on this page and the steady performance that we have realized. Industry conditions, particularly around oil and natural gas pricing, coupled with our strong operations of business portfolio, have led to consistent quarterly results. This type of performance is seldom associated with cyclical businesses like chemicals and refining. While we have had some volatility among our product groups and normal seasonality across the year, we achieved quite steady results overall. We will look at the details of individual businesses later in the call. During the quarter, we declared a regular interim dividend of $0.50 per share and repurchased 13.5 million shares. If you would turn to Slide #5, you will see our year-to-date safety results. Overall, our safety statistics continued to be among the very best in the industry, but we have not improved year-on-year. We believe that the safety perfection is achievable, and to get there, we must have continuous improvement. We want no one hurt on the job, not even the minor injuries we have experienced. We'll press even harder in the coming days. I'd like to now turn the call over to Karyn to discuss our financial performance.

Thanks, Jim. Please turn to Slide #6, which shows third quarter EBITDA by segment. As Jim said, the quarter generally reflected conditions that prevailed throughout 2012 and the first half of 2013. This consistency is repeated in our segment earnings. As you can see, the third quarter earnings profile is very similar to the pattern of the last 12 months. During the third quarter, O&P-Americas generated EBITDA of $841 million. Exclusive of planned maintenance at our Clinton site, our ethylene assets continue to operate near 100% of capacity. O&P-EAI EBITDA was $204 million, a third consecutive quarter of $200 million or better performance. Intermediates & Derivatives segment EBITDA was $427 million. Strong results in the oxyfuels and styrene added to steady performance in propylene oxide following second quarter turnarounds. Refining segment EBITDA was slightly above breakeven. Poor gasoline spreads, coupled with marine costs and facility maintenance, more than offset an improved heavy light spread. In the right side of the slide, you see a similar pattern across the last 12 months segment EBITDA. O&P-Americas and Intermediates & Derivatives segments have stood out throughout the period. Before discussing our cash flow, I want to mention 2 other items. First, regarding our cash fixed costs. Our annual underlying cash fixed costs continue to run at a level consistent with prior year as cost reductions offset inflation. However, due to timing factors, our second half costs are expected to run a few percentage points above the first half rate. We experienced a similar trend last year. Second, the third quarter effective tax rate is somewhat below the annual run rate. The quarter was impacted by certain discrete items, which reduced tax expense by approximately $25 million net. These items include changes in valuation allowances and the closing of certain prior year tax audits.…

Thanks, Karyn. Let's discuss segment performance, beginning on a Slide #9, with Olefins & Polyolefins - Americas. Third quarter EBITDA was $841 million, approximately $110 million less than the record second quarter results. Approximately $65 million of the decline can be attributed to our scheduled maintenance turnaround at our Clinton ethylene/polyethylene site. Joint venture equity income was $7 million, and we received dividends of $15 million. Versus the second quarter, the ethylene contract price declined by approximately $0.01 per pound. The cost of both naphtha and propane feedstock increased during the quarter, both cost -- ethane costs decreased by approximately $0.03 per gallon. Increased propylene prices caused us to restart our metathesis unit, which produces propylene from ethylene. During the quarter, the unit produced approximately 100 million pounds of propylene, contributing approximately $25 million to EBITDA. Exclusive of the turnaround and the metathesis unit operation, our ethylene production averaged 98% of nameplate capacity. Our olefin operations continued to outperform the industry. Approximately 87% of our ethylene production was from NGLs. Ethane accounted for 70% and propane, 15%. Combined, polyolefin results improved versus the second quarter. Our average third quarter polyethylene price increased slightly less than $0.02 per pound. Sales volumes were relatively unchanged. Polypropylene volume increased by approximately 5%. The price spread over propylene decreased by $0.01 per pound. Entering the fourth quarter, we have benefited from the restart of our Clinton facility. During the winter months it's not uncommon to experience seasonally higher raw material costs but, thus far, this has not been a significant factor. Let's turn to Slide #10 and review our performance in the Olefins & Polyolefins - Europe, Asia and International segment. Third quarter EBITDA was $204 million, a decline of $91 million versus the second quarter. Joint venture equity income was $48 million, and…

[Operator Instructions] Our first question comes from David Begleiter of Deutsche Bank.

Jim, in your project chart, you mentioned the refining opportunity given Canadian -- discounted Canadian crudes. Is that still in that $200 to $300 range? And you mentioned you got some of those discounted crudes this quarter and for next year. What's the impact do you think nearer term and longer-term from discounted Canadian crudes?

Yes, David, we don't have new capital per se that will be required to bring that Canadian crude on. Basically, we have reserve capacity in certain pipeline projects that are expected to start up midyear next year. Maybe something in the neighborhood of 75,000 plus barrels of additional Canadian crude will come down and we'll see what the crack spreads are at that point in time but it should be a nice positive for our refining results.

[indiscernible] is the PO JV in China still on track for 2016?

Yes, we're still working there pretty hard. We're in the process of negotiating final agreements and so that's tracking along.

Our next question is from Chris Nocella of RBC Capital Markets.

Just a couple of quick questions on cash. You have $4.4 billion of cash in the balance sheet, which is the highest in 2 years and you generate over $1 billion a quarter. So is it reasonable to assume here maybe a little bit higher regular dividend and maybe special dividend at some point? And then second, the total debt to LTM EBITDA is 1x, which is below your peers. What do you view there as a good normalized leverage target maybe a little bit longer-term?

Let's see, we ended the quarter with $4.5 billion. However, you do need to take into consideration that $1.5 billion of that balance is a result of the bond offering that we've done -- that we did this quarter. So therefore, from a timing perspective, we do have higher cash balances than we historically carry. So the bond proceeds are a big part of the source of that cash and that's really purely timing related. However, you do need to consider the potential use of this cash over the next few quarters. So if you extrapolate the rate at which we're funding our buybacks today, not to infer that, that is what we're planning, but if you look at it in that context, coupled with funding of our growth projects, there's a real quantifiable potential use of that cash over the next few quarters. But in terms of targets, in terms of our overall leverage or cash targets, there's absolutely no targets. That will depend on the cash needs coupled with future cash flow generation profile. We're generating a significant amount of free cash flow, as you've indicated, but we're also returning a significant amount of cash directly to our shareholders. And if you look at our current run rate, it's $1 billion to $1.25 billion a quarter, which, obviously, is a significant use of that cash as well. In terms of overall leverage, we'll continue to look at our balance sheet. We're going to be prudent, methodical and opportunistic, just as we have been in this third quarter whereby we've significantly increased our leverage around 35%.

And Jim, you mentioned that capital costs have crept a little higher for some of your projects in the Gulf Coast. Where are you seeing the inflation in this? And is this something that is company specific? Or is this a bigger industry issue you think?

This is a bigger industry issue. You see wage inflation that's fairly significant on the Gulf Coast right now due to a variety of projects that are starting to go into engineering. Our projects are actually in construction. And in a number of instances, we've done lump sum type bids on particular pieces of equipment. So we have very good visibility into where we think our project costs will end up. As I said, there's always some risk of productivity slowdown, we're on-site, or a little bit more wage inflation. But we've added that into our latest estimates, and we're feeling good about our projects. I think the key is that we're so early compared to our competition and that should give us a substantial benefit. I personally think if it's starting to get tight today with the few number of projects that are actually in construction, you should expect that to really ramp up a few years from now. So we're feeling good about being early movers.

Our next question is from Duffy Fischer of Barclays.

Jim, a couple of questions. One, you've got a very nice cadence of CapEx projects coming in that you laid out on Slide 13. When you think forward and let's just say that oil and gas stay where they're at today, what would that cadence look like if we looked out, say, 2016 to '19, will there be another slug of similar size over that 4-year period that could deliver maybe another incremental $1 billion or so of EBITDA?

Well, we haven't announced anything yet, Duffy. As you may know, we start working on projects that would be announced in that time frame, about now, start talking to third parties, negotiating deals, that kind of thing. And so we're not ready to discuss those future projects. But as you would expect, we're working on our future growth opportunities today. Nothing to announce yet.

Okay. And then we've had INEOS talk about potentially keeping Grangemouth open now with what would be a second deal around exporting ethane from the U.S. to Europe. What are your general thoughts about that becoming a bigger trend? Others, other than INEOS, maybe some of the Asians getting involved, is that a risk or a serious risk, I guess, us to our ethane pricing here the U.S.?

No, I think, Duffy, that you're going to see a limited amount of ethane exported like that. In fact, if you read those headlines closely, I think they've asked for some subsidy to help bring ethane into the site to make it more competitive. There's been negotiations going on in the press in that site, so I don't particularly want to comment about its future. But, obviously, there's a fair amount of margin pressure on certain sites in Europe and that's why we continue to work the cost so hard. And I think if you look at our European Olefins & Polyolefins performance compared to our peer group, we're leading the pack. So we work the costs. We try to run differentially and try to make a bit of money opportunistically. I don't think there's going to be a lot of ethane pressure, although I have historically said that propane costs should come up as more export facilities are available. Propane inventories are still pretty high at the moment, but you have seen exports increase. And I think over time, the percentage of propane as a heating value to crude oil will continue to march up.

Our next question is from Vincent Andrews of Morgan Stanley.

Maybe, Jim, you can expand on those comments and just speak specifically to your sort of outlook on ethane S&D going into 2014 and I guess, my particular question is just what the probability is, you think, of breaking natural gas parity in 1Q maybe as some of the new pipes make more product available in Mont Belvieu?

Yes. Well, right now, things look very good for ethane. Inventories are still high and everybody is running and the prices haven't increased. So that feels very good. There is always a possibility that ethane could trade below its heating value with natural gas and I've seen various studies on that. At particular moments, I think that's probable. But longer-term, based on what we're seeing today, it seems that will trade around parity with natural gas. We'll just have to see. I don't want to predict that it will stay under for a long period of time, but when people are in turnarounds and all, there will be a lot of pricing pressure. Well, you can see that in the first quarter, sometimes in the fourth quarter over the years.

Okay. And just a follow-up, how are you thinking about the refinery strategically? I mean, maybe now is not the best time given where it is in the cycle. But as part of the overall portfolio, how should we be thinking about that over the next several years?

Yes. Well, as I said, our refinery results this quarter are disappointing. We had lost profit opportunities that would have improved our results by about $30 million. That should not be a continuous trend. As you've seen over the last couple of years, we have improved our operations, our run rates. So that's a bit of a blip. But we still don't like it. Refining margins are very pressured and as a result, the assets out of sold have traded for very, very low values. We'll always continue to look at our strategy and our portfolio and if at a later point in time, it makes sense, somebody offers us more money than that asset is worth in our mind, we always -- that's true of any asset we have, we would consider a strategic transaction. But for now, our focus is let's get it running right, let's improve the profitability and there will be a better day.

Our next question is from Bob Koort of Goldman Sachs.

This is actually Neal Sangani on for Bob. There's been a sizable differential open up between Texas and Louisiana spot ethylene, can you explain how that flows through the business and the downstream margins?

Sure. Well, you're absolutely right that there has been quite a change in spot. Today, NTP, the last settlement, around $0.46 and spot is just slightly above that at Belvieu. On the other hand, Louisiana, it's closer to mid-$0.60 range. And so there is a very, very big difference. That's driven by a couple of significant factors. One, Williams being out; and second, the Evangeline pipeline repairs that are taking months. And so that's kind of upset the normal conditions and so there is a significant short on the Louisiana side and, unfortunately, we can't get ethane -- or ethylene to them from Belvieu. So that's had a near-term impact. Now having said that, we have sold less spot volumes for a couple of different reasons. One, as I mentioned, we're running our metathesis unit, my making nice margins in that, so less need to move spot. And secondarily, we have a big turnaround coming next year and we'll opportunistically put some ethylene into inventory and prepare for that.

Okay. And then your efforts to lighten the feed slate in Europe, are those mostly complete or is there still more you can squeeze out to crack more LPGs?

Well, I think there's more we can do, a couple of very small capital projects to increase some flexibility. As I mentioned, the opportunity in the third quarter was less than in the second quarter. As you know, butane in the winter months doesn't trade to the advantage that it does sometimes in the summer. And propane moved up a bit. So with those 2 factors, we weren't able to make the same margin. We'll watch it very closely. We could improve it a bit. I think you saw in the second quarter we did have higher rates than 40%. And particularly at Berre, France, we've opened up that operating window quite a bit and we'll continue to look at Wesseling. We're renegotiating some feedstock supply agreements that will give us more flexibility. So more to come in Europe.

Our next question is from P.J. Juvekar of Citi.

Jim, you've been rightly concerned about propane prices going up and I think you mentioned propane to be about 15% of your feedstocks. Can you tell us how low can you go on propane? And then, secondly, do you plan to keep running your metathesis unit going forward?

Well, we could go materially lower on propane if we needed to. There's other things we can do to fix the back end on that, some of that around condensates. So we watch that pretty closely. We could go lower. We prefer to crack as much ethane as possible. Now we need to recognize in this quarter that we had Clinton down and that's why it looked like we cracked less ethane. So that's almost a purity ethane cracker and so the ratios went down a little bit. Propane is not as preferred as it was. So we can go a bit lower on that. The second part of your question, again, P.J.?

I was talking about the metathesis unit and do you plan to keep that running?

Yes, we campaign the metathesis unit based on where the propylene values are. And when propylene prices are high and given the ratio of ethylene to propylene, we'll run that in double dimer mod and have a pretty nice return off of it. And that makes sense to do that right now and especially given where spot ethylene is. It just gives us another dial that we can use to increase our profitability. So we'll campaign it.

And just secondly, on your Intermediate business, can you talk about your MTBE contribution? And then I think for the first time, Jim, you talked positively on styrene. Is that something -- is that a trend that we should expect going forward?

Well, I'd like to talk about styrene first because it's such a nice thing to talk about. It's very seldom that we have a couple of quarters in a row of nice styrene earnings. And what some of the people are actually beginning to say that supply and demand are pretty balanced and with a little bit of operating upset here or there or somebody in turnaround, that profitability is there. So we think styrene could be a reasonable contributor going forward. And you don't see a lot of new capacity coming on. So overall, we think that's a commodity that's -- we're going to see more profitability from. Is it a long-term trend? I don't know, but we have a couple of quarters of nice results and it's feeling better. In terms of MTBE, well, last year, we had some very remarkable numbers. This year is more typical. Gasoline values are low right now so you see some pressure on MTBE prices but we've had another really solid year of oxyfuels results. And of course, we're the industry leader in oxyfuels, #1 in competitive position. So it's been a good business. We'll see some seasonality, but we expect that to continue to be a nice contributor going forward.

The next question is from Kevin McCarthy of Bank of America.

Jim, just a follow-up on propane. It seems there are quite a few moving parts. You have rising costs, your feedstock flex capability and then you have your metathesis flywheel. So if you boil all that down, what impact, if any, did you experience from rising propane costs in the third quarter versus the second quarter?

Kevin, I don't think it was a very big story. It was -- the bigger story in our O&P margins was simply Clinton being down. And we finished that turnaround basically on time and on budget. It was as we expected. And so -- and propane pricing increased a bit. It just didn't have a significant impact, again, because we have different dials we can turn and we worked around it very neatly and made some money in metathesis.

Okay. And then just to follow-up on the spot ethylene market. It's such a thin market versus the contract market. But I think it can often be a component or a starting point for some of the contract ethylene negotiations. So given the dislocations out of Evangeline and so forth, how do you see the ethylene contract playing out as the quarter progresses? Is it going to be a big factor in terms of the spot market action or will people look past it more so than normal?

Well, I think I always try not to publicly state where I think NTP is going to turn out. So I won't do that. But I'll just tell you that we're running hard right now and at full capacity and everything is moving. So there's still plenty of pressure. You've got to watch and see what's happening in PVC and a few others things when you start talking NTP. But in terms of volumes and all, we're doing great. And I think there's going to be some people trying to build inventories for turnarounds next year. There's going to be quite a few of them. I think there'll be some people trying to not sell the spot, to build some inventories, which should keep things pretty tight.

The next question is from Nils Wallin of CLSA.

One thing that's been interesting in the last 2 quarters is that the polyethylene margin over ethylene has started to go positive. Just curious as to what your view would be on that going forward, if this was just a couple of quarter anomaly, or do you expect polyethylene margins over ethylene to be positive in the next year or 2?

Well, we're seeing really tight supply dynamics and most of the types of polyethylene here in the Americas right now, particularly high density. There've been some outages that have really put people in short positions and we're seeing really strong demand from our customers. And so that's been a plus. And then you have Louisiana out -- or I shouldn't say out, but short of ethylene, which puts a little more pressure on it going forward. So on the polymer side, it looks pretty good near-term.

Got it. And then just on the NGL portion, you only had about, based on my numbers, about 2% of your feed slate based on butane and during the quarter, at some point, butane costs were actually below propane. So I was curious as to what you thought of the relative cost differentials between butane and propane going forward? And how Lyondell can perhaps take advantage of those?

Well, we watch our crack daily, I'd say, almost hourly. And so as things come in favor, we make quick, quick transitions. We've got a nice pipeline network where people manage that on an ongoing modeling basis, and they're looking at everything from the co-product values to what they can do in the spot market. So I would say that as those opportunities present themselves, we'll be all over it and have been.

Next question is from Mike Ritzenthaler of Piper Jaffray.

I'm curious if the Clinton shutdown affected local ethane prices for Morris? Was there a way to measure that sort of local elasticity from changes in demand?

That gets pretty tricky to do, because one of the things that happens is sometimes other people know we're turning around, doing turnaround and so they're doing the same thing. And so it reduces the supply. So it wasn't a one-to-one translation. There was some benefit to Morris, but it was pretty modest.

Okay, that make sense. And then on that renewable diesel project that you've mentioned and its effect on RIN prices, was there any CapEx that's associated with that? And does that project make sense and I guess, how easy would it be to walk away from that if RINs come down materially in 2014 to the levels that maybe they were at in 2012? Or is that something that's going to be part of the portfolio long term?

That was a very, very modest investment basically around a tank and being able to take vegetable oil in, so very, very, very modest and then we run it through a hydrotreater and -- it's simple. We could come in and out of it. It had almost an immediate payback at the prize of RINs at the moment. So it was a very easy decision to do, and we can run it or not run it based on where the RINs are.

Our next question is from Frank Mitsch of Wells Fargo.

I apologize, you were talking before about running your refinery at a lower level to make a change that would benefit $5 million a month. Did I hear that correctly?

Yes. Basically, what I was saying is we were having difficulty with our vacuum unit. We had some trays that were fouled and we needed to get in. We had that condition for a while, and it got to the point we had to go in and do something about it, and so we did. Coming out with that condition eliminated, it should allow us benefit of about $5 million.

A month, correct?

Yes, yes, and that's -- but again, that's just getting back to normal operations. It was a -- the vacuum unit has been fouled for a while and it just got worse.

All right. So if I look back over the past couple of quarters, that's probably one of the reasons why the Refining segment didn't do as well but going forward, we're going to see the benefit of that, correct?

Yes, that's right. But I'll make the point that we've been disappointed over the last couple of quarters in our results. We had a lot of turnaround work at the beginning of the year. But we're better than that in Refining. And I've explained that to our team. We pride ourselves in being the top operators, not only in the chemical industry, but in refining. And we haven't lived up to our personal expectation of ourselves lately. So I've challenged our team to get on the ball again and let's get the numbers better. We're performing as an average Gulf Coast refinery but we don't like average.

That's -- if I could have you to give a pep talk to my children, that would be awesome. Karyn, I noticed that the accrued liability's ticked up $500 million sequentially. I'm not sure, what's beyond that? What's behind that?

Yes, the primary reason for that is the dividend. So the dividend that we declared here in the third quarter was paid in October of this quarter.

Our next question is from has Hassan Ahmed of Alembic Global.

One of the reasons cited for your sequential decline in EAI EBITDA was compressing core product values. Now, I just wanted to sort of hear your views about how you think core product value contribution to margins in, call it, Europe, Asia, would look like going forward? Obviously, a bunch of moving parts with regards to shift towards lighter feeds and implications on, call it, propylene and butadiene prices and the like. I mean, should we, relative to history, see the higher core product contributions to margins lower? I mean, how does that stack up in the near to medium term?

I think propylene kind of has a world settling price. And while there's some dislocations from moment to moment based on incidents, or this or that, we've seen some of that in the United States recently, I think Europe has been more stable there. And, of course, we're monomer short in Europe, significantly monomer short. I think the bigger story will be butadiene and we've seen some incredibly low butadiene prices. It happened to be coincidental at the time we started up our unit but that didn't add enough capacity to cause that. It was just more of what was going on downstream. And we've seen some firming. We've seen some people talk about maybe some more orders being filled and as a result of that, we've see some price increases in butadiene and I think most people expect that to start firming again. A couple of years ago, the crack in Europe was almost carried by butadiene. And it since has become almost a negative in the crack. So some firming of butadiene will be good for us and I think it's a plus going forward. And we expect to see that.

Fair enough. And a follow-up, if I may. I was just taking a look at Slide 13 with your growth projects, and comparing that with a presentation from, probably, a month ago or so, and one of the things missing was the sort of in-development row, where you had a possible new polyethylene line and olefins, NGL recoveries sort of line as well contributing, I'm going to say, $160 million to $230 million incremental EBITDA, so is that still sort of valid?

Yes, those things are still working. We're just not in construction per se. Like, this list are things that you can see, steel and concrete, on the ground now. So that's why it was not in the list. But we're still working those things just like we were before.

And your estimate of sort of EBITDA contribution is similar to that presentation I referred to?

That's right.

Our next question is from Don Carson with Susquehanna.

Jim, I had a question on RINs. Just looks like RINs were, I think, $0.25 in the first quarter, $0.50 in the second and I think you mentioned $0.35 in the third. So if the EPA proposal to cut the RFS to 13 billion or 13.2 billion gallons of corn-based ethanol next year, if that holds and RIN prices continue to trade lower, what would you see is the year-over-year tailwind in RIN costs going into 2014?

Yes, well, they've -- RIN costs at the moment have come down on a lot. It's closer to that low end of the number I quoted, around $0.25. So that's significant. We were saying last quarter that it could be, at the high price, as much as a couple of hundred million dollar headwind to us and obviously, the prices have come down drastically since then. So it's a plus. It's hard to predict what the government's going to do, but the EPA has been saying the right things and hopefully, it will be less of a factor.

And then, also a question on your methanol start up later this year. You'll be buying a lot more natural gas than you do currently. Is it your plan to just be a spot buyer in the markets? Or will you be hedging forward to try and lock in spreads on the methanol business? What's the whole approach to natural gas hedging?

Right now, given where natural gas prices are, we like the position that we're in. And so we're not planning to do any hedging. We're coming into November and gas prices are still incredibly low, Henry Hub around $3.60, something like that. So we're fine with the gas prices, not planning to hedge. We're just anxious to get the unit running. We're on the cusp of being ready to mechanically compete -- complete it and hopefully, ramp it up pretty quickly. It's a 10-year-old unit; we recognize that. But we've been working it extremely hard and we're literally getting ready to start the thing up soon.

Our next question is from Laurence Alexander of Jefferies.

This is actually Rob Walker on for Laurence. I guess just to -- first, to follow-up on your comments around methanol. Not to jump the gun and you haven't started up yet, but what kind of prospects would you have for either debottlenecks over time or kind of your inclination or interest in more methanol capacity?

Yes, I was out there visiting with the team just a couple of weeks ago getting ready for the startup and making sure everything was ready to go, operators ready to run the unit and they were already talking to me about the possibilities they were seeing to debottleneck the unit. That's typical. We'll have to see the operating constraints but they're telling me that there's some [indiscernible] debottleneck opportunities once we get the thing running. Now, first and foremost, our priority was to get it running, not add capital to it and complicate the startup. But they said there's probably some pretty simple things we can do to ramp it up. Going forward, we'll keep an open mind toward additional methanol. The gas prices have been staying very, very low and other people have been talking about it. But, I think, the key thing about this unit was when you look at the capital cost of this compared to a newbuild, just remarkably low. And so that's why it's such a powerful investment for us.

Okay. And then, just wondering why is JV income growing so fast? And can that continue?

Well, I think we've been running the Saudi operations a little better than we had before. There's still opportunities to run those assets better, frankly, and we're going to pay more attention to it. We are not the operators, but we don't run our joint venture units as well as we run our own units. We pride ourselves on operational excellence. But if we can move up those rates to something closer to what we do, there's still more potential there.

The final question comes from John Roberts of UBS.

Jim, would you hazard a guess at how high propane might go or how small its discount to its oil-based equivalent value might get?

Well, I can kind of range it for you based on some history. I think, currently, it's about 44%, something in that neighborhood, I think. And if you go back to the 2000, I think it was about 80%. And 2004, 2008, maybe closer to 70%. So there's a possibility for it to move a fair amount. But there's got to be more export facilities that are coming online. There's quite a bit that's announced. There's people -- you've already seen significant more exports in this year compared to last year. But on the positive side, inventories are still high because there's been a lot of drilling success. So overall, it's a good story. Remember that it's $0.30, $0.40 per gallon shipping costs and then kind of do the math from there. And there's -- it's always going to trade at some discount because the transportation costs and all, depending upon where it's produced. But there's room for it to come up some more against crude oil.

I think that's the last question today and we're just about out of time. So I'm going to ask Jim to make a few comments and close the call off.

Okay. Thanks, Doug. Just a few final thoughts. First, as I mentioned at the very beginning, we've had consistent quarter-over-quarter results and that's not representative of commodity businesses. We have strong operational results, still top decile in safety performance, very reliable operations. We did have 4 quarters in a row of above nameplate operations in U.S. olefins. We weren't able to achieve that again this quarter because we had the Clinton turnaround. We knew going into the quarter, we couldn't string 5 together. We got very, very close, if you take Clinton out, it was 98%. And so well above industry rates. We're also very mindful of our costs. We're in the budget season at this moment in time, and my mantra is always flat to falling. We work these fixed costs hard, we're a margin business, we're very, very disciplined on costs and don't intend to give up any of the ground that we've gained so far. And in certain areas, we'll work those costs extremely hard given competitive pressures in Europe in refining. We tried to emphasize on this call our significant growth profile. Basically, we have a new project coming online every 6 months for the next couple of years. And that's an exciting growth profile, nice earnings potential. Part of that is it's faster and cheaper than our competition. And we hope to have our projects paid for before the other people bring their assets online. We have a very exciting future. We're generating a lot of cash. We've been providing that cash to our shareholders, both in regular dividends, historically special dividends and now, share repurchases. And we expect that we'll continue to perform very, very well quarter to quarter. Thanks for your interest.

This does conclude today's conference call. You disconnect your phones at this time.