Solid Strategy, Confident Execution Lehman Brothers Conference March 23, 2004 Karen Twitchell Vice President and Treasurer

1
Solid Strategy, Confident ExecutionLehman
Brothers Conference March 23, 2004Karen
TwitchellVice President and Treasurer

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 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 Companys
Annual Report on Form 10-K for the year ended
December 31, 2003, filed in March 2004.
Reconciliations of GAAP financial measures to
non-GAAP financial measures are provided at the
end of this presentation.
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Lyondell Has Built a Balanced Portfolio
Lyondell
Growth International Presence -- A leading
global producer of PO and derivatives -- Process
technology strength
ICD
Cash Generation -- Unique capability to refine
heavy crude oils -- Contractually stable
business strong cash flow generator
LCR
Commodity Leverage -- A leading North American
producer of ethylene, propylene and
polyethylene -- Low cost position based on
feedstock flexibility and scale
Equistar
4
Significant Integration Exists Among the
Operating Entities and With Our Partners
5
Leading Product Positions Create Significant
Earnings Leverage
Pre-Tax Leverage (?1/unit)
(1)
(1)
Product
Annual Capacity
Capacity Position
Intermediate Chemicals and Derivatives
(2)
st
Propylene Oxide
(
lbs)
4.5 billion
1
in North America
23MM
st
1
in the world
st
Styrene Monomer (
lbs)
5.0 billion
1
in North America
21MM
th
4
in the world
(4)
st
MTBE (bbl/day)
58,500
1
in North America
9MM
st
1
in the world
Equistar
nd
Ethylene (
lbs)
11.6 billion
2
in North America
116MM
th
5
in the world
(3)
nd
Propylene (
lbs)
5.0 billion
2
in North America
50MM
th
7
in the world
rd
Polyethylene (
lbs)
5.7 billion
3
in North America
57MM
th
4
in the world
1 Source LYO capacities as of January 2004,
CMAI 2 Includes 100 of joint venture volumes 3
Does not include refinery-grade material or
production from the product flexibility unit at
Equistars Channelview facility. 4 Based on
1/gal change
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Weve Significantly Strengthened Our Operations
Safety Performance Enterprise Incident Rate
Average SGA and RD, Sales 2000 - 2002
Peers include Dow, Nova, Eastman, Celanese,
Solutia, Westlake, Millennium, Georgia Gulf
1st Quartile 02 1.00
Recordable Injury Rate
Days of Working Capital
Capital Spending
Days
MM
2004 Budget
1999
Based on accounts receivable (including those
sold), inventories accounts payable as of
12/03, and fourth-quarter days of sales.
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Lyondell and Equistar Products Serve a Broad Mix
of End Users
ETHYLENE
PROPYLENE OXIDE
8
Growth in the World Economy Revives
(Percent change)
Source 2004 Global Insight, Inc.
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A Brief Portfolio Review

• ICD
• Propylene Oxide (PO) and Derivatives
• Styrene
• MTBE
• LCR
• Gasoline
• Heating oil
• Jet fuel
• Equistar
• Ethylene
• Polyethylene

10
Our Propylene Oxide and Derivatives Business
(ICD) Benefits from a Strong Position
PO Industry Capacity
Lyondell PO Derivatives
PO End Uses
Durables - Furniture - Automotive -
Construction - Boating - Electronics Non-Durables
- Coatings/Adhesives - Personal Care - Spandex -
Aircraft DeIcing
Source LYO databook and SRI Post
PO-11 Project
11
There Are Very Few Future Propylene Oxide
Capacity Additions
Demand at 4.4 growth
Source SRI / Lyondell
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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 3.0 B lbs of sales 1
• Leading PO and derivative positions
• Strong styrene relationships

Beijing
?
Tokyo
?
?
Shanghai
?
?
?
Guangzhou
Taipei
?
?
?
Hong Kong
?

?
?
Offices Inventory Point
Manufacturing
?
?
1 Includes 100 of Nihon Oxirane
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There are Three Principle Propylene Oxide
Technologies. Lyondell Practices Two Co-Product
Technologies

• Technology Principle Participants
• PO Styrene (POSM) Lyondell, Shell
• PO MTBE (PO / MTBE) Lyondell, Huntsman
• Chlorine Based Dow, Asian Plants

14
The North American MTBE Industry Has Been
Adjusting To The Regulatory Changes

• 2002 VS. Q1 2004
• M B/D
• U.S. Demand (130)
• U.S. Supply / Capacity
• -- U.S. Dehydro Capacity (70)
• -- Refinery / Olefins Capacity (20)
• -- Import / Export (40)
• (130)

Source EIA, Lyondell Estimates
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Steps Toward Increased ICD Cash Flow
MM/Yr
Potential Cash Improvement From 2003
600
500
400
300
200
100
Base
MTBE Resolution
Convert PO/SM Purchases on Production
Sell-out at 1995 PO / TDI / SM Margins
Complete PO-11 Capital Spend
1999 PO / TDI SMMargins
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LYONDELL-CITGO Refining Performance Is Structured
To Be Independent of Crude Oil Costs and Refining
Margins

• JV with CITGO
• CITGO 100 owned by PDVSA
• 268 M B/D Heavy Crude Refinery located in Houston
  
• 230 M B/D contract with PDVSA
• Deemed Margin
• Crude Price Based on Product Price Less Cost
  Formula
• Balance of Crude Processed at Market Conditions
• Net Cash Distribution to Lyondell
• 2003 223 MM
• 2002 80 MM
• 2001 120 MM

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LCR Important Cash Generator -- Operating
Reliability and Crude Deliveries Drive Performance
MB/day
MM
1
2
Net Distribution To LYO, MM 33
(7) 16 76 20 24 59 17 2
22 49 7 67 69 55 32
1 4Q01 Scheduled maintenance turnaround 2 1Q03
Includes a 25MM write-off
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Equistar is a Leading Ethylene Producer
Top 5 North America
64
Nova 8

• 2 in North America
• Competitive position based on feedstock
  flexibility

ChevronPhillips10
40
ExxonMobil13
Exxon 7
Union Carbide7
Equistar15
Nova8
Dow9
Dow/Carbide18
Shell9
Source CMAI
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North American Supply/Demand Balance Is On Track
To Improve Significantly
Source CMAI / Equistar (September/2003)
20
Effective Ethylene Operating Rates Are Forecast
To Be In The Low To Mid 90 Range
U.S. Ethylene Supply/Demand
2004
CMAI-2/04
21
The Emergence of a Middle Class Increases Local
Demand for Plastics
PE Consumption/capita, lbs
China PE Demand Domestic vs. Export
US
Singapore
Korea
Taiwan
WE
Malaysia
Japan
Thailand
China India
Indonesia
2000 GDP/Capita
Sources CMAI 2001 Nexant Chemsystems
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We Believe that Global Ethylene Supply/Demand is
on a Path to a Tight Balance
CMAI base case
Sensitivity
104
96
99
Source CMAI
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Liquid Cracking Provides an Advantage vs. Ethane
Raw Materials
Equistar Capability
NGL
37
Liquid
63
N. American Industry
(ex. Equistar)
Liquid
25
2003
NGL
75
Source CMAI and Lyondell
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In Summary, The Business Areas Are Positioned For
Significant Improvement

• Global Economy Turning Positive
• Crude Oil and Natural Gas High But Vulnerable To
  A Fall
• Significant Volumetric Leverage
• Tightening Supply/Demand Outlook In Key Products
• Differential Positions In Key Products
• POSM Technology
• Liquid Crackers

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Enterprise Earnings Capability Far Exceeds Recent
Trough Results
Cycle EBITDA Potential
Peak
Recession/ Trough
Pre- Recession
2003 Proportional Interest, Dividends Capital
1
1
1
1 Chem Data/CMAI industry margins conditions for
ICD and Equistar products (ex. MTBE) applied to
current capacities and ownership, LCR 2003 EBITDA
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Our Financial Strategy is Focused and Unchanged

• Maintain Sufficient Liquidity
• Repay Debt

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We Have Maintained Significant Liquidity
12/31/2003
12/31/2002


Equistar
Lyondell
Equistar
Lyondell
199MM
438MM
27MM
330MM
Cash ST Investments
433MM
300MM
434MM
301MM
Facility Avails
632MM
738MM
461MM
631MM
Total Liquidity
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We Have Actively Managed Our Maturity Profile
Debt Maturities(1),(2)
Pre-Payable Debt(3)

1. Lyondell Does not include 350MM Revolving
   Credit Facility, which expires in 2005, or 100MM
   Receivables Purchase Program
2. Equistar Does not include 250MM Inventory
   Revolving Credit Facility or 450MM Receivables
   Purchase Program
3. Prepayable debt is shown for the first year in
   which it is callable. Debt with make-whole
   provisions is shown at maturity, including the
   900MM Senior Secured Notes Series A due 2007
   (Lyondell) and the 700MM Senior Notes due 2008
   (Equistar)

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De-leveraging Will Benefit All Stakeholders

• Impact of Lyondell debt reduction at constant
  capitalization1
• Debt Reduction
• 2B
• Debt to capitalization 35
• Avoided interest expense 200MM/Yr
• Earnings improvement 75/share
• Share price improvement at
• constant capitalization 11.50/share

1 Capitalization debt book value of equity
minority interest Based on 175 MM shares
outstanding
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