LyondellBasell Industries N : 2023 Statutory Dutch Annual Report

CONTENTS

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1. About LyondellBasell

OVERVIEW

LyondellBasell Industries N.V. is a global, independent chemical company and was incorporated, as a Naamloze Vennootschap, under Dutch law on October 15, 2009. Unless otherwise indicated, the "Company," "we," "our," "us" and "LyondellBasell" are used in this report to refer to the businesses of LyondellBasell Industries N.V. and its consolidated subsidiaries.

We participate globally across the petrochemical value chain and are an industry leader in many of our product lines. Our chemicals businesses consist primarily of large processing plants that convert large volumes of liquid and gaseous hydrocarbon feedstocks into plastic resins and other chemicals. Our chemical products tend to be basic building blocks for other chemicals and plastics. Our plastic products are used in large volumes as well as smaller specialty applications. Our customers use our plastics and chemicals to manufacture a wide range of products that people use in their everyday lives including food packaging, home furnishings, automotive components, paints and coatings. Our refining business consists of our Houston refinery, which processes crude oil into refined products such as gasoline and distillates. We also develop and license chemical and polyolefin process technologies and manufacture and sell polyolefin catalysts.

Our financial performance is influenced by the supply and demand for our products, the cost and availability of feedstocks and commodity products, global and regional production capacity, our operational efficiency and our ability to control costs. We have a strong operational focus and, as a large volume producer of commodities, continuously strive to differentiate ourselves through safe, reliable and low-cost operations in all of our businesses. We purchase large quantities of natural gas, electricity and steam which we use as energy to fuel our facilities and purchase large quantities of natural gas liquids and crude oil derivatives which we use as feedstocks. The relatively low cost of natural gas-derived raw materials in the U.S. versus the global cost of crude oil-derived raw materials has had a significant positive influence on the profitability of our North American operations.

We are a leader in the global chemical industry creating solutions for everyday sustainable living. Through advanced technology and focused investments, we are enabling a circular and low carbon economy.

Across all we do, we aim to unlock value for our customers, investors and society. As one of the world's largest producers of polymers and a leader in polyolefin technologies, we develop, manufacture and market high-quality and innovative products for applications ranging from sustainable transportation and food safety to clean water and quality healthcare.

Our purpose, commitments and values reflect the role we seek to play in the world, what we uniquely deliver to achieve that purpose, and how we behave. Together with our business strategy, our story and culture powerfully communicate the role we play in creating a more sustainable world.

Our Purpose-Creating solutions for everyday sustainable living.

Our Commitments-We are committed to delivering unique products and services in the following ways:

Sustainability-focused innovation-We redefine our industry by developing circular and low carbon products and technologies at scale and championing chemistry as a sustainable solution for our planet.

Ever-better performance-As an inventor and leader in chemistry, we apply our combined expertise to elevate our performance and develop extraordinary, high-quality products.

Outside-in perspective-We develop a deep understanding of emerging trends, end-markets, and consumer needs to stay one step ahead, create meaningful value, and lead our customers forward.

Impactful collaboration-We foster relationships across the entire value chain to successfully solve global challenges, create better outcomes, and amplify our impact on the communities we serve.

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Our Values-Our values give us direction on how to behave, providing grounding in actions that ensure our team is achieving company objectives while also engendering a unifying culture of commitment and shared purpose.

We champion people-We put people at the heart of everything we do by embracing a diverse, equitable, and inclusive culture, adopting a customer-centric lens, and being safety-minded.

We strive for excellence-We relentlessly raise the bar by feeling empowered to take ownership, promoting collaborative ways of working, and being passionate about our impact on the world.

We shape the future-We remain on the cutting-edge by initiating environmentally conscious decisions, spurring creative solutions and cultivating a pioneering mindset.

SEGMENTS

We manage our operations through six operating segments. Our reportable segments are:

• Olefins and Polyolefins-Americas ("O&P-Americas"). Our O&P-Americas segment produces and markets olefins and co-products, polyethylene and polypropylene.
• Olefins and Polyolefins-Europe,Asia, International ("O&P-EAI"). Our O&P-EAI segment produces and markets olefins and co-products, polyethylene and polypropylene.
• Intermediates and Derivatives ("I&D"). Our I&D segment produces and markets propylene oxide and its derivatives; oxyfuels and related products; and intermediate chemicals, such as styrene monomer, acetyls, ethylene oxide and ethylene glycol.
• Advanced Polymer Solutions ("APS"). Our APS segment produces and markets compounding and solutions, such as polypropylene compounds, engineered plastics, masterbatches, engineered composites, colors and powders.
• Refining. Our Refining segment refines heavy, high-sulfur crude oil and other crude oils of varied types and sources available on the U.S. Gulf Coast into refined products, including gasoline and distillates.
• Technology. Our Technology segment develops and licenses chemical and polyolefin process technologies and manufactures and sells polyolefin catalysts.

Effective January 1, 2023, our Catalloy and polybutene-1 businesses were moved from the APS segment and reintegrated into the O&P-Americas and O&P-EAI segments. This move allows the APS team to focus on our compounding and solutions business, and to develop a more agile operating model with meaningful regional and segment growth strategies.

Financial information about our business segments and geographical areas can be found in Note 31 to the Consolidated Financial Statements.

2. Report of the Board of Directors

2.1 Operational and Financial Overview

This discussion should be read in conjunction with the information contained in our Consolidated Financial Statements and the accompanying notes elsewhere in this report. Unless otherwise indicated, the "Company," "we," "us," "our" or similar words are used to refer to LyondellBasell Industries N.V. together with its consolidated subsidiaries ("LyondellBasell N.V."). As we are a holding company incorporated in the Netherlands, we conduct substantially all of our operations through subsidiaries.

Throughout 2023, petrochemical markets faced headwinds from soft global demand, capacity additions and economic uncertainty. Markets were broadly pressured by weak demand for durable goods which impacted margins in the O&P- Americas, O&P-EAI, I&D and APS segments. Refining results declined primarily as a result of lower demand for diesel and other distillates, compared to the prior year. In contrast, oxyfuels margins benefited from tight supply and strong summertime gasoline crack spreads.

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In the first quarter of 2023, we started up the world's largest propylene oxide (PO) and tertiary butyl alcohol (TBA) unit in Texas. These new assets on the U.S. Gulf Coast have an annual capacity of 470 thousand metric tons of PO and one million metric tons of TBA and its derivatives.

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

Revenues-Revenues decreased by $10,600 million, or 20%, in 2023 compared to 2022. Average sales prices in 2023 were lower for many of our products as sales prices generally correlate with crude oil prices, which decreased relative to 2022. These lower prices led to a 22% decrease in revenue. Volume improvements resulted in a 1% increase in revenue, primarily driven by increased I&D sales volumes. Favorable foreign exchange impacts resulted in a 1% increase in revenue.

Cost of Sales-Cost of sales decreased by $9,093 million, or 20%, in 2023 compared to 2022. This decrease is primarily related to lower feedstock and energy costs. Fluctuations in our cost of sales are generally driven by changes in feedstock and energy costs. On an annual basis, feedstock and energy related costs generally represent approximately 70% to 80% of cost of sales. Other variable costs account for approximately 10% of cost of sales and fixed operating costs, consisting primarily of expenses associated with employee compensation, depreciation and amortization, and maintenance, account for the remainder.

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Impairments-During 2023, we recognized non-cash impairment charges of $616 million, primarily consisting of impairment charges of $352 million related to the reallocation of our Catalloy and polybutene-1 businesses being moved from our APS segment and reintegrated into our O&P-Americas and O&P-EAI segments and an impairment charge of $192 million related to LyondellBasell Covestro Manufacturing Maasvlakte V.O.F (our "European PO Joint Operation"). During 2022 we recognized a non-cash impairment charge of $69 million related to the sale of our Australian polypropylene manufacturing facility.

Operating Profit-Operating profit decreased by $2,409 million in 2023 compared to 2022. In 2023, Operating income decreased for our Refining, O&P-Americas, I&D, APS and O&P-EAI segments by $668 million, $541 million, $342 million, $277 million and $235 million, respectively. Operating income for our Technology segment increased by $3 million in 2023 compared to 2022. Results for each of our business segments are discussed further in the Segment Analysis section below.

Income Taxes-Our effective income tax rates of 16.2% in 2023 and 17.1% in 2022 resulted in Income tax expense of $347 million and $785 million, respectively.

Our effective income tax rate fluctuates based on, among other factors, changes in pre-tax income in countries with varying statutory tax rates, changes in unrecognized deferred tax assets, changes in foreign exchange gains/losses, the amount of exempt income, changes in unrecognized tax benefits associated with uncertain tax positions and changes in tax laws. We continue to maintain unrecognized deferred tax assets in various jurisdictions totaling to $78 million as of 2023, which could impact our effective income tax rate in the future.

Compared to 2022, the 2023 effective income tax rate decreased primarily due to the relative impact of our exempt income on reduced earnings, coupled with fluctuations in return to accruals and benefits recognized in the fourth quarter of 2023 related to a patent box ruling. These decreases were partially offset by an increase in the effective tax rate related to non-deductible impairments, an audit settlement recognized in the second quarter of 2023 and fluctuations in uncertain tax positions.

2.1.1 Segment Analysis

We use earnings from continuing operations before interest, income taxes, and depreciation and amortization ("EBITDA") as our measure of profitability for segment reporting purposes. This measure of segment operating results is used by our chief operating decision maker to assess the performance of, and allocate resources to, our operating segments. Intersegment eliminations and items that are not directly related or allocated to business operations, such as foreign exchange gains (losses) and components of pension and other post-retirement benefit costs other than service cost, are included in "Other." Information presented to our chief operating decision maker is prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). As such, the segment analysis disclosed below is prepared in accordance with U.S. GAAP. For additional information related to our operating segments, as well as a reconciliation of EBITDA to its nearest U.S. GAAP and IFRS measure, Operating profit, see Note 31 to our Consolidated Financial Statements.

Effective January 1, 2023, our Catalloy and polybutene-1 businesses were moved from our Advanced Polymer Solutions segment and reintegrated into our Olefins and Polyolefins-Americas and Olefins and Polyolefins-Europe, Asia, International segments. Segment information provided within has been revised for all periods presented to reflect these changes on a retrospective basis as if the changes had taken place prior to the fiscal years presented. This change has no impact on the Company's consolidated statements of income, consolidated balance sheets, consolidated statements of shareholders' equity and consolidated statements of cash flows previously reported.

Our continuing operations are managed through six reportable segments: O&P-Americas,O&P-EAI, I&D, APS, Refining and Technology.

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Accounting policies for internal reporting, which are based on U.S. GAAP, are materially similar to those described in Summary of Material Accounting Policies (see Note 2 of the Consolidated Financial Statements), except for:

• Inventories-The Company measures its inventories in accordance with the Last In, First Out ("LIFO") method, which is permitted under U.S. GAAP. According to International Accounting Standards ("IAS") 2, Inventories, the LIFO method is prohibited under IFRS. Therefore, inventories are measured using the First In, First Out ("FIFO") method for the Consolidated Financial Statements. This inventory measurement difference between the reportable segments and the consolidated information results in different cost of sales and net profit for the period.
• Employee Benefits-Under U.S. GAAP, ASC Topic 715, Compensation-RetirementBenefits ("ASC 715") requires the interest expense component of pension expense to be calculated as the product of the defined benefit liability and the discount rate. Such interest expense is netted against interest income resulting from the expected rate of return on plan assets applied to the market value of assets. The expected rate of return on plan assets is a longer term rate, and is expected to change less frequently than the discount rate, reflecting long-term market expectations, rather than current fluctuations in market conditions. Under IFRS, in accordance with IAS 19, Employee Benefits, the Company recognizes a net interest expense (income), which is the product of the net defined benefit liability (asset) and the discount rates, as a component of its pension expense on defined benefit plans. Under ASC 715, past service cost and actual return on plan assets in excess of expected return are initially recorded in other comprehensive income and subsequently recognized in earnings over the average remaining service period of the participants to the extent it exceeds the "corridor." The corridor is defined as the greater of 10 percent of the accumulated projected benefit obligation or the fair value of the plan assets as of the beginning of the year. Under IFRS, the Company immediately recognizes past service cost and net interest expense (income) as discussed above in the Consolidated Statement of Income. Actual return of plan assets in excess of recognized interest income is permanently recorded in other comprehensive income.
• Joint Operations-Both U.S. GAAP and IFRS require a reporting entity to consolidate an entity that it controls as a result of holding a majority of the voting rights. Under IFRS 11 Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint ventures. For joint operations, we recognize our share of revenue earned from the joint operations and our share of expenses incurred. We also recognize the assets associated with the joint operations that it controls and the liabilities it incurs under the joint arrangement. For joint ventures we recognize our interest in the joint venture or associate as an investment and uses the equity method of accounting. Under U.S. GAAP, ASC 323, Investments-EquityMethod and Joint Ventures, we account for equity investments using the equity method of accounting if we have the ability to exercise significant influence over, but not control of, an investee. Significant influence generally exists if we have an ownership interest representing between 20% and 50% of the voting rights. Under the equity method of accounting, investments are stated initially at cost and are adjusted for subsequent additional investments and our proportionate share of profit or losses and distributions.
• Other-Amongst others, there are differences between IFRS and U.S. GAAP with respect to leases, discontinued operations, the subsequent measurement of asset retirement obligations, cross-currency swaps, capitalization of development costs related to research and development and amortization of debt issuance costs. If material, these differences are separately disclosed in the Consolidated Financial Statements reconciliation.

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The following tables reflect selected financial information for our reportable segments:

O&P-Americas Segment

Overview-EBITDA decreased in 2023 relative to 2022 primarily driven by lower olefins margins.

In calculating the impact of margin and volume on EBITDA, consistent with industry practice, management offsets revenues and volumes related to ethylene co-products against the cost to produce ethylene. Volume and price impacts of ethylene co-products are reported in margin.

Ethylene Raw Materials-Ethylene and its co-products are produced from two major raw material groups:

• NGLs, principally ethane and propane, the prices of which are generally affected by natural gas prices; and
• Crude oil-based liquids ("liquids" or "heavy liquids") including naphtha, condensates, and gas oils, the prices of which are generally related to crude oil prices.

We have flexibility to vary the raw material mix and process conditions in our U.S. olefins plants in order to maximize profitability as market prices fluctuate for both feedstocks and products. Although prices of crude-based liquids and natural gas liquids are generally related to crude oil and natural gas prices, during specific periods the relationships among these materials and benchmarks may vary significantly. Ethane made up approximately 70% of the raw materials used in our North American crackers in 2023 and 2022.

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

Revenues-Revenues decreased by $3,200 million, or 22%, in 2023 compared to 2022. Lower average sales prices for all businesses resulted in the 23% decrease in revenue primarily driven by increased market supply and lower demand. Higher volumes due to improved operating results resulted in a 1% increase in revenue.

EBITDA-EBITDA decreased by $562 million, or 20%, in 2023 compared to 2022. Lower polyolefins results led to a 29% decrease in EBITDA primarily due to lower margins as a result of lower average sales prices reflecting softer demand and new industry capacity. Higher olefins results contributed to a 7% increase in EBITDA driven equally by increased volumes and higher margins, due to higher operating rates and lower feedstock and energy costs, respectively.

O&P-EAI Segment

Overview-EBITDA decreased in 2023 compared to 2022 mainly as a result of lower polyolefin margins partially offset by higher olefins results.

In calculating the impact of margin and volume on EBITDA, consistent with industry practice, management offsets revenues and volumes related to ethylene co-products against the cost to produce ethylene. Volume and price impacts of ethylene co-products are reported in margin.

Ethylene Raw Materials-In Europe, naphtha is the primary raw material for our ethylene production and represents approximately 65% to 70% of the raw materials used in 2023 and 2022.

The following table sets forth selected financial information for the O&P-EAI segment including Share of profit of associates and joint ventures, which is a component of EBITDA.

Revenues-Revenues decreased by $2,976 million, or 22%, in 2023 compared to 2022. Lower average sales prices resulted in a 23% decrease in revenue as sales prices generally correlate with crude oil prices, which, on average, decreased compared to 2022. Lower volumes resulted in a revenue decrease of 1% primarily due to weak demand. Favorable foreign exchange impacts resulted in a revenue increase of 2%.

EBITDA-EBITDA decreased by $187 million, or 105%, in 2023 compared to 2022. Lower polyolefins results led to a 241% decrease in EBITDA primarily driven by decreased margins due to lower average sales prices reflecting weak demand. Higher olefins results led to an 88% increase in EBITDA driven equally by higher volumes and margins resulting from the absence of planned and unplanned downtime and lower feedstock and energy costs, respectively. In 2022, we recognized a $69 million non-cash impairment charge in conjunction with the sale of our polypropylene manufacturing facility located in Australia. The absence of this charge in 2023 resulted in a 39% increase in EBITDA. See Note 31 to the Consolidated Financial Statements for additional information.

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