Equistar

http://www.equistarchem.com/index.htm

Equistar Chemicals, LP is a $6.5 billion chemical company that was formed in 1997. Lyondell Chemical Company owns 41 percent of the Equistar partnership, while Millennium Chemicals and Occidental Petroleum Corporation each own 29.5 percent.
　（＊　2002/1　Occidental持分をLyondellが購入、OccidentalはLyondell株を購入）

Equistar is one of the largest producers of ethylene, propylene and polyethylene in the world today. We pay attention to even the smallest needs of our customers. We're a leading producer of polypropylene, oxygenated chemicals, performance polymers, and wire and cable resins and compounds. We're an industry leader with an unwavering commitment to being the premier petrochemicals and polymers company in the world.

Our commitment begins with each of our more than 3,000 employees. It stretches out from our headquarters in Houston across 13 manufacturing complexes along the United States Gulf Coast and in the Midwest. It continues through our 1,400-mile ethylene/propylene distribution system, which spans the Texas Gulf Coast.

We are the product of many minds coming together with the single focus of providing the right product for every customer. That's what drives us to maintain an extended product line, enhanced operating efficiencies, greater geographic diversity and stronger research and development capabilities. That's what drives us to provide the resources that help us lead today and rise to the challenges of a changing industry tomorrow.

The One Source for Petrochemicals and Polymers
With Equistar, customers have one reliable source to meet their needs for petrochemicals, polymers, ethylene oxide and derivatives. Equistar ranks among the leading world producers of ethylene and propylene with an annual ethylene capacity of more than 11 billion pounds and more than five billion pounds of polyethylene.

Equistar's specialty chemicals businesses upgrade olefin co-product streams into higher value-added products. Equistar ranks number one in the domestic production of diethyl ether and industrial ethyl alcohol. Equistar is the leading U.S. producer of polyolefin powders; wire and cable resins and compounds; polymers for adhesives, sealants and coatings; tie-layer resins and liquid polyolefins.

Focused Research and Development and Technical Support
Customers can benefit from Equistar's highly skilled technical support and targeted research and development that add value to our products. Equistar technicians assist customers in optimizing our resins on their equipment, as well as developing specific resins for individual needs. With more than 30 commercial or semi-commercial plastics processing lines at the Equistar Technology Center, Equistar engineers and technicians can evaluate polyolefin products under conditions similar to a customer's plant.

Products to Improve Lives
Equistar products are used in countless items that make everyday living safer, healthier and more convenient.

Examples include lightweight, yet tougher bottles for milk, juices, shampoos and detergents, ingredients for detergents themselves, safer food containers, stronger adhesives, brake fluid, antifreeze, stain and mildew-resistant carpeting and fabrics, easier-to-apply paints and inks, better insulated communications cables, safer tires, improved housing construction materials and sporting gear that protects against injury.

Manufacturing Operations

With Equistar, customers have one reliable source to meet their needs for petrochemicals, polymers, ethylene oxide and derivatives. Our network of world-scale olefins crackers offer customers flexibility and reliability. From Channelview, Chocolate Bayou, Corpus Christi and La Porte, Texas and Lake Charles, Louisiana, Equistar's complexes are strategically located on the U.S. Gulf Coast. Additional olefins crackers in Morris, Illinois and Clinton, Iowa further enhance Equistar's ability to supply high quality petrochemicals both to our customers and to Equistar's polymers plants. Strengthening our ability is a pipeline distribution that spans from Corpus Christi to Lake Charles.

In rapidly expanding polymers markets, our competitive advantages emerge from major processing facilities in Texas. The Morris and Clinton complexes are the only polyethylene facilities in the Midwest and give us flexibility when delivering our products to customers in the Midwest and U.S. East Coast.

Large, efficient, low-cost ethylene oxide manufacturing facilities improve our cost structure and help Equistar continue to produce higher value EO derivatives, such as ethylene glycol for polyester film and fiber.

Bayport,TX : PP、LDPE
　　　built by El Paso Products Company in the 1970s,
　　　Lyondell Petrochemical acquired the facility in 1990 from Rexene Corporation.

Victoria,TX : HDPE
　　　constructed in 1976 within the Du Pont Chemical Complex

Corpus Christi,TX :　Ethylene, Propylene,　Butadiene, Benzene
　　　began operation in 1980 as Corpus Christi Petrochemical Company .
　　　In 1988, OxyChem purchased the Complex from Cain Chemical Company.

Channelview,TX :　Ethylene, Propylene,　Butadiene, Benzene, Toluene , Alkylate,　MTBE
　　　constructed by Texas Butadiene & Chemical Corporation in 1957
　　　The plant became part of ARCO Chemical in 1969.

La Porte,TX :Ethylene, Propylene, LDPE, LLDPE, HDPP
　　　U.S. Industrial Chemicals Co., a division of National Distillers & Chemical
　　　began operations in 1959.
　　　Several ownership changes occurred in the 1980s, the last being to Quantum.

Chocolate Bayou,TX :Ethylene, Propylene,Butadiene, Benzene
　　　　　　　　　　　　　　 :HDPE
　　　The olefins facility was constructed as a jv between Monsanto and Conoco in 1980
　　　It was acquired by Occidental Petroleum in 1988 from Cain Chemical.

Matagorda, TX : HDPE
　　　constructed in 1981 by Conoco, which sold the plant to DuPont in 1983
　　　Ownership later changed between DuPont and Cain Chemical, the latter of which
　　　　　 was purchased by Occidental Petroleum Corporation in 1988.

Beaumont,　TX :　EO,　EG

Lake Charles,LA : Ethylene（900 million pounds per year）, Propylene
　　　originally built by Cities Service Company in 1972 and shut down in the early 1980’s.
　　　It was restarted in 1986 by Occidental Chemical (Oxychem)

Morris, Illinois : Ethylene, Propylene, LDPE, LLDPE, PP
　　　Constructed in 1969　

Clinton, Iowa : Ethylene, Propylene, LDPE, HDPE
　　　Construction of the Clinton facility began in 1969

Tuscola, Illinois :Ethyl Alcohol, Diethyl Ether, Compounds for Wire and Cable
　　　　　　　　　　　　Microfine Polyolefin Powders

Anaheim, CA & New Ark,NJ :　Denatured Alcohol

Peachtree City, GA & Fairport Harbor, OH : Wire and Cable insulation compounds

Rated Capacity (MMlbs/yr) (as of January 1, 2001)

† Reflects only equity share of PD Glycol venture with DuPont
‡ Excludes capacity of Port Arthur, Texas facility, which was permanently shutdown February 28, 2001

Lyondell

1985

Lyondell formed in 1985 from selected chemical and refining assets of Atlantic Richfield Company (ARCO)

1989

Spun off from ARCO
Lyondell becomes public company listed on the New York Stock Exchange (Ticker Symbol: LYO)

1990

Acquired LDPE and PP businesses from Rexene

1993

Formed LYONDELL-CITGO Refining Company (LCR) with CITGO Petroleum Corporation

1995

Acquired HDPE business from Alathon

1996

Formed Lyondell Methanol Company (LMC) with MCN Investment

1997

Upgraded LCR
Equistar Chemicals, LP formed with Millennium Chemicals

1998

Equistar expanded with addition of Occidental Petroleum Corporation businesses
Acquired ARCO Chemical Company

1999

Successfully refinanced long-term debt with $4.2 billion combined equity and debt offering

2000

Sold worldwide polyols business to Bayer AG

Began construction on world-scale propylene oxide (PO) facility in Rotterdam, The Netherlands

Millennium Chemicals

Millennium Chemicals is one of the leading chemical companies in the world.

We supply millions of pounds of chemicals each year to manufacturers for use in thousands of consumer and industrial products. In short, we work hard to improve the fundamentals of daily life.

Millennium Chemicals is…

The world's second-largest producer of titanium dioxide (TiO2) and the largest merchant seller of titanium tetrachloride (TiCl4) in North America and Europe.

The world's second-largest producer of terpene-based fragrance and flavor chemicals.

The second-largest producer of acetic acid and vinyl acetate monomer in North America, and through its partnership interest in LaPorte Methanol Company, LP, a partner in a leading U.S.A. producer of methanol.

A 29.5% owner of Equistar Chemicals, LP, the second-largest producer of ethylene and the third-largest producer of polyethylene in North America.

Millennium Chemicals' corporate headquarters are located in Red Bank, New Jersey. Millennium Chemicals' global network includes 4,000 employees on five continents. View our directory for a complete listing of office and manufacturing locations.

Occidental Petroleum Corporation

Occidental Petroleum Corporation, headquartered in Los Angeles, California, is one of the world's largest oil and natural gas exploration and production companies. Occidental also manufactures and markets a number of basic and specialty chemicals. Through its various oil and gas operating companies, Occidental is the world's largest "independent" oil and gas company based on combined oil and gas production. In the oil and gas industry, the term independent applies to companies that do not have refining and marketing operations.

Since 1997, a series of acquisitions, sales and asset swaps has significantly increased the size of our oil and gas operations relative to our chemical business. As a result, Occidental has been transformed into a highly focused oil and gas company with large, long-lived assets concentrated in the United States, the Middle East and Latin America. We also are an industry leader in developing and utilizing enhanced oil recovery (EOR) techniques to effectively and profitably recover oil and gas from maturing properties.

Through its chemical subsidiary, Occidental Chemical Corporation (OxyChem) and its investments in Equistar Chemicals LP and Oxy Vinyls LP, Occidental is a leading North American manufacturer and marketer of basic chemicals such as chlorine and co-product caustic soda, as well as certain petrochemicals, polymers and plastics and speciality products.

Our energy trading and marketing operation, Occidental Energy Marketing Incorporated (OEMI) offers marketing, trading and related risk management services for clients involved in crude oil, natural gas and power markets.

2002/1/31 Lyondell Chemical　

Lyondell to Acquire Occidental's 29.5% Stake in Equistar; Occidental to Acquire Equity Position in Lyondell

- Positions Lyondell for significant additional cash flow as　petrochemical cycle recovers.
- Strengthens Lyondell's balance sheet.

Lyondell Chemical Company today announced that it has agreed in principle with Occidental Petroleum Corporation to acquire Occidental's 29.5% share of Equistar Chemicals, LP. Occidental will purchase an equity investment position in Lyondell, the cash proceeds from which Lyondell will use to fund the purchase of Occidental's stake in Equistar. This would bring Lyondell's ownership interest in Equistar to 70.5%. Millennium Chemicals Inc. holds the remaining 29.5% interest.
"These transactions are cash flow driven," said Dan F. Smith, Lyondell's President and Chief Executive Officer. "The structure allows Lyondell to conserve cash at the trough of the chemical cycle while significantly increasing our proportionate share of Equistar's cash distributions as the chemical cycle improves. We believe this will accelerate Lyondell's debt repayment capability and enables us to improve our balance sheet immediately."

Occidental will receive the following for its investment in Lyondell:
-- 30 to 34 million shares of newly issued Series B Common Stock, with the final number to be determined at closing of the transaction.
These shares will have the same rights as Lyondell's regular Common Stock with the exception of the dividend. The Series B Common Stock will pay a dividend at the same rate as the regular Common Stock but, at Lyondell's option, the dividend may be paid in additional shares of Series B (payment in kind) or in cash. These new Series B shares also include provisions for conversion to regular Common Stock three years after issuance or earlier in certain circumstances. As of year-end 2001, Lyondell had approximately 118 million shares of common stock outstanding.
-- Five-year warrants to acquire five million shares of Lyondell regular Common Stock at $25 per share.
-- A contingent payment equivalent in value to 7.38 percent of Equistar's cash distributions for 2002 and 2003 up to a total of $35 million, payable in cash or Lyondell common stock, as determined by Lyondell.
-- Two Occidental executives, Dr. Ray R. Irani, Chairman and Chief Executive Officer, and Stephen I. Chazen, Chief Financial Officer and Executive Vice President, will become members of the Lyondell Board of Directors.

With the chemical industry currently in the trough of the business cycle, the acquisition will be cash flow neutral and will not be initially accretive to Lyondell earnings. However, due to Equistar's significant earnings leverage, the transaction is expected to become cash flow and earnings accretive at a very early stage in the recovery of the chemical cycle.
"On a normalized Equistar earnings level, which we believe to be approximately $1 billion of EBITDA per year, we believe this transaction will add significant value for Lyondell shareholders and bondholders," Smith said.
"In addition, we welcome the participation of Occidental as an investor and as part of our Board."
Under terms of the agreements that govern the Equistar partnership, Millennium will have the right to participate in the acquisition of Occidental's portion of Equistar on a ratable basis, if it elects to do so.
Since the basic structure of the Equistar governance agreement does not change, Lyondell will continue to account for its investment in the Equistar joint venture under the equity method of accounting.

Equistar Chemicals, LP was formed in December 1997 with the combination of the olefins and polymers businesses of Lyondell and Millennium. Occidental joined the partnership in May 1998 with the contribution of the ethylene, propylene, ethylene oxide and derivatives businesses of Occidental Chemical Corporation, a subsidiary of Occidental Petroleum. The venture has achieved significant cost savings since its formation and has become one of the largest and most efficient commodity chemical producers in North America. Dan Smith, Lyondell's President and CEO, also serves as Chief Executive Officer of Equistar.

Closing of the transactions is subject to completion and execution of definitive documentation, approval by the Boards of Directors of Lyondell and Occidental, approval by Lyondell stockholders and other customary conditions.

Lyondell Chemical Company, ( http://www.lyondell.com ), headquartered in Houston, Texas, is the world's largest producer of propylene oxide (PO); the world's number three supplier of TDI (toluene diisocyanate); a leading producer of propylene glycol; a leading producer of other PO derivatives such as BDO (butanediol) and PGE (propylene glycol ether); and a producer of styrene monomer and MTBE as co-products of PO production. Equistar Chemicals, LP, a joint venture in which Lyondell currently owns a 41% interest, is one of the largest producers of ethylene, propylene and polyethylene in North America and a leading producer of polypropylene, ethylene oxide, ethylene glycol, high value-added specialty polymers and polymeric powder. Through its 58.75% interest in LYONDELL-CITGO Refining LP, Lyondell is one of the largest refiners in the United States, processing extra heavy Venezuelan crude oil to produce gasoline, low sulfur diesel and jet fuel. Lyondell is the third largest methanol producer in the U.S., through its 75% interest in Lyondell Methanol Company, L.P.

March 28, 2003 　Equistar 　　　　　　　　　　　　　　　　参考　Sunoco, Inc.

Equistar Agrees to Supply Propylene to Sunoco for 15 Years and Sell Bayport Polypropylene Unit in Pasadena, Texas

Lyondell Chemical Company (NYSE: LYO) today announced that its joint venture Equistar Chemicals, LP, is entering into a long-term propylene supply arrangement with Sunoco, Inc. and is selling its Bayport polypropylene manufacturing unit in Pasadena, Texas, to Sunoco, subject to certain conditions. The transaction will be effective as of March 31.

Beginning April 1, 2003, Equistar will supply propylene to Sunoco for a period of 15 years, and a majority of the propylene to be supplied will be provided under a cost-based formula.

Equistar is selling its Bayport polypropylene unit to Sunoco, but will retain ownership of its Bayport low-density polyethylene (LDPE) unit. Sunoco will operate both units. Equistar's Novolen(R)-based polypropylene manufacturing plant in Morris, Illinois, and its interest in the Novolen Technology Holdings venture are not included in the transaction.

The total consideration to Equistar for the supply arrangements and asset sale is approximately $190 million, plus the value of the Bayport polypropylene inventory.

"Equistar is a major producer of propylene and Sunoco is a growing, committed producer of polypropylene," said Dan F. Smith, Lyondell President and CEO and Equistar CEO. "These transactions enable each company to focus on its particular area of expertise. Additionally, the cash received from these transactions will enable Equistar to enhance liquidity, which remains key among our financial priorities."

Lyondell Chemical Company, (www.lyondell.com ), headquartered in Houston, Texas, is a leading producer of: propylene oxide (PO); PO derivatives, including propylene glycol (PG), butanediol (BDO) and propylene glycol ether (PGE); toluene diisocyanate (TDI); and styrene monomer and MTBE as co-products of PO production. Through its 70.5% interest in Equistar Chemicals, LP, Lyondell also is one of the largest producers of ethylene, propylene and polyethylene in North America and a leading producer of ethylene oxide, ethylene glycol, high value-added specialty polymers and polymeric powder. Through its 58.75% interest in LYONDELL-CITGO Refining LP, Lyondell is one of the largest refiners in the United States, principally processing extra heavy Venezuelan crude oil to produce gasoline, low sulfur diesel and jet fuel.

The statements in this release relating to matters that are not historical facts are forward-looking statements that are subject to risks and uncertainties. Actual results could differ materially, based on factors including, but not limited to: the cyclical nature of the chemical and refining industries; availability, cost and volatility of raw materials and utilities; governmental regulatory actions and political unrest; global economic conditions; industry production capacity and operating rates; the supply/demand balance for Lyondell's and its joint ventures' products; competitive products and pricing pressures; access to capital markets; technological developments and other risk factors. For more detailed information about the factors that could cause actual results to differ materially, please refer to Lyondell's Annual Report on Form 10-K for the year ended December 31, 2002, which was filed in March 2003.