Jennifer Jewson

Marketing Manager, Acetyls Americas

North American Acetyls-

A Time of Change

lyondellbasell.com 2

Agenda

• LyondellBasell Overview

• Shale Gas

• Acetyls Market Overview

lyondellbasell.com 3

LyondellBasell is…

• One of the world’s largest olefins, polyolefins, chemicals and refining companies with revenues of $51 billion.

• 58 plants in 18 countries, more than 14,000 employees worldwide, sales in more than 100 countries.

• The global leader in polyolefins technology, production and marketing.

• A pioneer in propylene oxide and derivatives. A producer of fuels and refined products, including biofuels.

• Dedicated to ongoing research and development programs that meet the ever-changing requirements of our customers, including the creation of new catalysts, processes and products.

• A publicly traded company listed on the New York Stock Exchange (NYSE),

ticker symbol: LYB.

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Fast facts

• Third-largest independent chemical company in the world*

• Olefins and Polyolefins – Europe, Asia and International

• Olefins and Polyolefins – Americas

• Broad product portfolio

• Manufacturing flexibility

• Superior technology base

• Operational excellence

• Vertically integrated facilities

• Intermediates and Derivatives

• Technology

Five business segments

Delivers exceptional customer value across the petrochemical chain

• Refining and Oxyfuels

*Measured by revenue

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Diversified and vertically integrated portfolio

Technology Intermediates

& Derivatives

Olefins & Polyolefins

Europe Asia & International

Olefins & Polyolefins

Americas

Refining &

OxyFuels

Wellhead

Refining

Olefins

Olefin Derivatives

2nd Level Derivatives

Capturing

value along

the chain

Styrene

Glycols

Glycol Ethers

Butanediol

PP

Compounding

Ethylene Oxide

Acetyls Propylene Oxide

Polybutene-1 Oxy Fuels

Aromatics Fuels

Crude Natural Gas Liquids

Olefins

Glycols

Glycol Ethers

Refining

Te

ch

no

log

y

Catalloy Process Resins

Polypropylene Polyethylene

Olefins Crackers

Tech

no

log

y

PP

Compounding

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Natural Gas from Shale

• Supply

– 90% of the natural gas consumed in the US in 2010 was produced domestically

– The US possesses 2,214 trillion cubic feet (Tcf) of potential natural gas resources, enough to supply 90 years of use at the current consumption rates

– Natural gas from proven and unproven shale resources accounts for 542 Tcf of this resource estimate

• Demand

– New opportunities for the petrochemical industry, driving announcements for debottlenecks, restarts, and new construction

• Potential Concerns

– Fracking requires large amounts of water, which could reduce water supply

– Discussions around the hydraulic fracturing fluid if it is released

– Fracking produces large amounts of wastewater, which may contain dissolved chemicals and other contaminants

While concerns must be addressed, we believe shale gas presents a multitude

of opportunities for the Petrochemical industry and LYB

Sources: CMAI/IHS and EIA

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Source: EIA, 2011 Annual Energy Outlook

Supply growth from shale is expected to more than offset declines from

traditional supply sources

US Natural Gas Supply Outlook

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llio

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t /

Ye

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Shale Gas

Tight Gas

Coalbed Methane

Lower 48 Onshore Conventional

Lower 48 Offshore ConventionalAlaska

US Natural Gas Supply Outlook

Sources: CMAI/IHS and EIA

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Source: EIA

Source: EIA

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2

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Ene 2011 Jul 2011 Ene 2012 Jul 2012 Ene 2013 Jul 2013

Henry Hub Natural Gas Price

Historical spot price

STEO price forecast

NYMEX futures price

95% NYMEX futures price upper confidence interval

95% NYMEX futures price lower confidence interval

Note: Confidence interval derived from options market information for the 5 trading days ending March 1, 2012

Intervals not calculated for months with sparse trading in "near-the-money" options contracts

dollars per million Btu

Source: Short-Term Energy Outlook, March 2012

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Natural Gas Pricing Outlook

As a result of supply growth, gas prices are expected to remain muted in

the medium term

Source: EIA

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Nat

ura

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Pri

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g, $

/MM

BTU

s

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Natural Gas

CO

Oxygen

CO / H2

Ethylene

Oxygen

Syngas

Methanol

Acetic Acid

Vinyl Acetate

Methanol restarts

Methanex Medicine Hat

OCI Beaumont

LyondellBasell Channelview

Ethylene expansions

Westlake

Ineos

CP Chem

Dow Chemical

LyondellBasell / Equistar

OxyChem

Shell Chemical

Nova

Braskem / Idesa

Natural Gas and the Acetyls Process

Source: CMAI/IHS

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North American Methanol

• MTBE phase-out program resulted in a loss of approximately

1.8 million MT of methanol consumption

• Escalating natural gas prices in US (7-8 $/MMBTUs) made

methanol production uneconomical

• One large methanol unit remained in operation in 2010- LMC

which is a 85/15 JV of LyondellBasell/Linde

• Natural Gas from shale has now changed the domestic

production landscape with the announcements of restarts and

the relocation of existing plants

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North American Supply/Demand Balance

12

Beaumont

850 KT 1Q

Channelview

780 KT 4Q

Methanex

1,000 KT 2H

Methanex

1,000 KT

Based on demand needs one would assume local production would run at full

rates and imports would move to other locations

Demand growth 2011-2016 3.4%

Source: CMAI/IHS

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Demand by Region/End Use 55.4 Million MT 2011

NEA

55%

SEA

4%

ISC

2%

NAM

11%

SAM

3%

EU

15%

MEAF

6%

CIS BALTIC

4%

Formaldehyde

34%

MMA

2%

Acetic Acid

10%

Gasoline/Fuel

12%

Chloromethanes

1%

MTBE/TAME

10%

DME

12%

MTO/MTP

2%

Methylamines

4%

Solvents

5%

DMT/Other

8%

2006-2011 Growth Rate = 7.7%

2011-2016 Forecast Growth Rate = 13.2 %

China accounts for 85% of the growth

Almost nonexistent

a few years ago

Source: CMAI/IHS

Almost 60% of the methanol demand is in Asia which also has the two fastest

growing applications: MTO/MTP and Fuel Blending

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Acetic Acid: 2012 Industry Cost Curve

Source: Internal

As a result of shale gas, North American Acetic Acid producers will have a cost

advantage over other regions

2012 Acetic Acid Industry Cost Curve (KTA)

2012 Demand

Capacity

$ p

er

ton

Middle East

Americas

EU / Asia (Non-China)China

Asia / EU

High Cost

Technology

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NE Asia

N. America

SE Asia

CIS & Baltics

S. America

MEAF

India

Europe

15

2011 Capacity: 16.9 MM MT

Growth Outlook: 5% AAGR

Industry Trends:

Limited number of technologies with leading

technology being methanol carbonylation

High degree of downstream integration

Future capacity growth in NE Asia and US

Europe increases net import position

China oversupplied

Customer / competitor consolidation

Merchant Markets:

VAM

PET bottles

Solvents and Coatings

Celanese

BP

Sterling Sinopec

Other

LB Acetyls

ZJC

Sopo

Acetic Acid - Fundamentals

2011 Capacity Share

2011 Capacity by Region

Source: CMAI/IHS

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Acetic Acid applications

Acetic Acid Vinyl Acetate Monomer

Purified Teraphtalic Acid Precursor for PET, Textiles and Films Acetic Anhydride

Cellulose Acetate

Others Peracetic Acid (disinfectant) Agrochemicals

22% 14%

18%

33%

Household food applications (special foodgrade) Source: Tecnon

Acetate Esters Inks and Coatings

Source: CMAI/IHS

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World Acetic Acid Supply/Demand

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-

4,000

8,000

12,000

16,000

20,000

24,000

28,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Effective Op

erating R

ate (96%)

Vo

lum

e, K

T

New Capacity Base Capacity Total Demand Virgin Demand Effective Operating Rate

Capacity growth in Asia drives their operating rates into the low 60’s for 2012 and 2013

Source: CMAI/IHS

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Acetic Acid Trade Balances

0

200

400

600

800

2010 2011 2016

-800 -600 -400 -200

0

2010 2011 2016

-800 -600 -400 -200

0

2010 2011 2016

0 200 400 600 800

2010 2011 2016

-800 -600 -400 -200

0

2010 2011 2016

0 200 400 600 800

2010 2011 2016

-200 0

200 400 600 800

2010 2011 2016

NE Asia

0 200 400 600 800

2010 2011 2016

SE Asia

-800 -600 -400 -200

0

2010 2011 2016

0 200 400 600 800

2010 2011 2016

Source: CMAI/IHS

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Acetic Acid Demand Development By Application

► Annual acetic acid capacity growth • 2006-2011 8% • 2011-2016 3%

► Consumption by Region • Americas 20% • EU 12% • MEAF 3% • SEA 5% • NEA 54% • India 5%

► 2011-2016 estimated demand AAGR: • VAM 4% • Anhydride 3% • Ethyl Acetate 7% • PTA 6% • Butyl Acetate 4%

Acetic Acid has strong growth potential, with a diverse mix of downstream end-uses

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Millio

n M

T

Vinyl Acetate PTA Acetic Anhydride

Ethyl Acetate Butyl Acetate Others

Forecast

Source: CMAI/IHS

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VAM: 2012 Industry Cost Curve

VAM also has the added benefit of low-cost ethylene

2012 VAM Industry Cost Curve (KTA)

Capacity

$ p

er

ton

2012 Demand

Middle East

Americas

China

Asia (Non-China)

Europe / China (Acetylene)

Source: Internal

lyondellbasell.com

NE Asia

SE Asia

CIS & Baltics

N. America

MEAFIndia

Europe

21

2011 Capacity: 6.9 MM MT

Growth Outlook: 4% AAGR

Industry Trends: Moderate technology entry barrier

Ethylene based technology is growing faster than

acetylene route

China is major growth region from 2011 to 2016

Most producers have downstream integration

VAM capacity expansions will be where surplus acetic acid

is available

Derivative consolidation

Merchant Markets:

Coatings

Adhesives

Textiles

Film/molding

Packaging

Celanese

Dow

DuPontNan Pao

Other

LB Acetyls

Chang ChungSINOPEC

Vinyl Acetate - Fundamentals

2011 Capacity Share

2011 Capacity by Region

Source: CMAI/IHS

lyondellbasell.com

Vinyl Acetate Monomer Applications

VAM

Polyvinyl Acetate

Polyvinyl Alcohol

EVOH

Barrier Resin

EVA

Film, Moldings

48%

41%

2%

6%

Floor Heating Tubes Food Packaging

Binders for Coatings

Polyvinyl butyral

Safety Glass

Adhesives

Source: Tecnon

Other

3%

Source: CMAI/IHS

lyondellbasell.com 23

World VAM Supply/Demand

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Effective

Op

eratin

g Rate

(96

%)

Vo

lum

e, K

T

New Capacity Base Capacity Demand Effective Operating Rate

Source: CMAI/IHS

lyondellbasell.com

VAM Trade Balances

0 100 200 300 400

2010 2011 2016

-400 -300 -200 -100

0

2010 2011 2016

-400 -300 -200 -100

0

2010 2011 2016

0 100 200 300 400

2010 2011 2016

-200

-100

0

100

200

2010 2011 2016

-200

-100

0

100

200

2010 2011 2016

-200

-100

0

100

200

2010 2011 2016

NE Asia SE Asia

-400 -300 -200 -100

0

2010 2011 2016

-200 -100

0 100 200

2010 2011 2016

-600 -500 -400 -300 -200 -100

0

2010 2011 2016

Source: CMAI/IHS

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VAM Demand Development by Application

► Annual VAM capacity growth • 2006-2011 3% • 2011-2016 6%

► Consumption by Region • Americas 20% • EU 17% • MEAF 3% • SEA 5% • NEA 52% • India 2%

► 2011-2016 estimated demand AAGR: • PVAc 4% • PVOH 5% • EVA 5% • EVOH 4% • Other 4%

VAM has strong growth potential in developing regions, particularly in construction and automotive segments

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Mil

lio

n M

T

Polyvinyl Acetate Polyvinyl Alcohol EVA EVOH Others

Forecast

Source: CMAI/IHS

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Conclusions

• Natural gas from shale is abundant in North America

– Restarts, debottlenecks and new construction have been announced

– North America has become the second lowest cost region for Acetyls

• Acetic Acid has strong growth potential, with a diverse mix of

downstream end-uses

• VAM has strong growth potential in the developing world,

particularly in construction and automotive segments

As a fully integrated acetyls player with global reach, LYB is well positioned to leverage North America’s cost position and the shale gas advantage