“Catching the Asian Wave” UBS Warburg Grass Roots Conference February 11, 2004 Ed Dineen Sr. Vice President – Chemicals & Polymers.

“Catching the Asian Wave”

UBS Warburg Grass Roots Conference February 11, 2004

Ed DineenSr. Vice President – Chemicals & Polymers

2

Safe Harbor LanguageStatements in this presentation relating to matters that are not historical facts are forward-looking statements. These forward-looking statements are just predictions or expectations and 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; and technological developments and other risk factors. For more detailed information about the factors that could cause our actual results to differ materially, please refer to Lyondell Chemical Company’s Annual Report on Form 10-K for the year ended December 31, 2002, filed in March 2003, Lyondell’s Quarterly Report on Form 10-Q, filed in November, 2003, and Lyondell’s Annual Report on Form 10-K for the year ended December 31, 2003, which will be filed in March 2004. Reconciliations of GAAP financial measures to non-GAAP financial measures are provided at the end of this presentation.

3

Lyondell Has Built a Balanced Portfolio

Lyondell

IC&D

LCR

Equistar

Commodity Leverage-- A leading North American producer of ethylene, propylene

and polyethylene-- Low cost position based on feedstock flexibility and scale

Growth & International Presence-- A leading global producer of PO and derivatives-- Process technology strength

Cash Generation-- Unique capability to refine heavy crude oils-- Contractually stable business; strong cash flow generator

($ MM)

Revenues EBITDALyondell

OwnershipIC&D $3,801 $245 100.0%Equistar 6,545 175 70.5LCR 4,162 377 58.75

2003

4

Leading Product Positions Create Significant Earnings Leverage

1 Source: LYO capacities as of Jan 2004, CMAI2 Includes 100% of joint venture volumes.3 Does not include refinery-grade material or production from the product flexibility unit at Equistar’s Channelview

facility.4 Based on 1¢/gal change.

Inte

rmed

iate

Ch

emic

als

an

d D

eriv

ati

ves

Eq

uis

tar

Product Annual Capacity 1Capacity Position

Propylene Oxide2 (lbs) 4.5 billion 1st in North America1 st in the world

Styrene Monomer (lbs) 5.1 billion 1st in North America1st in the world

MTBE (bbl/day) 58,500 1st in North America1st in the world

Ethylene (lbs) 11.6 billion 2nd in North America5th in the world

Propylene (lbs) 5.0 billion 2nd in North America7 th in the world

Polyethylene (lbs) 5.7 billion 3 rd in North America4 th in the world

1

3

$23MM

$21MM

$ 94MM

$116MM

$50MM

$57MM

Pre-TaxLeverage(∆1¢/unit)

2

5

Future Earnings Are Driven Primarily By The Industry Cycle Rather Than New Investment

0

500

1000

1500

2000

2500

3000

2003 1999/2000Margins

1995 Margins 1988 Margins

$MM

LCR IC&D Equistar

1 Chem Data/CMAI industry margins conditions for IC&D and Equistar products (ex. MTBE) applied to current capacities and ownership, LCR 2003 EBITDA. Note: Assumes current capital structure; 175 MM shares.

1

1 1

Recession/ Trough

Pre-Recession

PeakCycle EBITDA Potential

$6.90 / share

$1.40 / share

2003Proportional

Interest,Dividends &

Capital

6

The Lyondell Enterprise Has A Well-Established Presence in Asia

Presence established in 1972

40% interest in Nihon Oxirane

$1 B revenue 1

2.5 Blbs of Sales 1

Leading PO and Derivative Positions

Strong Styrene Relationships

1 - Includes 100% of Nihon Oxirane

BeijingTokyo

Shanghai

Taipei

Hong Kong

Guangzhou

Offices

Inventory

Point

Manufacturing

7

0

10

20

30

40

50

60

70

80

90

100

PE MEG SM PO

China Asia

Asia Will Represent 40-60% of Global Demand Growth for Chemicals and Plastics

Source: CMAI for PE and SM, LYO estimates for PO

0

10

20

30

40

50

60

70

80

90

100

PE MEG SM PO

% %Asian Share of 2002

Global DemandAsian Share of 2002-2006

Global Growth

8

Asian Opportunities And Threats Are Shaped By Several Factors

Local Demand Growth

Inexpensive Labor– Construction Costs

– Finished Products

Global Customer Trends

Hydrocarbon Resource Avails

Intellectual Property Protection

Cultural Integration Challenges

New JV’s / Competitors

Evolving Political / Financial Structures

Plus Minus

9

In The Ethylene Chain, The Following Considerations Drive Our Strategy In Regard To Asia

Demand Growth Vs. Local And Mid-East Expansions

Competitive Position In Export And North American Markets

Finished Product Economics / Trade Flows

Potential For Differentially Advantaged Investments

10

0

20

40

60

80

100

120

0 5, 000 10, 000 15, 000 20, 000 25, 000 30, 000 35, 000 40, 000

US

Korea

Taiwan

WE

Singapore

Japan

Thailand

Malaysia

ChinaIndiaIndonesia

The Emergence of a Middle Class Increases Local Demand for Plastics

Sources: CMAI 2001; Nexant Chemsystems

0

2

4

6

8

10

12

Domestic Exports

1995 2001

China PE Demand

Domestic vs. Export

PE Consumption/capita, lbs

2000 GDP/Capita

11

In Ethylene, Raw Material Costs Are The Only Significant Differentiator

Technology– Widely Licensed

– Only Minor Advances Over Several Decades

Construction Costs:– Equipment Is Sourced Globally

– Labor Costs Provide Some Differentiation

– Infrastructure Can Differentiate

Operating Labor Cost Is A Minor Factor

Feedstocks:– Crude Oil Based Raw Materials

– Natural Gas Based Feedstocks Currently Advantaged In The Middle East

12

Long-Term Asian Growth Will Largely Be Supplied By The Middle East

Delivered to China

05

1015202530354045

Saudi - Ethane Asia - Naphtha NA - Ethane

Cash Costs w/Freight Capital Recovery

Po

lyet

hyl

ene

Cas

h C

ost

(ce

nts

/lb d

eliv

ered

)

Source: PACE, Lyondell estimate

13

Existing US capacity is competitive in its home market – E/P crackers are likely to be the high cost global facilities

Po

lyet

hyl

ene

Cas

h C

ost

(ce

nts

/lb d

eliv

ered

)

Source: PACE, Lyondell estimate

Delivered to U.S.

05

1015202530354045

Saudi - Ethane Asia - Naphtha NA - Naphtha NA - Ethane

Cash Costs w/Freight Capital Recovery

14

Asian Bag Production Has Been Advantaged But The Impact Has Been Less Than You Might Think

0

10

20

30

40

50

60

70

80

90

100

'96 '97 '98 '99 '00 '01 '02

%

Source: CMAI

0

10

20

30

40

50

60

70

80

U.S. China to U.S. China to U.S. @ equal RM Cost

Bag P

rodu

ction

Cos

t, cen

ts/lb

Raw Material Labor Conversion ex labor Ocean Freight U.S. Domestic Freight

Source: CMAI & Lyondell

Bag/Film Imports As Percent

Of N. American Ethylene Demand

PE Bag Production Costs

U.S..

China to U.S.

China to U.S. @ Equal RM Cost

15

Labor Costs Drive The Advantage But In The Future Other Factors Should Help Level The Playing Field

Regional Pricing Differences, ¢/lb China vs. U.S.

Peak TroughMay, 1995 May, 2003

PE 3 (18)

Styrene 23 (8)

Ocean Shipping Constraints Q3 1997 Q3 2003

U.S. to Asia 6 ¢/lb 4.25 ¢/lb

Asia to U.S. 6 ¢/lb 8.5 ¢/lb

Availability of New Ships: First Half, 2006

Tariffs– Temporary Plastic Bag Duties: 0 – 120%

Currency Valuation

Source: CMAI, U.S. Govt. Maersk Sealand

16

Our View Of The Ethylene Situation Can Be Summarized As:

Demand Growth Will Balance Middle East Supply

Asia Is Not A Differential Production Cost Environment

U.S. Naphtha-Based Production Is Not Threatened

Some Fabricated Products Will Migrate To Low-Cost Labor– Publicity Outweighs The Impact

– Playing Field Becoming More Balanced

17

The Propylene Oxide Situation Is Very Different Than Ethylene

Technology / Market Structure

Lyondell Relationships

Propylene Supply

PO Supply / Demand

No Mid-East Advantage Or Capacity Plans

18

Our Propylene Oxide and Derivatives Business Benefits From a Strong Position

Co-Product Technology

Chlorine-Based

Technology

LYO &Partners

Others

DowLYO &

Partners

Shell /BASF

PO Technology Source

PO Industry Capacity

Source: SRI, Tecnon , Lyondell estimates

19

Propylene Oxide Technology Is Not Widely Licensed

Chlorine Technology

Peroxidation Technologies

Direct Oxidation

PO / MTBE

POSM

PO

Age Early 1900’s

1960’s 1970’s 2000’s 2010’s

Economic Attractiveness

0 0 ++ + ++

Commercial Operators

Dow Asia

Lyondell Huntsman

Lyondell Shell

Repsol SKC

Sumitomo Lyondell R&D

20

Lyondell Has Long Standing Relationships With Strong Asian Companies

Sumitomo– Partner In Nihon Oxirane

– 30-Year Relationship

Chi Mei– 15-Year Relationship.

– Largest Global Styrene Consumer

21

The Asian / Middle East Propylene Chain Supply / Demand Balance Is Much Different Than The Ethylene Chain

0

2

4

6

8

10

12

14

16

18

20

Demand Growth Supply Growth0

1

2

3

4

DemandGrowth

SupplyGrowth

DemandGrowth

SupplyGrowth

Propylene Oxide GrowthPropylene Growth

2002 - 2007 2002 - 2007 2007 - 2010Blbs Blbs

Ethylene

Co-Product

FCC

Co-Product

Source: CMAI, SRI, Lyondell Estimates

22

For Lyondell And Equistar Products / Markets, The Situation Can Be Summarized As Follows:

Asian Development Is Critical To Global Growth

Asian Labor Rates Advantage Finished Product – Offsetting Pressures Are Developing

U.S. Ethylene Plants Continue To Be Competitive

Propylene Oxide Is Differentiated By:– Technology

– Relationships

– Raw Material Availability

23

Lyondell’s Asian Strategy Addresses These Conclusions

Near Term:

– Maximize Cash Generation

– Adjust Selling Channels To Reflect Opportunities

– Leverage Long-Standing Relationships

Long Term:

– Potential Propylene Oxide Expansion

– No Differential Ethylene Chain Advantage

24

The Asian Strategy Is Consistent With Our Financial Strategy

Maintain Sufficient Liquidity

Repay Debt

25

Lyondell net loss (302)$ Add: Benefit from income tax (179)

Interest expense, net 392 Depreciation and amortization 250 Loss from equity investment in Equistar 228 Income from equity investment in LCR (144)

Lyondell EBITDA 245$

Equistar net loss (339)$ Add: Depreciation and amortization 307

Interest expense, net 207

Equistar EBITDA 175$

Proportionate Share - 70.5% 123$

LCR net income 228$ Add: Depreciation and amortization 113

Interest expense, net 36

LCR EBITDA 377$

Proportionate Share - 58.75% 222$

Lyondell and Proportionate Share of Equity Investments - EBITDA Lyondell EBITDA 245$ 70.5% of Equistar EBITDA 123 58.75% of LCR EBITDA 222

Lyondell and Proportionate Share of Equity Investments 590$

LYONDELL CHEMICAL COMPANYRECONCILIATION OF NET INCOME (LOSS) TO EBITDA

(Millions of dollars)For the Twelve Months Ended December 31, 2003

26

Lyondell IC&DInterest expense, net 392$ Capital expenditures (a) 50 Dividends 116

Total 558$

Equistar Interest expense, net 207 Capital expenditures 106

Total 313$

Proportionate Share - 70.5% 221$

LCRInterest expense, net 36 Capital expenditures 46

Total 82$

Proportionate Share - 58.75% 48$

Lyondell and Proportionate Share of Equity Investments - Interest, Capital Expenditures and DividendsLyondell IC&D 558$ 75% of Equistar 221 58.75% of LCR 48 Lyondell and Proportionate Share of Equity Investments

Interest, Capital Expenditures and Dividends 827$

________(a) Excludes contributions to PO-11 and U.S. PO joint ventures and the purchase of the BDO-2 facility.

Lyondell Chemical Company

(Millions of dollars)For the Twelve Months Ended December 31, 2003

Reconciliation of Lyondell and Proportionate Share of Ventures' Interest, Capital Expenditures and Dividends