HOUSTON, Dec. 19 /PRNewswire/ -- Lyondell Chemical Company (NYSE: LYO) and Bayer AG announced today the formation of a manufacturing joint venture for the previously announced, world-scale propylene oxide (PO)/styrene monomer (SM) facility, known as PO-11, now under construction at the Maasvlakte site in Rotterdam, the Netherlands. The agreement has been approved by the Boards of Directors of both companies, and PO-11 is scheduled for start-up in early 2003.

Lyondell and Bayer will each have a 50 percent interest in the joint venture, which will be a partnership under Dutch law. Under the terms of the agreement, Bayer has purchased its interest in PO-11 from Lyondell with a cash payment of 50 percent of the costs incurred by Lyondell for the project to date. Future costs will be shared on an equal basis by both companies.

"We are pleased to have Bayer participating with Lyondell in this state- of-the-art facility, which will benefit from integration with the existing Lyondell operations in the Netherlands," said Dan F. Smith, President and Chief Executive Officer of Lyondell. "By building PO-11 together, Lyondell and Bayer can take advantage of the economies of a world-scale plant and better match each company's growing needs for propylene oxide and styrene monomer."

The world-scale PO-11 plant will have a capacity of 625 million pounds (285,000 metric tons) of PO and 1.4 billion pounds (640,000 metric tons) of styrene. Each partner will independently off-take its 50 percent share of the PO and styrene products from PO-11. Lyondell, with approximately 30 years of operating experience and technology improvements for the PO/SM process, will operate the facility using its proprietary technology.

A large portion of Lyondell's share of the PO output will be used to supply feedstock for Lyondell's new butanediol (BDO) plant being built at the Botlek site and scheduled for start-up in early 2002. With annual capacity of 280 million pounds (127,000 metric tons) of BDO, this new facility will be the lowest cost BDO plant in the world. Lyondell's 50 percent share of the SM output will be used to supply its established European merchant position and to support its global network of customers.

As previously announced, ABB Lummus Global has been awarded the facility's engineering, procurement and construction contract. Letters of intent have been signed for utilities and key raw materials, and site preparation is under way. The project is expected to create jobs for approximately 1,800 to 2,000 construction employees and 200 permanent operating employees.

Currently, Lyondell operates world-scale PO plants in Europe, at Botlek in Rotterdam and at Fos-sur-Mer in southern France, and in the United States at Channelview and Bayport, Texas (in part for its U.S. PO partnership with Bayer). The Maasvlakte site is located near Lyondell's Botlek facility.

Lyondell Chemical Company, (www.lyondell.com), with headquarters in Houston, Texas, is the world's largest producer of propylene oxide (PO); the world's number two 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. Through its 41% 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 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.
SOURCE Lyondell Chemical Company
Web site: http: //www.lyondell.com
Photo: NewsCom: http: //www.newscom.com/cgi-bin/prnh/20000921/LYOLOGO AP Archive: http://photoarchive.ap.org PRN Photo Desk, 888-776-6555 or 201-369-3467
CONTACT: media, Marvin Brown, 713-309-2643, or investors, Sami Ahmad, 713-309-7141, both of Lyondell Chemical Company
CAPTION: LYOLOGO LYONDELL LOGO Lyondell Logo. (PRNewsFoto)[PM] HOUSTON, TX USA 09/21/2000