Occidental Petroleum Corporation has announced the completion of the sale of its chemical division, Occidental Chemical Corporation (OxyChem), to Berkshire Hathaway for $9.7bn in cash, subject to customary purchase price adjustments. The transaction marks a strategic shift by the American group towards its oil and gas assets, as part of a financial restructuring plan aimed at reducing its debt.
A strategic shift focused on hydrocarbons
The sale of OxyChem follows several years of asset portfolio transformation by Occidental, according to President and Chief Executive Officer Vicki Hollub. The company now intends to focus on operating its high-return oil and gas fields and driving innovation across its energy divisions. Occidental’s oil and gas portfolio includes major operations in the United States, the Middle East and Latin America.
Occidental is nonetheless retaining certain environmental liabilities related to OxyChem’s legacy operations. The company stated that its subsidiary Environmental Resource Holdings, LLC (ERH) will continue to assume tort claims and environmental liabilities primarily associated with historical operations outside of the currently operating facilities.
Environmental obligations excluded from the transaction
Remediation activities will continue under the management of Glenn Springs Holdings, Inc., acting on behalf of ERH. Occidental expects to fund these operations over several years in line with workplans approved by the relevant authorities. No specific amount related to these expenditures was disclosed.
Berkshire Hathaway, the conglomerate led by Warren Buffett, is adding OxyChem to its industrial portfolio. The chemical division primarily produces chlorine, caustic soda and vinyl compounds, products essential to various industrial supply chains, including in construction, automotive, and water treatment sectors.
Partial withdrawal from the U.S. chemical sector
The divestment of OxyChem reflects a broader trend of portfolio streamlining in the energy sector, with several companies seeking to optimise capital by disposing of non-core assets. For Occidental, the sale is part of a deleveraging strategy initiated after the acquisition of Anadarko Petroleum in 2019.
“This transaction accelerates our strategy to strengthen Occidental’s balance sheet and focus on our oil and gas portfolio,” said Vicki Hollub. She also acknowledged the contributions of OxyChem’s teams, without commenting on potential future restructuring within the group’s remaining operations.
