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Merrill Lynch Chemical Conference Robert Blakely Chief Financial Officer March 20, 2002

Merrill Lynch Chemical Conference Robert Blakely Chief Financial Officer March 20, 2002. Safe Harbor Language.

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Merrill Lynch Chemical Conference Robert Blakely Chief Financial Officer March 20, 2002

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  1. Merrill LynchChemical ConferenceRobert BlakelyChief Financial OfficerMarch 20, 2002

  2. Safe Harbor Language Statements 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 future global economic conditions, access to capital markets, industry production capacity and operating rates, technological developments, the supply demand balance for the products produced by the Company and its joint ventures, competitive products and pricing pressures, increases in raw material and/or energy costs, changes in governmental regulations 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, 2001, which was filed in March 2002. Page 2

  3. Roadmap to Success • Executing our Strategic Plan • Prudently Managing Quality Assets • Delivering Results in Difficult Environment • Positioned for Significant Returns in Up-Turn

  4. Lyondell Operates in 3 Major Businesses • Lyondell Chemical Company - Intermediate Chemicals and Derivatives • World’s leading producer of PO and derivatives • 100% Ownership • Equistar - Petrochemicals and Polymers • A leading North American producer of ethylene, propylene and polyethylene • Low cost position based on feedstock flexibility and scale • 41% Ownership • LCR - Refining • Unique capability to refine heavy crude oils • Contractually stable business; strong cash flow generator • 58.75% Ownership

  5. Strategy for Value Creation

  6. Businesses are Integrated and Costs Optimized Lyondell Methanol Co. Intermediate Chemicals & Derivatives Markets Methanol MTBE Propylene glycol / ethers Antifreeze / deicers Resins / solvents PO / TBA Equistar Propylene oxide Pharmaceutical Coatings Plastics Butanediol / derivatives Propylene PO / SM Polypropylene SM • Polyurethanes • Auto seating • Furniture • CASE TDI Ethylene Polyethylene • Consumer products • Grocery sacks • Toys • Packaging EO / EG LCR Polyester Antifreeze Benzene Automotive Toluene

  7. Leading Positions in All Key Products IC&D Equistar * Source: CMAI, LYO capacities as of 1/1/02

  8. Sustainable Advantages in Key Businesses • Refining – Strong Cash Generation • Heavy Crude Processing Capability • Unique “Deemed Margin” Contract • Improved Operational Reliability • IC&D – PO Cost and Technology Leadership • Proprietary Process Technology Leader • Global Production Base • Important Derivative Positions Petrochemicals – Low Cost Advantage • Feedstock flexibility historically provides 4 cpp variable cost advantage

  9. Feedstock Flexibility is a Key Advantage Equistar Capability Liquid Cracking Variable Cost Advantage NGL 37% Ethane - Light Naphtha Cost of Ethylene Spread 8 Prior 15 Yr Average Liquid 7 63% 6 5 N. American Industry 4 ¢/lb ethylene (ex. Equistar) Liquid 3 22% 2 1 0 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 NGL Source: ChemData, 78% Source: CMAI and Lyondell.

  10. Reduced Fixed Costs

  11. Reduced Working Capital Days of Working Capital 2001 Cash from Working Capital: LYO $128MM Equistar $282MM* * Includes elimination $130 million AR securitization

  12. Prudently Managing Assets Disciplined Capital Expenditures PO11 Spending ($MM)

  13. Minimal Near Term Debt Maturities Debt Maturity Schedule 1 1 – LYO Revolver Expires

  14. Significant Liquidity 1 1 1 – excludes amounts committed against letters of credit at December 31, 2001

  15. Debt Reduction Still a Priority Total Lyondell Debt $3.1 B reduction

  16. Equistar Transactions • Lyondell Sells Package of Securities to Occidental • 30 – 34 million shares of Series B stock • 5 million, 5 year $25 warrants • Payments equivalent to 7.38% of ’02 & ’03 Equistar distributions up to $35 million • Lyondell buys Occidental’s 29.5% share of Equistar

  17. Impact of Occidental Transaction on Cash Generation and Earnings Potential Impact of $0.01/lb margin increase on Lyondell EPS BeforeAfter Ethylene0.240.32 Polymers0.140.19 Impact of potential accelerated debt reduction . . . Normalized Equistar EBITDA1 = $1.0 billion Increase in proportional Equistar EBITDA $300 million Impact of $300 million of Lyondell debt reduction $0.12/share 1 - Pro forma assuming 1993 (trough) and 1995 (cyclical upturn) CMAI cash margins, Equistar product capacities as of 2002 and up to $280 million of cost savings resulting from Equistar formation.

  18. Past Demand Contractions Were Followed by Periods of Strong Growth Source: DRI & ChemData

  19. Roadmap to Success • Executing our Strategic Plan • Prudently Managing Quality Assets • Delivering Results in Difficult Environment • Positioned for Significant Returns in Up-Turn

  20. Merrill LynchChemical ConferenceRobert BlakelyChief Financial OfficerMarch 20, 2002

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