LYB US Equity☆

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

GENERAL

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.”).

The discussion summarizing the significant factors affecting the results of operations and financial condition for the year ended December 31, 2019, can be found in Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the Securities and Exchange Commission on February 25, 2021, of which Item 7 is incorporated herein by reference.

OVERVIEW

Our 2021 results reflect robust demand for our products and tight market conditions. During 2021 relative to 2020, EBITDA increased largely due to margin improvements in our O&P—Americas, O&P—EAI and I&D segments.

Our 2021 cash generation allowed us to complete our goal of reducing long-term debt by $4 billion during the year and demonstrated our commitment to a solid investment-grade credit rating. We do not plan to pursue further long-term debt reduction in 2022. During 2021, we repurchased 5.2 million shares and increased our annual dividend for the eleventh consecutive year.

During the second quarter of 2021, we invested $104 million to purchase a 50% interest in a joint venture with the China Petroleum & Chemical Corporation (“Sinopec”) which will commission a new propylene oxide and styrene monomer unit in China in 2022.

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

Year Ended December 31,

Sales and other operating revenues $ 46,173 $ 27,753

Selling, general and administrative expenses 1,255 1,140

Research and development expenses 124 113

Interest income 9 12

Other income, net 62 85

Income from equity investments 461 256

Income from continuing operations before income taxes 6,786 1,386

Provision for (benefit from) income taxes 1,163 (43)

Income from continuing operations 5,623 1,429

Loss from discontinued operations, net of tax (6) (2)

36

Table of Contents

RESULTS OF OPERATIONS

Revenues—Revenues increased $18,420 million, or 66%, in 2021 compared to 2020. Average sales prices in 2021 were higher for many of our products as sales prices generally correlate with crude oil prices, which increased relative to 2020. These higher prices led to a 62% increase in revenue. Higher sales volumes, driven by increased demand, resulted in a revenue increase of 3%. Favorable foreign exchange impacts resulted in a revenue increase of 1%.

Cost of Sales—Cost of sales increased $13,038 million, or 54%, in 2021 compared to 2020. This increase primarily related to higher feedstock and energy costs. Fluctuations in our cost of sales are generally driven by changes in feedstock and energy costs. 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 on an annual basis and fixed operating costs, consisting primarily of expenses associated with employee compensation, depreciation and amortization, and maintenance, range from approximately 15% to 20% in each annual period.

Impairments—Results for our Refining segment include non-cash impairment charges of $624 million and $582 million recognized in 2021 and 2020, respectively. See Note 7 to the Consolidated Financial Statements for additional information regarding impairment charges.

SG&A Expense—Selling, general and administrative (“SG&A”) expense increased $115 million, or 10% in 2021 compared to 2020 primarily due to higher employee-related expenses.

Operating Income—Operating income increased by $5,214 million or 334% in 2021 compared to 2020. In 2021, Operating income increased for our O&P—Americas, O&P—EAI, I&D, Refining, Technology and APS segments by $3,382 million, $816 million, $466 million, $328 million, $184 million and $60 million, respectively. Results for each of our business segments are discussed further in the Segment Analysis section below.

Income from Equity Investments—Income from equity method investments increased $205 million, or 80%, in 2021 compared to 2020. Higher demand coupled with industry supply constraints resulted in improved margins for our joint ventures in our O&P—Americas and O&P—EAI segments.

Income Taxes—Our effective income tax rates of 17.1% in 2021 and -3.1% in 2020 resulted in a tax provision of $1,163 million and a tax benefit of $43 million, respectively.

The 2021 effective income tax rate of 17.1%, which is lower than the U.S. statutory tax rate of 21%, was favorably impacted by exempt income (-4.5%), return to accrual adjustments primarily from a tax benefit associated with an election made in 2021 to step-up certain Italian assets to fair market value retroactively (-1.8%) and the impact of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act (-0.9%) partially offset by the effects of earnings in various countries, notably in Europe, with higher statutory tax rates (1.1%) and U.S. state and local income taxes (1.2%).

The 2020 effective income tax rate of -3.1%, which is lower than the U.S. statutory tax rate of 21%, was favorably impacted by tax law changes including the CARES Act (-21.5%) coupled with exempt income (-10.4%), partially offset by changes in unrecognized tax benefits associated with uncertain tax positions (7.0%).

During 2021 and 2020, we recorded an overall tax benefit in relation to the CARES Act of approximately $64 million and $300 million, respectively, due to our 2020 U.S. tax losses which we carried back to tax years with a higher tax rate.For additional information, see Note 16 to our Consolidated Financial Statements.

37

Table of Contents

Comprehensive Income—We had comprehensive income of $5,757 million in 2021 and $1,268 million in 2020.Comprehensive income increased by $4,489 million in 2021 compared to 2020, primarily due to higher net income, net favorable changes in defined pension and other post-retirement benefits, and net favorable impacts of financial derivative instruments primarily driven by periodic changes in benchmark interest rates. These increases were partially offset by net unfavorable impacts of unrealized changes in foreign currency translation adjustments.

We recognized defined benefit pension and other post-retirement benefit plans pre-tax gains of $291 million and pre-tax losses of $51 million in 2021 and 2020, respectively. In 2021, changes in actuarial assumptions, primarily related to an increase in discount rates and higher actual returns versus expected returns on plan assets, resulted in a pre-tax gain of $214 million. In 2021, pre-tax gains of $77 million related to the amortization of accumulated actuarial losses and settlements were reclassified to Other income, net. In 2020, pre-tax losses of $109 million were recognized due to the decrease in discount rates and higher actual returns versus expected returns on plan assets. Pre-tax losses were partially offset by pre-tax gains of $58 million, primarily due to amortization of accumulated actuarial losses reclassified to Other income, net.

In 2021, the cumulative after-tax effect of our derivatives designated as cash flow hedges was a net gain of $72 million. The weakening of the euro against the U.S. dollar in 2021 and periodic changes in benchmark interest rates resulted in a pre-tax gain of $207 million related to our cross-currency swaps. In 2021, pre-tax losses of $216 million related to our cross-currency swaps were reclassified to Other income, net. In 2021, we recognized pre-tax gains of $75 million related to forward-starting interest rate swaps primarily driven by changes in benchmark interest rates. The remaining change relates to our commodity cash flow hedges.

The predominant functional currency for our operations outside of the U.S. is the euro. Relative to the U.S. dollar, the value of the euro weakened during 2021, resulting in net losses related to unrealized changes in foreign currency translation impacts which are reflected in the Consolidated Statements of Comprehensive Income. These losses were partially offset by a pre-tax gain of $199 million related to the effective portion of our net investment hedges.

38

Table of Contents

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.” For additional information related to our operating segments, as well as a reconciliation of EBITDA to its nearest generally accepted accounting principles (“GAAP”) measure, Income from continuing operations before income taxes, see Note 20 to our Consolidated Financial Statements.

Our continuing operations are managed through six reportable segments: O&P—Americas, O&P—EAI, I&D, APS, Refining and Technology. The following tables reflect selected financial information for our reportable segments.

Year Ended December 31,

Sales and other operating revenues:

Other, including segment eliminations (6,489) (3,457)

Operating income (loss):

Other, including segment eliminations (35) (13)

Depreciation and amortization:

Income (loss) from equity investments:

APS (1) (1)

39

Table of Contents

Year Ended December 31,

Other income (expense), net:

O&P—Americas $ 28 $ 70

Refining (7) 1

Other, including intersegment eliminations 25 (2)

EBITDA:

Other, including intersegment eliminations (10) (15)

Olefins and Polyolefins–Americas Segment

Overview—EBITDA improved in 2021 relative to 2020 driven by olefin and combined polyolefin margin improvements.

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. In 2021 and 2020, approximately 60% of the raw materials used in our North American crackers was ethane.

40

Table of Contents

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.

Year Ended December 31,

Sales and other operating revenues $ 15,002 $ 7,275

Income from equity investments 115 45

Revenues—Revenues increased by $7,727 million, or 106%, in 2021 compared to 2020. Higher average sales prices resulted in a 92% increase in revenue in 2021, primarily driven by tight market conditions. Volume improvements resulted in a revenue increase of 14% primarily due to the 2020 acquisition of our 50% interest in the Louisiana Joint Venture.

EBITDA—EBITDA increased by $3,463 million, or 191%, in 2021 compared to 2020, largely driven by margin improvements. Olefins results led to a 109% increase in EBITDA driven by higher margins as sales prices outpaced higher feedstock and energy costs. Higher polyethylene and polypropylene results led to a 48% and 29% increase in EBITDA, respectively, primarily due to polyolefin sales price increases which outpaced higher feedstock costs.

Olefins and Polyolefins–Europe, Asia, International Segment

Overview—EBITDA increased in 2021 compared to 2020 mainly as a result of higher combined polyolefins margins due to strong demand and tight markets.

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, heavy liquids are the primary raw materials for our ethylene production and represents approximately two-thirds of the raw materials used in 2021 and 2020.

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

Year Ended December 31,

Sales and other operating revenues $ 13,490 $ 8,367

Income from equity investments 313 186

Revenues—Revenues increased by $5,123 million, or 61%, in 2021 compared to 2020. Average sales prices in 2021 were higher across most products as sales prices generally correlate with crude oil prices, which on average, increased compared to 2020. These higher average sales prices were responsible for a 52% increase in revenue. Volume improvements resulted in a revenue increase of 6% primarily due to strong demand in combination with tight market supply. Favorable foreign exchange impacts resulted in a revenue increase of 3% in 2021.

41

Table of Contents

EBITDA—EBITDA increased by $923 million, or 112%, in 2021 compared to 2020. Polyethylene and polypropylene results improved resulting in an EBITDA increase of 55% and 46%, respectively. These improvements were driven by higher margins as price increases outpaced higher feedstock costs. Higher income from our equity investments led to an increase in EBITDA of 15%, mainly attributable to higher polyolefins margins associated with increased demand. Foreign exchange impacts, which on average were favorable, resulted in a EBITDA increase of 4%.

Intermediates and Derivatives Segment

Overview—EBITDA increased in 2021 compared to 2020, primarily driven by higher margins across most businesses due to tight market supply from industry outages coupled with strong demand.

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

Year Ended December 31,

Sales and other operating revenues $ 10,180 $ 6,269

Income from equity investments 34 26

Revenues—Revenues increased by $3,911 million, or 62%, in 2021 compared to 2020. Higher average sales prices resulted in a 64% increase in revenue in 2021 as sales prices generally correlate with crude oil prices, which on average, increased compared to 2020. Sales volumes declined in 2021 resulting in a 3% decrease in revenue due to the impact of unusually cold temperatures and associated electrical power outages that led to shutdowns of our manufacturing facilities in Texas in early 2021, coupled with unplanned maintenance activities in 2021. Favorable foreign exchange impacts resulted in a revenue increase of 1% in 2021.

EBITDA—EBITDA increased $545 million, or 65%, in 2021 compared to 2020. Our propylene oxide and derivatives and intermediate chemicals results improved resulting in an EBITDA increase of 54% and 18%, respectively. These improvements were primarily a result of higher margins due to strong demand coupled with tight market supply resulting from industry outages. Higher oxyfuels and related products results led to a 6% increase in EBITDA primarily driven by margin improvement as a result of improved demand and higher gasoline prices. Results declined 4% as a result of site closure costs associated with the exit of our ethanol business.

Advanced Polymer Solutions Segment

Overview—EBITDA for our APS segment increased in 2021 compared to 2020, primarily due to higher advanced polymer margins.

The following table sets forth selected financial information for the APS segment:

Year Ended December 31,

Sales and other operating revenues $ 5,145 $ 3,913

Loss from equity investments (1) (1)

42

Table of Contents

Revenues—Revenues increased in 2021 by $1,232 million, or 31%, compared to 2020. Average sales price increased resulting in a 25% increase in revenue in 2021 as sales prices generally correlate with raw material costs and product demand. Higher sales volumes resulted in a 3% increase in revenue stemming from higher demand. Foreign exchange impacts resulted in a revenue increase of 3% in 2021.

EBITDA—EBITDA increased in 2021 by $31 million, or 8%, compared to 2020. Higher advanced polymers results led to an EBITDA increase of 13% driven by margin improvements resulting from increased construction demand. Results benefited 10% from the absence of integration costs incurred in 2020 associated with the acquisition of A. Schulman Inc. These EBITDA improvements were offset by LIFO inventory charges which resulted in a 12% reduction in EBITDA. Compounding and solutions results remained relatively unchanged during 2021.

Refining Segment

Overview—EBITDA for our Refining segment increased in 2021 relative to 2020 primarily due to higher margins.

The following table sets forth selected financial information and heavy crude oil processing rates for the Refining segment and the U.S. refining market margins for the applicable periods. “Brent” is a light sweet crude oil and is one of the main benchmark prices for purchases of oil worldwide. “Maya” is a heavy sour crude oil grade produced in Mexico that is a relevant benchmark for heavy sour crude oils in the U.S. Gulf Coast market. References to industry benchmarks for refining market margins are to industry prices reported by Platts, a division of S&P Global.

Year Ended December 31,

Sales and other operating revenues $ 8,002 $ 4,727

Thousands of barrels per day

Heavy crude oil processing rates 231 223

Market margins, dollars per barrel

Brent - Maya differential 6.48 6.89

Revenues—Revenues increased by $3,275 million, or 69%, in 2021 compared to 2020. Higher product prices led to a revenue increase of 71% in 2021, due to an average Brent crude oil price increase of approximately $28 per barrel. Sales volume changes resulted in a 2% decline in revenues as higher run rates were offset by changes in product mix.

EBITDA—EBITDA increased by $247 million or 28%,in 2021 compared to 2020. This increase was primarily driven by margin improvements due to an increase in the Maya 2-1-1 market margin resulting from higher demand for refined products. This was partially offset by margin declines driven by higher costs for Renewable Identification Numbers (“RINs”) of approximately $1 per gallon.

During 2021 and 2020 we recognized non-cash impairment charges of $624 million and $582 million, respectively. For additional information see Note 7 to our Consolidated Financial Statements.

We are currently weighing strategic options for our Refining segment, including a potential sale of our Houston refinery. Any strategic option pursued for the Houston refinery remains subject to the approval of our Board of Directors and, assuming such approval is obtained, may require certain regulatory approvals or other closing conditions.

43

Table of Contents

Technology Segment

Overview—The Technology segment recognizes revenues related to the sale of polyolefin catalysts and the licensing of chemical and polyolefin process technologies. These revenues are offset in part by the costs incurred in the production of catalysts, licensing and services activities and research and development (“R&D”) activities. In 2021 and 2020, our Technology segment incurred approximately half of all R&D costs. EBITDA for our Technology segment increased in 2021 compared to 2020 largely due to higher licensing revenues and catalyst volumes.

The following table sets forth selected financial information for the Technology segment.

Year Ended December 31,

Sales and other operating revenues $ 843 $ 659

Revenues—Revenues increased by $184 million, or 28%, in 2021 compared to 2020. Higher catalyst volumes resulted in a 10% increase in revenue in 2021, primarily driven by strong demand. Licensing revenues increased by 15% in 2021. Favorable foreign exchange impacts increased revenue by 3% in 2021.

EBITDA—EBITDA in 2021 increased by $190 million, or 59%, compared to 2020. Higher licensing revenues led to an EBITDA improvement of 40% in 2021. Favorable foreign exchange impacts resulted in an EBITDA increase of 3% in 2021. The remaining increases was largely driven by higher catalyst sales volumes as a result of improved global demand.

44

Table of Contents

FINANCIAL CONDITION

Operating, investing and financing activities of continuing operations, which are discussed below, are presented in the following table:

Year Ended December 31,

Cash provided by (used in):

Operating Activities—Cash provided by operating activities of $7,695 million in 2021 primarily reflected earnings adjusted for non-cash items and cash used by the main components of working capital–Accounts receivable, Inventories and Accounts payable.

In 2021, the main components of working capital used $960 million of cash driven by an increase in Inventories and Accounts receivable, partially offset by an increase in Accounts payable. The increase in Inventories was primarily due to an increase in raw material costs coupled with an increase in inventory to levels required to support improved demand and in anticipation of turnarounds in 2022. The increase in Accounts receivable was driven by higher revenues across most businesses primarily driven by higher average sales prices. The increase in Accounts payable was primarily driven by increased raw material and energy costs.

Other operating activities in 2021 includes an $870 million tax refund received in the fourth quarter of 2021 and the effects of changes in income tax accruals primarily driven by increased pretax income. For additional information see Note 16 to our Consolidated Financial Statements.

Cash of $3,404 million generated by operating activities in 2020 primarily reflected earnings adjusted for non-cash items and cash provided by the main components of working capital.

In 2020, the main components of working capital provided $311 million of cash driven by a decrease in Inventories and an increase in Accounts payable, partially offset by an increase in Accounts receivable. The decrease in Inventory was primarily driven by company-wide inventory reduction initiatives to maximize liquidity. The increase in Accounts payable was primarily driven by increased raw material purchases during the fourth quarter of 2020. The increase in Accounts receivable was driven by higher sales in the fourth quarter 2020 for our O&P—Americas, O&P—EAI, and I&D segments resulting from demand recovery.

Other operating activities in 2020 includes the effects of changes in tax accruals, primarily driven by a tax refund of $900 million.

Investing Activities—Capital expenditures in 2021 totaled $1,959 million compared to $1,947 million in 2020. Approximately 60% of our capital spending in both periods was for profit-generating growth projects, primarily our PO/TBA plant, with the remaining spending supporting sustaining maintenance. See Note 20 to the Consolidated Financial Statements for additional information regarding capital spending by segment.

We invest cash in investment-grade and other high-quality instruments that provide adequate flexibility to redeploy funds as needed to meet our cash flow requirements while maximizing yield.

We received proceeds of $346 million and $114 million in 2021 and 2020, respectively, upon the sale and maturity of certain of our available-for-sale debt securities. Additionally, in 2021 and 2020, we received proceeds of $335 million and $313 million, respectively, from the sale or liquidation of our investment in equity securities.

45

Table of Contents

In 2020, we invested $270 million in debt securities that are deemed available-for-sale and $608 million in investments in equity securities. Our investments in available-for-sale debt securities and equity securities are classified as Short-term investments.

In 2021, we made an equity contribution of $104 million to form Ningbo ZRCC LyondellBasell New Material Company Limited, a 50/50 joint venture with Sinopec. In 2020, we invested $2,440 million in cash for 50% equity interests in the Bora LyondellBasell Petrochemical Co. Ltd joint venture and the Louisiana Integrated PolyEthylene JV LLC. For additional information related to our Equity investments, see Note 8 to the Consolidated Financial Statements.

In 2021, foreign currency contracts with an aggregate notional value of €300 million expired. Upon settlement of these foreign currency contracts, we paid €300 million ($355 million at the expiry spot rate) to our counterparties and received $358 million from our counterparties.

Financing Activities—In 2021 and 2020, we made payments of $463 million and $4 million to acquire 5.2 million and 0.1 million, respectively, of our outstanding ordinary shares. We also made dividend payments totaling $1,486 million and $1,405 million in 2021 and 2020, respectively. For additional information related to our share repurchases and dividend payments, see Note 18 to the Consolidated Financial Statements.

During 2020, to bolster liquidity we issued long-term debt of $6 billion which was partially offset by repayments of $3 billion during the year. In 2021, we prioritized debt reduction resulting in a $4 billion decrease in our outstanding long-term debt. For a detailed discussion of financing activities for 2021 and 2020, see Note 11 to the Consolidated Financial Statements.

In 2021 and 2020, we made net repayments of $296 million and received net proceeds of $239 million, respectively, through the issuance and repurchase of commercial paper instruments under our commercial paper program.

In November 2021, foreign currency contracts previously designated as cash flow hedges with an aggregate notional value of $855 million expired. Upon settlement of these foreign currency contracts we paid €790 million ($904 million at the expiry spot rate) to our counterparties and received $855 million from our counterparties.

In May 2020, we terminated and cash settled $2,000 million in notional value of our cross-currency interest rate swaps, designated as cash flows hedges, maturing in 2021 and 2024. Upon termination of the swaps, we received $346 million from our counterparties.

In 2020, we posted collateral of $238 million related to positions held with our counterparties for certain forward-starting interest rate swaps.

In November 2020, we paid $882 million to our counterparties and received €750 million ($887 million at the expiry spot rate) from our counterparties upon expiration and settlement of the foreign currency contracts entered to economically hedge the redemption of €750 million aggregate principal amount of our 1.875% guaranteed notes originally due in 2022.

For additional information related to our swaps and currency contracts, see Note 13 to the Consolidated Financial Statements.

46

Table of Contents

Liquidity and Capital Resources

Overview

We plan to fund our ongoing working capital, capital expenditures, debt service, dividends and other cash requirements with our current available liquidity and cash from operations, which could be affected by general economic, financial, competitive, legislative, regulatory, business and other factors, many of which are beyond our control. Cash and cash equivalents, cash from our short-term investments, cash from operating activities, proceeds from the issuance of debt, or a combination thereof, may be used to fund the purchase of shares under our share repurchase authorization.

We intend to continue to declare and pay quarterly dividends, with the goal of increasing the dividend over time, after giving consideration to our cash balances and expected results from operations. Our focus on funding our dividends while remaining committed to a strong investment grade balance sheet continues to be the foundation of our capital allocation strategy.

Cash and Liquid Investments

As of December 31, 2021, we had Cash and cash equivalents and marketable securities classified as Short-term investments totaling $1,481 million, which includes $1,136 million in jurisdictions outside of the U.S., principally in the United Kingdom. There are currently no legal or economic restrictions that would materially impede our transfers of cash.

Credit Arrangements

At December 31, 2021, we had total debt, including current maturities, of $11,614 million, and $218 million of outstanding letters of credit, bank guarantees and surety bonds issued under uncommitted credit facilities.

We had total unused availability under our credit facilities of $3,946 million at December 31, 2021, which included the following:

•$3,046 million under our $3,250 million Senior Revolving Credit Facility, which backs our $2,500 million commercial paper program. In November 2021, we entered into a second amendment and restatement of our credit agreement to increase our availability under the Senior Revolving Credit Facility from $2,500 million to $3,250 million. See Note 11 for additional detail. Availability under this facility is net of outstanding borrowings, outstanding letters of credit provided under the facility and notes issued under our commercial paper program. At December 31, 2021, we had $204 million of outstanding commercial paper, net of discount, and no borrowings or letters of credit outstanding under this facility; and

•$900 million under our $900 million U.S. Receivables Facility. Availability under this facility is subject to a borrowing base of eligible receivables, which is reduced by outstanding borrowings and letters of credit, if any. At December 31, 2021 we had no borrowings or letters of credit outstanding under this facility. In June 2021, we extended the term of the facility to June 2024 in accordance with the terms of the agreement.

At any time and from time to time, we may repay or redeem our outstanding debt, including purchases of our outstanding bonds in the open market, through privately negotiated transactions or a combination thereof, in each case using cash and cash equivalents, cash from our short-term investments, cash from operating activities, proceeds from the issuance of debt or proceeds from asset divestitures. Any repayment or redemption of our debt will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. In connection with such repurchases or redemptions, we may incur cash and non-cash charges, which could be material in the period in which they are incurred.

47

Table of Contents

In accordance with our current interest rate risk management strategy and subject to management’s evaluation of market conditions and the availability of favorable interest rates among other factors, we may from time to time enter into interest rate swap agreements to economically convert a portion of our fixed rate debt to variable rate debt or convert a portion of our variable rate debt to fixed rate debt.

Share Repurchases

In May 2021, our shareholders approved a proposal to authorize us to repurchase up to 34.0 million ordinary shares, through November 28, 2022 (“2021 Share Repurchase Authorization”), which superseded any prior repurchase authorizations. Our share repurchase authorization does not have a stated dollar amount, and purchases may be made through open market purchases, private market transactions or other structured transactions. Repurchased shares could be retired or used for general corporate purposes, including for various employee benefit and compensation plans. The maximum number of shares that may yet be purchased is not necessarily an indication of the number of shares that will ultimately be purchased. In 2021, we purchased 5.2 million shares under our share repurchase authorization for $477 million.

As of February 22, 2022, we had approximately 27.2 million shares remaining under the current authorization. The timing and amounts of additional shares repurchased, if any, will be determined based on our evaluation of market conditions and other factors, including any additional authorizations approved by our shareholders. In addition, cash and cash equivalents, cash from our short-term investments, cash from operating activities, proceeds from the issuance of debt, or a combination thereof, may be used to fund the purchase of shares under our share repurchase authorization. For additional information related to our share repurchase authorization, see Note 18 to the Consolidated Financial Statements.

Capital Budget

In 2022, we are planning to invest approximately $2.1 billion in capital expenditures, which includes approximately $79 million for investments in our U.S. and European PO joint ventures and Louisiana joint venture. Approximately 40% of the 2022 budget is planned for profit-generating growth projects, primarily our PO/TBA plant, with the remaining budget supporting sustaining maintenance.

Cash Requirements from Contractual and Other Obligations

As part of our ongoing operations, we enter into contractual arrangements that may require us to make future cash payments under certain circumstances. Our cash requirements related to contractual and other obligations primarily consist of purchase obligations, principal and interest payments on outstanding debt, lease payments, pension and other post-retirement benefits and income taxes. For more information regarding our debt arrangements, lease obligations, pension and other post-retirement benefits and income taxes see Notes 11, 12, 14 and 16 to the Consolidated Financial Statements, respectively.

We are party to obligations to purchase raw materials, utilities and industrial gases which are designed to ensure sources of supply and are not expected to be in excess of normal requirements. These purchase arrangements include provisions which state minimum purchase quantities; however, in the event we do not take the contractual minimum volumes, we are obligated to compensate the vendor only for any resulting economic losses they suffer. No material fees were paid to vendors for such losses in 2021. Assuming that contractual minimum volumes are purchased at contract prices as of December 31, 2021, these commitments represent approximately 20% of our annual Cost of sales with a weighted average remaining term of 7 years.

We also have purchase obligations under take-or-pay agreements which require us to either buy and take delivery of a minimum quantity of goods or to pay for any shortfall. These arrangements primarily relate to product off-take agreements with joint ventures located in Poland. No material shortfall was paid for quantities not taken under these contracts in 2021. When valued using a contract price as of December 31, 2021, these commitments represent approximately 5% of our annual Cost of sales with a weighted average remaining term of 12 years.

48

Table of Contents

CURRENT BUSINESS OUTLOOK

We expect continued strength in demand for our products. Supply chain disruptions and virus surges have been restraining pent-up consumer demand across the global economy. As vaccinations facilitate a more sustainable global reopening and supply chains normalize, our businesses should benefit from continued strong demand for both goods and services. We are closely monitoring rising feedstock and energy costs, particularly at our European operations. Elevated levels of ethylene industry maintenance activities scheduled for the first half of 2022 are likely to constrain supply. We expect tight markets for acetyls and propylene oxide will continue to drive strong profitability within our I&D segment. Further, we expect to expand our production with the commissioning of new facilities within our I&D segment in China and the U.S. during 2022. In January, our Advanced Polymers Solutions segment benefited from increased order volumes for our products used in automotive production.

Planned maintenance in 2022 for our O&P—Americas, O&P—EAI and I&D segments is expected to impact EBITDA by approximately $125 million, $60 million and $80 million, respectively.

RELATED PARTY TRANSACTIONS

We have related party transactions with our joint venture partners. We believe that such transactions are effected on terms substantially no more or less favorable than those that would have been agreed upon by unrelated parties on an arm’s length basis. See Note 4 to the Consolidated Financial Statements for additional related party disclosures.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management applies those accounting policies that it believes best reflect the underlying business and economic events, consistent with accounting principles generally accepted in the U.S., see Note 2 to the Consolidated Financial Statements. Inherent in such policies are certain key assumptions and estimates made by management and updated periodically based on its latest assessment of the current and projected business and general economic environment.

Management believes the following accounting policies and estimates, and the judgments and uncertainties affecting them, are critical in understanding our reported operating results and financial condition.

Inventories—We account for our raw materials, work-in-progress and finished goods inventories using the last-in, first-out (“LIFO”) method of accounting.

The cost of raw materials, which represents a substantial portion of our operating expenses, and energy costs generally follow price trends for crude oil and/or natural gas. Crude oil and natural gas prices are subject to many factors, including changes in economic conditions.

Since our inventory consists of manufactured products derived from crude oil, natural gas, natural gas liquids and correlated materials, as well as the associated feedstocks and intermediate chemicals, our inventory market values are generally influenced by changes in the benchmark of crude oil and heavy liquid values and prices for manufactured finished goods. The degree of influence of a particular benchmark may vary from period to period, as the composition of the dollar value LIFO pools change. Due to natural inventory composition changes, variation in pricing from period to period does not necessarily result in a linear lower of cost or market (“LCM”) impact. Additionally, an LCM condition may arise due to a volumetric decline in a particular material that had previously provided a positive impact within a pool. As a result, market valuations and LCM conditions are dependent upon the composition and mix of materials on hand at the balance sheet date. In the measurement of an LCM adjustment, the numeric input value for determining the crude oil market price includes pricing that is weighted by volume of inventories held at a point in time, including WTI, Brent and Maya crude oils.

49

Table of Contents

As indicated above, fluctuation in the prices of crude oil, natural gas and correlated products from period to period may result in the recognition of charges to adjust the value of inventory to the lower of cost or market in periods of falling prices and the reversal of those charges in subsequent interim periods as market prices recover. Accordingly, our cost of sales and results of operations may be affected by such fluctuations.

No LCM inventory valuation charge was recorded in 2021, and we do not believe any of our inventory balance at year-end is at risk for impairment. Given the inherent volatility in the prices of our finished goods and raw materials, sustained price declines could result in LCM inventory valuation charges. During 2020, we recognized an LCM inventory valuation charge of $16 million related to the decline in pricing for our raw material and finished goods inventories.

In the first quarter of 2020, we recognized LCM inventory valuation charges of $419 million which was driven by a decline in pricing for many of our raw material and finished goods inventories. During the second, third and fourth quarters of 2020, we recognized LCM inventory valuation benefits of $96 million, $160 million and $147 million, respectively, as market prices began to recover subsequent to the first quarter of 2020.

Market price volatility for crude oil, heavy liquids and ethylene were the primary contributors to the LCM inventory valuation charges, and representative prices used to determine the LCM inventory valuation charges recognized during 2020 ranged from $12.14 to $41.75 per barrel for crude oil, $13.50 to $51.07 per barrel for heavy liquids and $205 to $767 per ton for ethylene.

Long-Lived Assets Impairment Assessment—The need to test for impairment can be based on several indicators, including a significant reduction in prices of or demand for products produced, a weakened outlook for profitability, a significant reduction in margins, an expectation that a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life, other changes to contracts or changes in the regulatory environment. If the sum of the undiscounted estimated pre-tax cash flows for an asset group is less than the asset group’s carrying value, fair value is calculated for the asset group using an income approach or a market approach when appropriate, and the carrying value is written down to the calculated fair value. For purposes of impairment evaluation, long-lived assets including finite-lived intangible assets must be grouped at the lowest level for which independent cash flows can be identified.

Significant judgment is involved in developing estimates of future cash flows since the results are based on forecasted financial information prepared using significant assumptions which may include, among other things, projected changes in supply and demand fundamentals (including industry-wide capacity, our planned utilization rate and end-user demand), new technological developments, capital expenditures, new competitors with significant raw material or other cost advantages, changes associated with world economies, the cyclical nature of the chemical and refining industries, uncertainties associated with governmental actions and other economic conditions. Such estimates are consistent with those used in our planning and capital investment and business performance reviews.

When an income approach is used to estimate fair value of our long-lived assets, the cash flows are discounted using a rate that is based on a variety of factors, including market and economic conditions, operational risk, regulatory risk and political risk. This discount rate is also compared to recent observable market transactions, if possible.

Houston Refinery Impairment—During the fourth quarter of 2021 and during the third quarter of 2020, we identified impairment triggers relating to our Houston refinery’s asset group which resulted in non-cash impairment charges of $624 million and $582 million, respectively. Refer to Note 7 to our Consolidated Financial Statements.

50

Table of Contents

In 2021, the estimate of the Houston refinery’s undiscounted pre-tax cash flows utilized significant assumptions including management’s best estimates of the expected future cash flows, the estimated useful lives of the asset group, and the residual value of the refinery. These estimates required considerable judgment and are sensitive to changes in underlying assumptions such as future commodity prices, margins on refined products, operating rates and capital expenditures including repairs and maintenance. As a result, there can be no assurance that the estimates and assumptions made for purposes of our impairment determination will prove to be an accurate prediction of the future. The Houston refinery’s estimated fair value was calculated using a market approach which utilized unobservable inputs, which generally consist of market information provided by unrelated third parties.

In 2020, the estimates of the Houston refinery’s undiscounted pre-tax cash flows utilized significant assumptions similar to those utilized during 2021. The Houston refinery’s estimated fair value was determined using an income approach that was based on projected financial information and significant inputs that were not observable in the market.

Should our estimates and assumptions significantly change in future periods, it is possible that we may determine future impairment charges.

An estimate of the sensitivity to net income resulting from impairment calculations is not practicable, given the numerous assumptions, including pricing, volumes, discount rates, and market information provided by unrelated third parties that can materially affect our estimates. That is, unfavorable adjustments to some of the above listed assumptions may be offset by favorable adjustments in other assumptions.

Equity Method Investments Impairment—Investments in nonconsolidated entities accounted for under the equity method are assessed for impairment when there are indicators of a loss in value, such as a lack of sustained earnings capacity or a current fair value less than the investment’s carrying amount.

When it is determined such a loss in value is other than temporary, an impairment charge is recognized for the difference between the investment’s carrying value and its estimated fair value. When determining whether a decline in value is other than temporary, management considers factors such as the length of time and extent of the decline, the investee’s financial condition and near-term prospects, and our ability and intention to retain our investment for a period that will be sufficient to allow for any anticipated recovery in the value of the investment. Management’s estimate of fair value of an investment is based on the income approach and/or market approach. For the income approach, the fair value is typically based on the present value of expected future cash flows using discount rates believed to be consistent with those used by principal market participants. For the market approach, since quoted market prices are usually not available, we utilize market multiples of revenue and earnings derived from comparable publicly-traded industrial gases companies.

Goodwill—As of December 31, 2021, we had goodwill of $1,875 million. Of this amount, $1,357 million is related to the acquisition of A. Schulman in 2018, which is included in our APS segment, and is mainly attributed to acquired workforce and expected synergies. The remaining goodwill at December 31, 2021 primarily represents the tax effect of the differences between the tax and book basis of our assets and liabilities resulting from the revaluation of those assets and liabilities to fair value in connection with the Company’s emergence from bankruptcy and fresh-start accounting in 2010. Additional information on the amount of goodwill allocated to our reporting units appears in Note 7 and Note 20 to the Consolidated Financial Statements.

We evaluate the recoverability of the carrying value of goodwill annually or more frequently if events or changes in circumstances indicate that the carrying amount of the goodwill of a reporting unit may not be fully recoverable. We have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Qualitative factors assessed for each of the reporting units include, but are not limited to, changes in long-term commodity prices, discount rates, competitive environments, planned capacity, cost factors such as raw material prices, and financial performance of the reporting units. If the qualitative assessment indicates that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, a quantitative test is required.

51

Table of Contents

We also have the option to proceed directly to the quantitative impairment test. Under the quantitative impairment test, the fair value of each reporting unit, calculated using a discounted cash flow model, is compared to its carrying value, including goodwill. The discounted cash flow model inherently utilizes a significant number of estimates and assumptions, including operating margins, tax rates, discount rates, capital expenditures and working capital changes. If the carrying value of the reporting unit including goodwill exceeds its fair value, an impairment charge equal to the excess would be recognized, up to a maximum amount of goodwill allocated to that reporting unit.

For 2021 and 2020, management performed a qualitative impairment assessment of our reporting units, which indicated that the fair value of our reporting units was greater than their carrying value including goodwill. Accordingly, a quantitative goodwill impairment test was not required, and no goodwill impairment was recognized in 2021 or 2020.

Long-Term Employee Benefit Costs—Our costs for long-term employee benefits, particularly pension and other post-retirement medical and life insurance benefits, are incurred over long periods of time, and involve many uncertainties over those periods. The net periodic benefit cost attributable to current periods is based on several assumptions about such future uncertainties and is sensitive to changes in those assumptions. It is management’s responsibility, often with the assistance of independent experts, to select assumptions that in its judgment represent its best estimates of the future effects of those uncertainties and to review those assumptions periodically to reflect changes in economic or other factors.

The current benefit service costs, as well as the existing liabilities, for pensions and other post-retirement benefits are measured on a discounted present value basis. The discount rate is a current rate, related to the rate at which the liabilities could be settled. Our assumed discount rate is based on yield information for high-quality corporate bonds with durations comparable to the expected cash settlement of our obligations. For the purpose of measuring the benefit obligations at December 31, 2021, we used a weighted average discount rate of 2.80% for the U.S. plans, which reflects the different terms of the related benefit obligations. The weighted average discount rate used to measure obligations for non-U.S. plans at December 31, 2021, was 1.45%, reflecting market interest rates. The discount rates in effect at December 31, 2021 will be used to measure net periodic benefit cost during 2022.

The benefit obligation and the net periodic benefit cost of other post-retirement medical benefits are also measured based on assumed rates of future increase in the per capita cost of covered health care benefits. As of December 31, 2021, the assumed rate of increase for our U.S. plans was 6.3%, decreasing to 4.5% in 2029 and thereafter.

The net periodic benefit cost of pension benefits included in expense is affected by the expected long-term rate of return on plan assets assumption. Investment returns that are recognized currently in net income represent the expected long-term rate of return on plan assets applied to a market-related value of plan assets, which is defined as 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 current assumed discount rate, reflecting long-term market expectations, rather than current fluctuations in market conditions.

The weighted average expected long-term rate of return on assets in our U.S. plans of 7.25% is based on the average level of earnings that our independent pension investment advisor advised could be expected to be earned over time. The weighted average expected long-term rate of return on assets in our non-U.S. plans of 1.44% is based on expectations and asset allocations that vary by region. The asset allocations are summarized in Note 14 to the Consolidated Financial Statements.

The actual rate of return on plan assets may differ from the expected rate due to the volatility normally experienced in capital markets. Management’s goal is to manage the investments over the long term to achieve optimal returns with an acceptable level of risk and volatility.

52

Table of Contents

Net periodic pension cost recognized each year includes the expected asset earnings, rather than the actual earnings or loss. Along with other gains and losses, this unrecognized amount, to the extent it cumulatively exceeds 10% of the greater of the projected benefit obligation or the market related value of the plan assets for the respective plan, is recognized as additional net periodic benefit cost over the average remaining service period of the participants in each plan.

The following table reflects the sensitivity of the benefit obligations and the net periodic benefit costs of our pension plans to changes in the actuarial assumptions:

Effects onBenefit Obligationsin 2021 Effects on NetPeriodic PensionCosts in 2022

Millions of dollars U.S. Non-U.S. U.S. Non-U.S.

Projected benefit obligations at December 31, 2021 $ 1,916 $ 1,924 $ — $ —

Projected net periodic pension costs in 2022 — — (1) 57

Discount rate increases by 100 basis points (176) (253) (9) (6)

The sensitivity of our post-retirement benefit plans obligations and net periodic benefit costs to changes in actuarial assumptions are reflected in the following table:

Effects onBenefit Obligationsin 2021 Effects on NetPeriodic BenefitCosts in 2022

Millions of dollars U.S. Non-U.S. U.S. Non-U.S.

Projected benefit obligations at December 31, 2021 $ 203 $ 68 $ — $ —

Projected net periodic benefit costs in 2022 — — — 4

Discount rate increases by 100 basis points (17) — (1) —

Discount rate decreases by 100 basis points 21 — 2 —

Additional information on the key assumptions underlying these benefit costs appears in Note 14 to the Consolidated Financial Statements.

Accruals for Taxes Based on Income—The determination of our provision for income taxes and the calculation of our tax benefits and liabilities is subject to management’s estimates and judgments due to the complexity of the tax laws and regulations in the tax jurisdictions in which we operate. Uncertainties exist with respect to interpretation of these complex laws and regulations.

Deferred tax assets and liabilities are determined based on temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, and are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse.

We recognize future tax benefits to the extent that the realization of these benefits is more likely than not. Our current provision for income taxes is impacted by the recognition and release of valuation allowances related to net deferred tax assets in certain jurisdictions. Further changes to these valuation allowances may impact our future provision for income taxes, which will include no tax benefit with respect to losses incurred and no tax expense with respect to income generated in these countries until the respective valuation allowance is eliminated.

53

Table of Contents

We recognize the financial statement benefits with respect to an uncertain income tax position that we have taken or may take on an income tax return when we believe it is more likely than not that the position will be sustained with the tax authorities.

ACCOUNTING AND REPORTING CHANGES

For a discussion of the potential impact of new accounting pronouncements on our Consolidated Financial Statements, see Note 2 to the Consolidated Financial Statements.

54

Table of Contents

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

See Note 13 to the Consolidated Financial Statements for further discussion of our management of commodity price risk, foreign exchange risk and interest rate risk.

Commodity Price Risk—Prices for our products and raw materials are subject to changes in supply and demand. Natural gas, crude oil and refined products, along with feedstocks for ethylene and propylene production, constitute the main commodity exposures. Pricing terms in our raw material contracts are generally indexed to market prices. Changes in market prices for raw materials generally correlate with market prices for our products. In certain sales contracts, we may negotiate pricing terms to better align with changes in raw material costs. We also selectively enter commodity swap and futures contracts to manage commodity price risk. The impact of a 10% change in commodity prices at December 31, 2021 and 2020 would not materially impact the fair values of our commodity derivative contracts.

Foreign Exchange Risk—We manufacture and market our products in many countries throughout the world and, as a result, are exposed to changes in foreign currency exchange rates. Our reporting currency is the U.S. dollar. Many of our operating entities use the euro as their functional currency. Translation adjustments are deferred in Accumulated other comprehensive income.

We enter foreign currency derivatives that are designated as net investment hedges to reduce the volatility in Shareholders’ equity resulting from translation adjustments associated with our net investments in foreign operations. We also enter foreign currency contracts that are designated as cash flow hedges to manage the variability in cash flows associated with intercompany debt balances. The table below illustrates the impact on Other comprehensive loss of a 10% fluctuation in the foreign currency rate associated with the hedges at December 31:

Net investment hedges:

Cross currency basis swaps € 617 € 617 euro/U.S. dollar rate $ 71 $ 77

Cross currency swaps € 750 € 750 euro/U.S. dollar rate $ 92 $ 101

Forward exchange contracts € 1,250 € 300 euro/U.S. dollar rate $ 142 $ 37

Cash flow hedges:

Some of our consolidated entities enter transactions that are not denominated in their functional currency. This results in exposure to foreign currency risk for financial instruments, including, but not limited to, third-party and intercompany receivables and payables and intercompany loans.

Our policy is to maintain a balanced position in foreign currencies to minimize exchange gains and losses arising from changes in exchange rates. We maintain risk management control practices to monitor the foreign currency risk attributable to our inter-company and third party outstanding foreign currency balances. These practices involve the centralization of our exposure to underlying currencies that are not subject to central bank and/or country specific restrictions. By centralizing most of our foreign currency exposure into one subsidiary, we are able to take advantage of natural offsets thereby reducing the overall impact of changes in foreign currency rates on our earnings.

55

Table of Contents

To minimize the effects of our net currency exchange exposures, we enter into forward exchange contracts and cross-currency swaps. We also engage in short-term forward exchange contracts to manage our net exposure to foreign currencies as economic hedges. Changes in the fair value of these foreign currency contracts are reporting in the Consolidated Statements of Income and offset the currency exchange results recognized on foreign currency balances.

Other income, net, in the Consolidated Statements of Income reflects net foreign currency losses of $2 million and $7 million in 2021 and 2020, respectively. As of December 31, 2021, our foreign currency contracts that are accounted for as economic hedges mature between January 2022 and March 2022, inclusively, had an aggregate notional amount of $222 million and the fair value was a net liability of $1 million. A 10% fluctuation compared to the U.S. dollar would have resulted in an additional impact to earnings of approximately $4 million and $5 million in 2021 and 2020, respectively.

Interest Rate Risk—We are exposed to interest rate risk with respect to our fixed-rate and variable-rate debt. Fluctuations in interest rates impact the fair value of fixed-rate debt and expose us to the risk that we may need to refinance debt at higher rates. Fluctuations in interest rates impact interest expense from our variable-rate debt. To minimize earnings at risk as part of our interest rate risk management strategy, we target to maintain floating-rate debt, through the use of interest rate swaps and issuance of variable-rate debt, equal to our cash and cash equivalents, as those assets earn interest based on floating-rates.

Pre-issuance interest rate—To mitigate the risk that benchmark interest rates may increase in connection with future financing activities, we adopted a pre-issuance interest rate strategy, under which we entered forward-starting interest rate swaps that are designated as cash flow hedges. We estimate that a 10% change in market interest rates as of December 31, 2021 and 2020, would change the fair value of these forward-starting interest rate swaps by approximately $48 million and $44 million, respectively.

Fixed-rate debt—We enter into interest rate swaps that effectively convert our fixed-rate debt to variable-rate debt. These interest rate swaps are designated as fair value hedges. At December 31, 2021 and 2020, the total notional amount of these interest rate swaps was $1,163 million and $122 million, respectively.

At December 31, 2021, after giving consideration to the fixed-rate debt that we have effectively converted to variable-rate debt, approximately 90% of our debt portfolio, on a gross basis, incurred interest at a fixed-rate and the remaining 10% of the portfolio incurred interest at a variable-rate. We estimate that a 10% change in market interest rates as of December 31, 2021 and 2020, would not materially impact the fair value of these interest rate swaps.

Variable-rate debt—At December 31, 2021, our variable rate-debt consisted of $204 million outstanding under our Commercial Paper Program. We also have available borrowing capacity under our $3,250 million Senior Revolving Credit Facility and our $900 million U.S. Receivables Facility. At December 31, 2021, there were no outstanding borrowings under these facilities. Based on our average variable-rate debt outstanding per year, we estimate that a 10% change in market interest rates as of December 31, 2021 and 2020 would not materially impact the fair value of these facilities.

56

Table of Contents

Item 8. Financial Statements and Supplementary Data.

Index to the Consolidated Financial Statements

Page

LYONDELLBASELL INDUSTRIES N.V.

Management’s Report on Internal Control over Financial Reporting 58

Report of Independent Registered Public Accounting Firm 59

Consolidated Financial Statements:

Consolidated Statements of Income 62

Consolidated Statements of Comprehensive Income 63

Consolidated Balance Sheets 64

Consolidated Statements of Cash Flows 66

Consolidated Statements of Shareholders’ Equity 68

Notes to the Consolidated Financial Statements 69

57

Table of Contents

MANAGEMENT’S REPORT ON INTERNAL CONTROL

OVER FINANCIAL REPORTING

Management of the Company, including the Chief Executive Officer and the Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended. Internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

We conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2021 based on the Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on our evaluation, management has concluded that our internal control over financial reporting was effective as of December 31, 2021.

The effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by PricewaterhouseCoopers LLP (PCAOB ID 238), an independent registered public accounting firm, as stated in their report which is included herein.

58

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of LyondellBasell Industries N.V.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of LyondellBasell Industries N.V. and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of income, of comprehensive income, of shareholders’ equity and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

59

Table of Contents

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated belowis a matterarising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to theconsolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidatedfinancial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Taxation - Provisions for unrecognized tax benefits

As described in Notes 2, 9, 10, and 16 to the consolidated financial statements, as of December 31, 2021, the Company has recorded an income tax provision of $1,163 million, income tax receivables of $263 million, income tax payables of $402 million, and net deferred tax liabilities of $2,160 million related to which they have reported $327 million of unrecognized tax benefits. The Company operates in multiple jurisdictions throughout the world, and its tax returns are periodically audited or subjected to review by tax authorities. As a result, there is an uncertainty in income taxes recognized in the Company’s consolidated financial statements. Management recognizes uncertain income tax positions when it is more likely than not, based on the technical merits, that the position or a portion thereof will be sustained upon examination. As disclosed by management, there continues to be increased attention to the tax practices of multinational companies, including U.S. tax reform proposals, European Union’s state aid investigations, Pillar One and Two proposals by the Organization for Economic Cooperation and Development (OECD) with respect to base erosion and profit shifting, and European Union tax directives and their implementation.

The principal considerations for our determination that performing procedures relating to the provision for unrecognized tax benefits is a critical audit matter are (i) the significant judgment by management when determining provisions for unrecognized tax benefits, including a high degree of estimation uncertainty relative to the complexity of tax laws, frequency of tax audits, and potential for adjustments as a result of such tax audits; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s timely identification of tax uncertainties; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

60

Table of Contents

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the identification and recognition of the liabilities for unrecognized tax benefits and controls addressing completeness of the uncertain tax positions. These procedures also included, among others (i) testing management’s assessment of the technical merits of tax positions and estimates of the amount of tax benefit expected to be sustained; (ii) testing the completeness of management’s assessment of both the identification and possible outcomes of uncertain tax positions; and (iii) evaluating the status and results of tax audits with the relevant tax authorities. Professionals with specialized skill and knowledge were used to assist in evaluating the completeness of the Company’s uncertain tax positions, including evaluating the reasonableness of management’s assessment of whether tax positions are more likely than not of being sustained and the amount of potential benefit to be realized, as well as the determination and the application of relevant tax laws.

/s/ PricewaterhouseCoopers LLP

Houston, Texas

February 24, 2022

We have served as the Company’s auditor since 2008.

61

Table of Contents

LYONDELLBASELL INDUSTRIES N.V.

CONSOLIDATED STATEMENTS OF INCOME

Year Ended December 31,

Millions of dollars, except earnings per share 2021 2020 2019

Sales and other operating revenues:

Operating costs and expenses:

Selling, general and administrative expenses 1,255 1,140 1,199

Income from continuing operations before income taxes 6,786 1,386 4,052

Provision for (benefit from) income taxes 1,163 (43) 648

Loss from discontinued operations, net of tax (6) (2) (7)

Dividends on redeemable non-controlling interests (7) (7) (7)

Net income attributable to the Company shareholders $ 5,610 $ 1,420 $ 3,390

Earnings per share:

Net income (loss) attributable to the Company shareholders —

Basic:

Diluted:

See Notes to the Consolidated Financial Statements.

62

Table of Contents

LYONDELLBASELL INDUSTRIES N.V.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Year Ended December 31,

Other comprehensive income (loss), net of tax—

Unrealized (losses) gains on available-for-sale debt securities (1) 1 —

Defined benefit pension and other post-retirement benefit plans 224 (41) (269)

Foreign currency translations (155) 107 (20)

Total other comprehensive income (loss), net of tax 140 (159) (421)

Dividends on redeemable non-controlling interests (7) (7) (7)

See Notes to the Consolidated Financial Statements.

63

Table of Contents

LYONDELLBASELL INDUSTRIES N.V.

CONSOLIDATED BALANCE SHEETS

December 31,

ASSETS

Current assets:

Cash and cash equivalents $ 1,472 $ 1,763

Restricted cash 5 2

Short-term investments 9 702

Accounts receivable:

Prepaid expenses and other current assets 1,022 1,382

See Notes to the Consolidated Financial Statements.

64

Table of Contents

LYONDELLBASELL INDUSTRIES N.V.

CONSOLIDATED BALANCE SHEETS

December 31,

Millions of dollars, except shares and par value data 2021 2020

LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY

Current liabilities:

Current maturities of long-term debt $ 6 $ 8

Accounts payable:

Commitments and contingencies

Redeemable non-controlling interests 116 116

Shareholders’ equity:

Accumulated other comprehensive loss (1,803) (1,943)

Total Company share of shareholders’ equity 11,858 7,971

Non-controlling interests 14 17

See Notes to the Consolidated Financial Statements.

65

Table of Contents

LYONDELLBASELL INDUSTRIES N.V.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,

Cash flows from operating activities:

Amortization of debt-related costs 35 21 11

Share-based compensation 66 55 48

Inventory valuation charges — 16 33

Equity investments—

Distributions of earnings, net of tax 315 159 247

Deferred income tax (benefit) provision (198) 331 209

Changes in assets and liabilities that provided (used) cash:

Cash flows from investing activities:

Expenditures for property, plant and equipment (1,959) (1,947) (2,694)

Proceeds from repurchase agreements — — 527

Purchases of available-for-sale debt securities — (270) (108)

Purchases of equity securities — (608) (33)

Acquisition of equity method investment (106) (2,440) —

Proceeds from settlement of net investment hedges 358 — —

Payments for settlement of net investment hedges (355) — —

Net cash used in investing activities $ (1,502) $ (4,906) $ (1,635)

See Notes to the Consolidated Financial Statements.

66

Table of Contents

LYONDELLBASELL INDUSTRIES N.V.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,

Cash flows from financing activities:

Repurchases of Company ordinary shares $ (463) $ (4) $ (3,752)

Purchase of non-controlling interest — (30) (63)

Payments of debt issuance costs (3) (63) (22)

Debt extinguishment costs (150) (77) —

Issuance of short-term debt — 521 2,500

Repayments of short-term debt — (506) (1,526)

Net (repayments of) proceeds from commercial paper (296) 239 (549)

Collateral paid for interest rate derivatives — (238) —

Proceeds from settlement of cash flow hedges 855 346 —

Payment for settlement of cash flow hedges (904) — —

Proceeds from settlement of foreign currency contract — 887 —

Payments for settlement of foreign currency contract — (882) —

Net cash (used in) provided by financing activities (6,385) 2,271 (2,835)

Effect of exchange rate changes on cash (96) 108 (4)

Supplemental Cash Flow Information:

Interest paid, net of capitalized interest $ 414 $ 498 $ 318

See Notes to the Consolidated Financial Statements.

67

Table of Contents

LYONDELLBASELL INDUSTRIES N.V.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Millions of dollars Issued Treasury

Other comprehensive loss — — — — (421) (421) —

Share-based compensation — 42 33 (3) — 72 —

Dividends - common stock ($4.15 per share) — — — (1,462) — (1,462) —

Repurchases of Company ordinary shares — (3,728) — — — (3,728) —

Purchase of non-controlling interests — — (64) — — (64) —

Distribution to non-controlling interests — — — — — — (4)

Other comprehensive loss — — — — (159) (159) —

Share-based compensation — 53 25 (10) — 68 —

Dividends - common stock ($4.20 per share) — — — (1,405) — (1,405) —

Repurchases of Company ordinary shares — (4) — — — (4) —

Purchase of non-controlling interests — — 7 — — 7 —

Distribution to non-controlling interests — — — — — — (2)

Other comprehensive income — — — — 140 140 —

Share-based compensation — 43 58 (1) — 100 —

Dividends - common stock ($4.44 per share) — — — (1,486) — (1,486) —

Repurchases of Company ordinary shares — (477) — — — (477) —

Sales of non-controlling interests — — — — — — (3)

See Notes to the Consolidated Financial Statements.

68

Table of Contents

LYONDELLBASELL INDUSTRIES N.V.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

TABLE OF CONTENTS

Page

1. Description of Company and Operations 70

2. Summary of Significant Accounting Policies 70

4. Related Party Transactions 81

5. Accounts Receivable 82

6. Inventories 82

7. Property, Plant and Equipment, Goodwill and Intangible Assets 83

8. Equity Investments 86

9. Prepaid Expenses, Other Current Assets and Other Assets 88

10. Accrued Liabilities 89

13. Financial Instruments and Fair Value Measurements 97

14. Pension and Other Post-retirement Benefits 102

15. Incentive and Share-Based Compensation 113

17. Commitments and Contingencies 122

18. Shareholders’ Equity and Redeemable Non-controlling Interests 124

20. Segment and Related Information 129

69

Table of Contents

LYONDELLBASELL INDUSTRIES N.V.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Company and Operations

LyondellBasell Industries N.V. is a limited liability company (Naamloze Vennootschap) incorporated under Dutch law by deed of incorporation dated October 15, 2009. 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.”).

LyondellBasell N.V. is a worldwide manufacturer of chemicals and polymers, a refiner of crude oil, a significant producer of gasoline blending components and a developer and licensor of technologies for the production of polymers.

2. Summary of Significant Accounting Policies

Basis of Preparation and Consolidation

The accompanying Consolidated Financial Statements have been prepared from the books and records of LyondellBasell N.V. under accounting principles generally accepted in the United States (“U.S. GAAP”). Subsidiaries are defined as being those companies over which we, either directly or indirectly, have control through a majority of the voting rights or the right to exercise control or to obtain the majority of the benefits and be exposed to the majority of the risks. Subsidiaries are consolidated from the date on which control is obtained until the date that such control ceases. All intercompany transactions and balances have been eliminated in consolidation.

Cash and Cash Equivalents

Our cash equivalents consist of highly liquid debt instruments such as certificates of deposit, commercial paper and money market accounts with major international banks and financial institutions. Cash equivalents include instruments with maturities of three months or less when acquired and exclude restricted cash.

Short-Term Investments

Our investments in debt securities are classified as available-for-sale and held-to-maturity on the basis of our intent and ability to hold the investments. Investments classified as available-for-sale are carried at fair value with changes reflected in other comprehensive income. Credit-related impairment, measured using the expected cash flows and limited to the amount by which the amortized cost basis of a security exceeds its fair value, is recognized through an allowance for expected credit losses, and adjusted subsequently if conditions change, with a corresponding impact in earnings. Where there is an intention or a requirement to sell an impaired available-for-sale debt security, the entire impairment is recognized in earnings with a corresponding adjustment to the amortized cost basis of the security.

Investments classified as held-to-maturity are carried at amortized cost less allowance for credit losses recorded through net income.

Trade Receivables

Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business and are carried at transaction price net of allowance for credit losses. Allowance for credit losses is measured using historical loss rates for the respective risk categories and incorporating forward-looking estimates. The corresponding expense for the loss allowance is reflected in Selling, general and administrative expenses.

Inventories

Cost of our raw materials, work-in-progress and finished goods inventories is determined using the last-in, first-out (“LIFO”) method and is carried at the lower of cost or market value. Cost of our materials and supplies inventory is determined using the moving average cost method and is carried at the lower of cost and net realizable value.

70

Table of Contents

LYONDELLBASELL INDUSTRIES N.V.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Inventory exchange transactions, which involve fungible commodities, are not accounted for as purchases and sales. Any resulting volumetric exchange balances are accounted for as inventory, with cost determined using the LIFO method.

Property, Plant and Equipment

Property, plant and equipment are recorded at historical cost. Historical cost includes expenditures that are directly attributable to the acquisition of the items. Costs may also include borrowing costs incurred on debt during construction of major projects exceeding one year, costs of major maintenance arising from turnarounds of major units and legally obligated decommissioning costs. Routine maintenance costs are expensed as incurred.

Depreciation is computed using the straight-line method over the estimated useful lives of assets to their residual values. The residual values and useful lives of assets are reviewed, and adjusted if appropriate, whenever events or circumstances indicate that a revision is warranted. Land is not depreciated.

We evaluate property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets, which, for us, is generally at the plant group level (or, at times, individual plants in certain circumstances where we have isolated production units with separately identifiable cash flows). If it is determined that an asset or asset group’s carrying value exceeded its undiscounted estimated pre-tax cash flows and estimated fair value, the asset is written down to its estimated fair value.

Gain or loss on retirement or sale of property, plant and equipment is recognized in Other income (expense), net.

Equity Investments

We account for equity method investments (“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.

We record our share of the profits or losses of the equity investments, net of income taxes, in the Consolidated Statements of Income. When our share of losses in an equity investment equals or exceeds the carrying amount of our investment including advances made by us, we do not recognize further losses, unless we have guaranteed obligations or are otherwise committed to provide further financial support to the investee.

We assess our equity investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. If the decline in value is considered to be other-than-temporary, the investment is written down to its estimated fair value.

Investments in PO Joint Ventures and the Louisiana Joint Venture—We share ownership with Covestro PO LLC, a subsidiary of Covestro AG (collectively “Covestro”), in a U.S. propylene oxide (“PO”) manufacturing joint venture (the “U.S. PO Joint Venture”). The U.S. PO Joint Venture owns a PO/styrene monomer (“SM” or “styrene”) and a PO/tertiary butyl alcohol (“TBA”) manufacturing facility. Covestro’s ownership interest in Series A partnership units represents an undivided interest in certain U.S. PO Joint Venture assets with correlative PO capacity reservation that resulted in ownership of annual in-kind cost-based PO production of approximately 680 thousand tons in 2021 and 2020. Our ownership interest in Series A and Series B partnership units conveys us an undivided interest in certain U.S. PO Joint Venture assets with correlative PO and co-product capacity, respectively, resulting in the ownership of annual in-kind cost-based PO and co-product production.

71

Table of Contents

LYONDELLBASELL INDUSTRIES N.V.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In addition, each partner has a 50% interest in a separate manufacturing joint venture (the “European PO Joint Venture”), which owns a PO/SM plant at Maasvlakte near Rotterdam, The Netherlands. In substance, each partner’s ownership interest represents an undivided interest in all of the European PO Joint Venture assets with correlative capacity reservation resulting in ownership of annual in-kind cost-based PO and SM production.

We do not share marketing or product sales under the U.S. PO Joint Venture. We operate the U.S. PO Joint Venture’s and the European PO Joint Venture’s (collectively the “PO Joint Ventures”) plants and arrange and coordinate the logistics of product delivery. The partners’ share in the cost of production and logistics is based on their product off-take.

During the fourth quarter of 2020, we executed a joint venture agreement with Sasol Chemicals (USA) LLC (“Sasol”) to form the Louisiana Integrated PolyEthylene JV LLC joint venture (the “Louisiana Joint Venture”). Under this arrangement, we acquired a 50% ownership interest in an ethane cracker, a low-density and linear-low density polyethylene plants, and associated infrastructure. Under the terms of the joint venture agreement, each partner provides pro-rata share of ethane feedstocks and off-takes pro-rata shares of cracker and polyethylene products. We operate the Louisiana Joint Venture assets and market the polyethylene off-take for all partners through our global sales team.

We account for the PO Joint Ventures and the Louisiana Joint Venture using the equity method. We report the cost of our product off-take as inventory and the equity loss as cost of sales in our Consolidated Financial Statements. Related production cash flows are reported in the operating cash flow section of the Consolidated Statements of Cash Flows.

Our equity investment in the PO Joint Ventures and the Louisiana Joint Venture represents our share of the manufacturing plants and is decreased by recognition of our share of equity loss, which is equal to the depreciation of the assets of these joint ventures. Other changes in the investment balance are principally due to our additional capital contributions to these joint ventures to fund capital expenditures. Such contributions are reported in the investing cash flow section of the Consolidated Statements of Cash Flows.

Our product off-take of PO and its co-products from the PO Joint Ventures was 2.6 million tons in 2021, 2.6 million tons in 2020 and 2.4 million tons in 2019. Our product off-take of ethylene and polyethylene produced from the Louisiana Joint Venture in 2021 was 1.1 million tons. The product off-take in 2020 for the period subsequent to the formation of the joint venture was immaterial.

Redeemable Non-controlling Interests

Our redeemable non-controlling interests relate to shares of cumulative perpetual special stock (“redeemable non-controlling interest stock”) issued by our consolidated subsidiary, formerly known as A. Schulman, Inc. (“A. Schulman”). Holders of redeemable non-controlling interest stock are entitled to receive cumulative dividends at the rate of 6% per share on the liquidation preference of $1,000 per share. Redeemable non-controlling interest stock may be redeemed at any time at the discretion of the holders and is reported in the Consolidated Balance Sheets outside of permanent equity.

The redeemable non-controlling interests were recorded at fair value at the date of acquisition and are subsequently carried at the greater of estimated redemption value at the end of each reporting period or the initial amount recorded at the date of acquisition adjusted for subsequent redemptions. Dividends on these shares are deducted from or added to the amount of Income (loss) attributable to the Company shareholders if and when declared by the Company.

Goodwill

Goodwill is tested for impairment annually in the fourth quarter or whenever events or changes in circumstances indicate that the fair value of a reporting unit with goodwill is below its carrying amount.

72

Table of Contents

LYONDELLBASELL INDUSTRIES N.V.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

We first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Qualitative factors assessed for each of the reporting units include, but are not limited to, changes in long-term commodity prices, discount rates, competitive environments, planned capacity, cost factors such as raw material prices, and financial performance of the reporting units. If the qualitative assessment indicates that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, a quantitative test is required. If the carrying value of the reporting unit including goodwill exceeds its fair value, an impairment charge equal to the excess would be recognized up to a maximum amount of goodwill allocated to that reporting unit.

For 2021 and 2020, management performed qualitative impairment assessments of our reporting units, which indicated that the fair value of our reporting units was greater than their carrying value including goodwill. Based on this assessment, our historical assessment for impairment and forecasted demand for our products, a quantitative goodwill impairment test was not required and no goodwill impairment was recognized.

Intangible Assets

Intangible assets consist of customer relationships, trade names and trademarks, know-how, emission allowances, various contracts, in-process research and development costs and software costs. These assets are amortized using the straight-line method over their estimated useful lives or over the term of the related agreement. We evaluate definite-lived intangible assets with the associated long-lived asset group for impairment whenever impairment indicators are present.

Research and Development

Research and development (“R&D”) costs are expensed when incurred. Subsidies for R&D are included in Other income (expense), net. Depreciation expense related to assets employed in R&D is included as a cost of R&D.

Income Taxes

The income tax for the period comprises current and deferred tax. Income tax is recognized in the Consolidated Statements of Income, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In these cases, the applicable tax amount is recognized in other comprehensive income or directly in equity, respectively.

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts recognized for income tax purposes, as well as the net tax effects of net operating loss carryforwards. Valuation allowances are provided against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

We recognize uncertain income tax positions in our financial statements when we believe it is more likely than not, based on the technical merits, that the position or a portion thereof will be sustained upon examination. For a position that is more likely than not to be sustained, the benefit recognized is measured at the largest cumulative amount that is greater than 50 percent likely of being realized.

Other Provisions

Environmental Remediation Costs—Environmental remediation liabilities include liabilities related to sites we currently own, sites we no longer own, as well as sites where we have operated that belong to other parties. Liabilities for anticipated expenditures related to investigation and remediation of contaminated sites are accrued when it is probable a liability has been incurred and the amount of the liability can be reasonably estimated. Only certain post-remediation monitoring costs, the timing of which can be determined with reasonable certainty, are discounted to present value.

73

Table of Contents

LYONDELLBASELL INDUSTRIES N.V.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Asset Retirement Obligations—At some sites, we are legally obligated to decommission our plants upon site exit. Asset retirement obligations are recorded at the fair value using the present value of the estimated costs to retire the asset at the time the obligation is incurred. That cost, which is capitalized as part of the related long-lived asset, is depreciated on a straight-line basis over the remaining useful life of the related asset. Accretion expense in connection with the discounted liability is also recognized over the remaining useful life of the related asset. Such depreciation and accretion expenses are included in Cost of sales.

Foreign Currency Translation and Remeasurement

Functional and Reporting Currency—Items included in the financial information of each of LyondellBasell N.V.’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”) and then translated to the U.S. dollar (“the reporting currency”) as follows:

•Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

•Income and expenses for each income statement are translated at monthly average exchange rates; and

•All resulting exchange differences are recognized as a separate component within Other comprehensive income (foreign currency translation adjustments).

Transactions and Balances—Foreign currency transactions are recorded in their respective functional currency using exchange rates prevailing at the dates of the transactions. Exchange gains and losses resulting from the settlement of such transactions and from remeasurement of monetary assets and liabilities denominated in foreign currencies at the balance sheet date are recognized in earnings.

Revenue Recognition

Substantially all our revenues are derived from contracts with customers. We account for contracts when both parties have approved the contract and are committed to perform, the rights of the parties and payment terms have been identified, the contract has commercial substance and collectability is probable.

Revenue is recognized when obligations under the terms of a contract with our customer are satisfied. This generally occurs at the point in time when performance obligations are fulfilled and control transfers to the customer. In most instances, control transfers upon transfer of risk of loss and title to the customer, which usually occurs when we ship products to the customer from our manufacturing facility. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods. Customer incentives are generally based on volumes purchased and recognized over the period earned. Sales, value-added, and other taxes that we collect concurrent with revenue-producing activities are excluded from the transaction price as they represent amounts collected on behalf of third parties. We apply the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that we otherwise would have recognized is one year or less. Shipping and handling costs are treated as a fulfillment cost and not a separate performance obligation.

We have marketing arrangements to off-take and sell the production of some of our joint ventures in return for a percentage of the price realized on the sales to the end customer. In such arrangements, when we obtain control of the product, revenue and cost of sales are presented on a gross basis. Otherwise, we recognize revenue, net of amounts due to the joint venture, which represents commissions earned.

Payments are typically required within a short period following the transfer of control of the product to the customer. We occasionally require customers to prepay purchases to ensure collectability. Such prepayments do not represent financing arrangements, since payment occurs within a short time frame. We apply the practical expedient which permits us to disregard the effects of a significant financing component when, at contract inception, we expect the period between the payment and fulfillment of the performance obligation will be one year or less.

74

Table of Contents

LYONDELLBASELL INDUSTRIES N.V.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Contract balances typically arise when a difference in timing between the transfer of control to the customer and receipt of consideration occurs. Our contract liabilities, which are reflected in our Consolidated Financial Statements as Accrued liabilities and Other liabilities, consist primarily of customer payments for products or services received before the transfer of control to the customer occurs.

Share-Based Compensation

The Company recognizes compensation expense in the financial statements for equity-classified share-based compensation awards based upon the grant date fair value over the vesting period. See Note 15 to the Consolidated Financial Statements for additional information.

Leases

Leases with a term longer than 12 months are recorded on the balance sheet as a lease asset and lease liability. If at inception of a contract, a lease is identified, we recognize a lease asset and a corresponding lease liability based on the present value of the lease payments over the lease term, discounted using our incremental borrowing rate, unless an implicit rate is readily determinable. Lease payments include fixed and variable lease components derived from usage or market-based indices, such as the consumer price index. Other variable lease payments may fluctuate for a variety of reasons including usage, output, insurance or taxes. These variable amounts are expensed as incurred and not included in the lease assets or lease liabilities. Options to extend or terminate a lease are reflected in the lease payments and lease term when it is reasonably certain that we will exercise those options. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the Consolidated Statements of Income. The majority of our leases are operating leases for which we recognize lease expense on a straight-line basis over the lease term. We apply the practical expedient to account for lease and associated non-lease components as a single lease component for all asset classes with the exception of utilities and pipeline assets within major manufacturing equipment. For these assets, non-lease components are separated from lease components and accounted for as normal operating expenses. Leases with an initial term of 12 months or less are recognized in the Consolidated Statements of Income on a straight-line basis over the lease term.

Financial Instruments and Hedging Activities

Pursuant to our risk management policies, we selectively enter into derivative transactions to manage market risk volatility associated with changes in commodity pricing, currency exchange rates and interest rates. Certain derivatives used for this purpose are designated as net investment hedges, cash flow hedges or fair value hedges. Derivative instruments are recorded at fair value on the balance sheet. Gains and losses related to changes in the fair value of derivative instruments not designated as hedges are recorded in earnings.

Cash flows from derivatives designated as hedges are reported in our Consolidated Statements of Cash Flows under the same category as the cash flows from the hedged items unless the derivative contract contains a significant financing element. Cash flows for derivatives with a significant financing element are classified as Cash flows from financing activities. Cash flows related to economic hedges are classified consistent with the cash flows of the economic hedged items.

Net Investment Hedges—We enter into foreign currency derivatives and foreign currency denominated debt to reduce the volatility in shareholders’ equity resulting from changes in currency exchange rates of our foreign subsidiaries with respect to the U.S. dollar. Our foreign currency derivatives consist of cross-currency contracts and forward exchange contracts.

75

Table of Contents

LYONDELLBASELL INDUSTRIES N.V.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

We use the critical terms approach through the application of the spot method to assess hedge effectiveness at least quarterly. For derivatives designated as net investment hedges, gains or losses attributable to changes in spot foreign exchange rates over the designation period are reflected in foreign currency translation adjustments within Other comprehensive income (loss). Recognition in earnings is delayed until the net investment is sold or liquidated. At that time, the amount recognized is reported in the same line item as the gain or loss on the liquidation of the hedged foreign operations. For our cross-currency swaps, the associated interest receipts and payments are recorded in interest expense. For our foreign currency forward contracts, we amortize initial forward point values on a straight-line basis to interest expense over the life of the hedging instrument. We monitor on a quarterly basis for any over-hedged positions requiring re-designation and re-designation of the hedge to remove such over-hedged condition.

Cash Flow Hedges—We enter into cash flow hedges to manage the variability in cash flows of a future transaction. Our cash flow hedges include cross currency swaps, forward starting interest rate swaps and commodity futures, options and swaps. For derivatives designated as cash flow hedges, the gains and losses are recorded in other comprehensive income (loss) and released to earnings in the same line item and in the same period during which the hedged item affects earnings.

We use the critical terms and the quantitative long-haul methods to assess hedge effectiveness and monitor, at least quarterly, any change in effectiveness.

We have cross-currency swap contracts designated as cash flow hedges to reduce our exposure to the foreign currency exchange risk associated with certain intercompany loans. Under the terms of these contracts, we make interest payments in euros and receive interest in U.S. dollars. Upon the maturities of these contracts, we will pay the principal amount of the loans in euros and receive U.S. dollars from our counterparties.

We enter into forward-starting interest rate contracts to mitigate the risk of adverse changes in benchmark interest rates on future anticipated debt issuances.

We also execute commodity futures, options and swaps to manage the volatility of the commodity price related to anticipated purchases of raw materials and product sales. We enter into over-the-counter commodity swaps and options with one or more counterparties whereby we pay a predetermined fixed price and receive a price based on the average monthly rate of a specified index for the specified nominated volumes.

Fair Value Hedges—We use interest rate swaps as part of our current interest rate risk management strategy to achieve a desired proportion of variable versus fixed rate debt. Under these arrangements, we exchange fixed-rate for floating-rate interest payments to effectively convert our fixed-rate debt to floating-rate debt. For derivatives that have been designated as fair value hedges, the gains and losses of the derivatives and hedged items are recorded in earnings.

We use the long-haul method to assess hedge effectiveness using a regression analysis approach at least quarterly. We perform the regression analysis over an observation period of three years, utilizing data that is relevant to the hedge duration.

Fair Value Measurements

We categorize assets and liabilities, measured at fair value, into one of three different levels depending on the observability of the inputs employed in the measurement. Level 1 inputs are quoted prices for identical instruments in active markets. Level 2 inputs are quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable. Level 3 inputs are model-derived valuations in which one or more significant inputs or significant value-drivers are unobservable.

Fair value measurements are classified according to the lowest level input or value-driver that is significant to the valuation. A measurement may therefore be classified within Level 3 even though there may be significant inputs that are readily observable.

76

Table of Contents

LYONDELLBASELL INDUSTRIES N.V.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Changes in Fair Value Levels—Management reviews the disclosures regarding fair value measurements at least quarterly. If an instrument classified as Level 1 subsequently ceases to be actively traded, it is transferred out of Level 1. In such cases, instruments are reclassified as Level 2, unless the measurement of its fair value requires the use of significant unobservable inputs, in which case it is reclassified as Level 3.

We use the following inputs and valuation techniques to estimate the fair value of our financial instruments disclosed in Note 13 to the Consolidated Financial Statements:

Cross-Currency Swaps—The fair value of our cross-currency swaps is calculated using the present value of future cash flows discounted using observable inputs such as known notional value amounts, yield curves, basis curves, as applicable, and with the foreign currency leg revalued using published spot and forward exchange rates on the valuation date.

Forward-Starting and Fixed-for-Floating Interest Rate Swaps—The fair value of our forward-starting and fixed-for-floating interest rate swaps is calculated using the present value of future cash flows using observable inputs such as benchmark interest rates and market yield curves.

Commodity Derivatives—The fair values of our commodity derivatives are measured using closing market prices of public exchanges and from third-party broker quotes and pricing providers.

The fair value of our commodity swaps classified as Level 2 is determined using a combination of observable and unobservable inputs. The observable inputs consist of future market values of various crude and heavy fuel oils, which are readily available through public data sources. The unobservable input, which is the estimated discount or premium used in the market pricing, is calculated using an internally-developed, multi-linear regression model based on the observable prices of the known components and their relationships to historical prices. A significant change in this unobservable input would not have a material impact on the fair value measurement of our Level 2 commodity swaps.

Forward Exchange Contracts—The fair value of our forward exchange contracts is based on forward market rates.

Available-for-Sale Debt Securities—The fair value of our available-for-sale debt securities is calculated using observable market data for similar securities and broker quotes from recognized purveyors of market data.

Equity Securities—The fair value of our investment in equity securities is based on the net asset value provided by the fund administrator.

Short-Term Debt—The fair value of short-term borrowings related to precious metal financing arrangements accounted for as embedded derivatives are determined based on the future price of the associated precious metal.

Long-Term Debt—The fair value of our senior and guaranteed notes is calculated using pricing data obtained from well-established and recognized vendors of market data for debt valuations. The fair value of our term loan was determined based on a discounted cash flow model using observable inputs such as benchmark interest rates and public information regarding our credit risk.

We use the following inputs and valuation techniques to estimate the fair value of our pension assets disclosed in Note 14 to the Consolidated Financial Statements:

Common and Preferred Stock—Valued at the closing price reported on the market on which the individual securities are traded.