Positioned For The Cyclical Upturn Credit Suisse First Boston 17 th Annual Chemical Conference...

Positioned For The Cyclical Upturn

Credit Suisse First Boston 17th Annual Chemical Conference

September 28, 2004

Dan F. SmithPresident and Chief Executive Officer

2

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the benefits of the proposed transaction between Lyondell Chemical Company (“Lyondell”) and Millennium Chemicals Inc. (“Millennium”), including financial and operating results, Lyondell’s plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of Lyondell’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements. The following factors, among others, could affect the proposed transaction and the anticipated results: approval by Lyondell’s and Millennium’s respective shareholders and the parties’ ability to achieve expected synergies in the transaction within the expected timeframes or at all. Additional factors that could cause Lyondell’s results to differ materially from those described in the forward-looking statements can be found in Lyondell’s Annual Report on Form 10-K for the year ended December 31, 2003, which was filed with the Securities and Exchange Commission (the “SEC”) on March 12, 2004, and Lyondell’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, which was filed with the SEC on August 6, 2004. In addition, on September 16, 2004, Lyondell filed with the SEC an amendment to its registration statement on Form S-4 (as amended, the “Form S-4”) containing a preliminary joint proxy statement/prospectus regarding the proposed transaction between Lyondell and Millennium. The definitive joint proxy statement/prospectus will be sent to holders of Lyondell's and Millennium's common stock when it becomes available. Investors and security holders are urged to read that document and any other relevant documents filed or that will be filed with the SEC, including the definitive joint proxy statement/prospectus that will be part of the definitive registration statement, as they become available, because they contain, or will contain, important information. Investors and security holders may obtain a free copy of the definitive joint proxy statement/prospectus (when it becomes available) and other documents filed by Lyondell and Millennium with the SEC at the SEC’s web site at www.sec.gov. The definitive joint proxy statement/prospectus (when it becomes available) and the other documents filed by Lyondell may also be obtained free from Lyondell by calling Lyondell’s Investor Relations department at (713) 309-4590. The respective executive officers and directors of Lyondell and Millennium and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding Lyondell’s executive officers and directors is available in the proxy statement filed with the SEC by Lyondell on March 16, 2004 and in the Form S-4, and information regarding Millennium’s directors and its executive officers is available in Millennium’s Annual Report on Form 10-K/A for the year ended December 31, 2003, which was filed with the SEC on April 27, 2004, and in the Form S-4. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the definitive joint proxy statement/prospectus and other relevant materials filed with the SEC, as they become available. Reconciliations of GAAP financial measures to non-GAAP financial measures are provided at the end of this presentation.

3

Lyondell Has Built a Major Global Chemical Enterprise

Global producer of basic chemicals, polymers, and fuels Built one of the world’s leading chemical companies

through: Acquisitions and joint ventures New investment where differential

Our value proposition Excel at low-cost operation in a mature industry Return cash flow to investors:

Dividends and interest Debt reduction

4

3rd Largest Chemical Company in North America (Post-Transaction)

2003 Sales ($ in millions)

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

DOWDD

Pro Forma Lyondell

PPGROH

EMN

SHWNCX

ECLEC VAL

RPMCK LZ POL

HPCFOE

CYTGLK

FULSHLM

ALBW

LMARJ

5

Intermediate Chemicals(IC&D)

Equistar

Millennium

Four Principal Entities Will Form The Lyondell Enterprise

LYONDELL-CITGO Refining

Entity Business Focus Ownership2003

RevenueGeographic Locations Employees

Propylene Oxide

Styrene Monomer 100% $3.8B Global 3350

MTBE

Ethylene

Propylene 70.5 100% $6.5B N. America 3165

Polyethylene

TiO2

Acetic Acid 0 100% $1.7B Global 3600

Vinyl Acetate Monomer

Refining 58.75% $4.2B N. America 920

6

Lyondell Has Maintained Ethylene Chain Leverage While Diversifying Total Chemical Leverage

Notes: Lbs refers to capacity times ownership percentage.

1994 2004 Post-closing (pro forma)*

Share Count 80 MM 177 MM 245 MM

* Assumed 1.05 exchange ratio

Pounds / Share

1994 Jan. 1, 2004

Post Transaction

Closing

Petrochemicals Ethylene 45 46.5 47.5 Styrene -- 16.5 12 Propylene Oxide -- 13.5 10 TDI -- 3 2.5 Acetic Acid -- -- 5 TiO2 -- -- 6

45 79.5 83

Derivatives Polyolefins 5.5 24 24.5 Ethylene Oxygenates -- 6.5 6.5 PO Derivatives -- 9.5 7 Vinyl Acetate (VAM) -- -- 3.5

5.5 40 41.5

7

Our Products Have Become Basic Necessities In Developed Economies

Chemicals Plastics Pigments Fuels

* Includes pending MCH transaction and proportional share of LCR

2003 Sales Revenue

8

0

20

40

60

80

100

120

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

2000 GDP/Capita

PE

Co

nsu

mp

tio

n/c

apit

a, lb

s

US

Korea

Taiwan

WE

Singapore

Japan

Thailand

Malaysia

ChinaIndiaIndonesia

Chemical and Plastics Demand Grows Rapidly As Economies Develop

Source: CMAI 2001

Polyethylene Consumption By Nation

9

Our Products Tend To BeRaw Material And Capital Cost Intensive …

Raw Materials & Energy

75%

Labor7%

Capital Recovery18%

Source: CMAI July 2003 costs

5-year capital recovery.

Example: Ethylene/PE Production Costs

10

… But Profitability Is Driven By Supply/Demand Fundamentals

-50

50

150

250

350

450

550

1H99 1H00 1H01 1H02 1H03 1H04

EB

ITD

A

0

5

10

15

20

25

30

35

40

Cru

de P

rice

EBITDA Crude Price

-50

50

150

250

350

450

550

1H99 1H00 1H01 1H02 1H03 1H04

EB

ITD

A

70

75

80

85

90

95

100

Op

era

ting

Rate

EBITDA Operating Rate

Crude Oil vs. Equistar EBITDA U.S. Ethylene Operating Rates vs. Equistar EBITDA

Source: Platt’s, CMAI

11

Ethylene Is Recovering From A Significant Trough

Source: CMAI / Equistar (September 2004)

Ethylene Supply/Demand Balance - North America

40

50

60

70

80

90

100

110

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Bln

lb

s

65%

70%

75%

80%

85%

90%

95%

100%

Op

era

ting

Ra

te

Nam

epla

te C

apac

ity

Effective Operating Rate(at 96% on-stream-time)

N. America Demand

Rest of World

N. America

12

0

2

4

6

8

10

12

14

16

18

20

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

B L

bs

/yr

50%

60%

70%

80%

90%

100%

Op

era

ting

Ra

te

Su

pp

ly

Demand

Operating Rate

Source: LYO, SRI

Globally Propylene Oxide Is Following A Similar Trend With Minimal Supply Additions

13

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,0001

99

0

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

60%

65%

70%

75%

80%

85%

90%

95%

100%

Op

era

ting

Ra

te

Source: Millennium, SRI

The TiO2 Supply/Demand Outlook Is Similar To Propylene Oxide

M T

on

nes

Operating Rate

Demand

Cap

aci

ty

14

U.S. Refining Is Operating Near Full Capacity

Source: EIA

10

12

14

16

18

20

22

24

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

35

45

55

65

75

85

95

Operating Rate

Crude Oil Supply

Capacity

Mill

ion

Bar

rels

Per

Cal

end

ar D

ayU

tilization

15

Leading Product Positions Create Significant Earnings Leverage

1 Capacities as of January 20042 Includes 100% of joint venture volumes3 Does not include refinery-grade material or production from the product flexibility unit at

Equistar’s Channelview facility.4 Based on 1¢/gal change

Intermediate

Chemicals (IC&D)

Equistar

Millennium

Product Annual Capacity(1)Pre-Tax Leverage

(Δ1¢/unit)

Propylene Oxide (lbs) (2) 4.5 billion $23MM

Styrene Monomer (lbs) (2) 5.0 billion $21MM

MTBE (bbl/day) 58,500 $9MM (4)

Ethylene (lbs) 11.6 billion $116MM

Propylene (lbs) (3) 5.0 billion $50MM

Polyethylene (lbs) 5.7 billion $57MM

TiO2 (lbs) 1.5 billion $15 MM

Acetic Acid 1.2 billion $12 MM

Vinyl Acetate Monomer 0.9 billion $9 MM

16

Each Entity Within The Lyondell Enterprise Benefits From Differentiation

Company Differentiation

IC&D - Technology leadership- Global position

Equistar - Raw material flexibility- Liquid raw material advantage

Millennium * - Efficient process technology - Global position

LCR - PDVSA Heavy Crude Contract

* Post Millennium Transaction

17

Equistar Capability

NGL

37%

Liquid

63%

N. American Industry(ex. Equistar)

NGL

75%

Liquid

25%

For Example, Liquid Cracking Provides an Advantage vs. Ethane Raw Materials

Source: CMAI, Chem Data, and Lyondell

0

1

2

3

4

5

6

7

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 H12004

Liquid Cracking Variable Cost Advantage vs. NGL

Ethane – Light Naphtha Cost of Ethylene Spread

¢/l

b e

thy

len

e

Average

18

Fuel Gas / Oil

Ethylene

Propylene

Butadiene

Butylenes

Benzene

Gasoline

Co-Product Prices Have Increased More Rapidly Than Raw Material Costs

Source: CMAI, Lyondell Estimates

Crude Oil-Based Raw Materials

Naphtha Cracking Product YieldUnit

Dec 2003 June 2004 Aug 2004 June 2004 Aug 2004Raw Materials - Lt. Naphtha gal 79 90.9 107 15 35

Ethylene lbs 29.5 31.5 32.5 7 10

Co-Products - Propylene lbs 22.5 32.25 31.50 43 40 - Butadiene lbs 29 32 33 10 14 - Butylene lbs 15 21 21 40 40 - Benzene gal 155 260 385 68 148 - Gasoline gal 85 117 118 38 40 - Fuel Gas/Oil MMBTU 490 675 610 38 24

% Change thruPrice / Value, ¢ / Unit

19

In Summary, Our Businesses Are Well Positioned for the Up-Cycle

Improving Global Economy

Tightening Supply/Demand Outlook

Significant Volumetric Leverage

Differentiated Positions

20

Our Results Reflect Improving Conditions

Quarterly EBITDA

-50

0

50

100

150

200

250

300

350

400

Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Q2 2004

IC&D 100% Equistar 100% LCR

EBITDA $MM

21

Enterprise Earnings Capability Far Exceeds Recent Results (Current Ownership – Pre-Millennium Transaction)

0

500

1000

1500

2000

2500

3000

2003 1999/2000Margins

1995 Margins 1988 Margins

$M

M

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 2003 capital structure; 175 MM shares.

1

1

Recession/ Trough

Pre-Recession

PeakCycle EBITDA Potential

$6.90 / share

$1.40 / share

2003Proportional

Interest,Dividends &

Capital

1

22

We Have A Simple, Focused Financial Strategy

Maintain Sufficient Liquidity

Repay Debt

Create Value For Our Stakeholders

23

1 Capitalization = debt + book value of equity + minority interest2 Assumes 175MM shares outstanding3 Assumes 245MM shares outstanding

De-Leveraging Benefits All Stakeholders

Impact of Lyondell debt reduction at constant capitalization1

Debt Reduction

$2 Billion

(w/o MCH)

$3 Billion

(with MCH)

Debt to Capitalization 40% 45%

Avoided Interest Expense $200MM / Year $300MM / Year

Earnings Improvement 75¢ / share 80¢ / share

Share Price Improvement at Constant Capitalization

$11.50 / share $12.25 / share2 3

24

* Includes asset impairment charge of $103, reorganization, office and plant closure costs of $18 and $5 minority interest.

1999 2000 2001 2002 2003 2004

Net income (loss) 49$ 208$ (107)$ (1,207)$ (195)$ 48$ Add: Depreciation and amortization 147 152 159 147 154 153 Interest expense, net 84 89 91 102 102 110 Cum. effect of accounting change - - - 1,053 - - EBITDA 280$ 449$ 143$ 95$ 61$ 311$

Equistar Chemicals, LP

For the six-month periods ended June 30Reconciliation of Net Income (Loss) to EBITDA

(Millions of Dollars)

25

Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Q2 2004

Lyondell net income (loss) (113)$ (68)$ (44)$ (77)$ (15)$ 3$ Add: Provision for (benefit from) income tax (55) (39) (27) (58) (9) 3

Interest expense, net 83 99 106 104 109 108 Depreciation and amortization 57 61 66 66 63 64 (Income) loss from equity investment in Equistar 100 32 26 70 (6) (33) Income from equity investment in LCR (19) (37) (43) (45) (56) (63)

Lyondell EBITDA 53$ 48$ 84$ 60$ 86$ 82$

Equistar net income (loss) (146)$ (49)$ (40)$ (104)$ 5$ 43$ Add: Depreciation and amortization 78 76 76 77 76 77

Interest expense, net 49 53 51 54 55 55

Equistar EBITDA (19)$ 80$ 87$ 27$ 136$ 175$

Proportionate Share - 70.5% (14)$ 57$ 61$ 19$ 96$ 123$

LCR net income 28$ 58$ 69$ 73$ 91$ 103$ Add: Depreciation and amortization 28 29 28 28 30 28

Interest expense, net 10 9 8 9 10 8

LCR EBITDA 66$ 96$ 105$ 110$ 131$ 139$

Proportionate Share - 58.75% 39$ 56$ 62$ 65$ 77$ 82$

Lyondell and Proportionate Share of Equity Investments - EBITDA Lyondell EBITDA 53$ 48$ 84$ 60$ 86$ 82$ 70.5% of Equistar EBITDA (14) 57 61 19 96 123 58.75% of LCR EBITDA 39 56 62 65 77 82

Lyondell and Proportionate Share of Equity Investments 78$ 161$ 207$ 144$ 259$ 287$

LYONDELL CHEMICAL COMPANYRECONCILIATION OF NET INCOME (LOSS) TO EBITDA

(Millions of dollars)

26

2003 1999/2000 1995 1988(Millions of dollars) Actual Margins 1 Margins 1 Margins 1

Lyondell net (loss) income (302)$ 190$ 900$ 1,155$ Add: (Benefit from) provision for income tax 2 (179) 100 485 620

Interest expense, net 3 392 390 390 390 Depreciation and amortization 4 250 250 250 250 Loss (income) from equity investment in Equistar 228 (170) (940) (1,280) Income from equity investment in LCR (144) (145) (145) (145)

Lyondell EBITDA 245$ 615$ 940$ 990$

Equistar net income (loss) (339)$ 225$ 1,315$ 1,795$ Add: Depreciation and amortization 4 307 310 310 310

Interest expense, net 3 207 205 205 205

Equistar EBITDA 175$ 740$ 1,830$ 2,310$

Proportionate Share - 70.5% 123$ 520$ 1,290$ 1,630$

LCR net income 228$ 230$ 230$ 230$ Add: Depreciation and amortization 113 115 115 115

Interest expense, net 36 35 35 35

LCR EBITDA 377$ 380$ 380$ 380$

Proportionate Share - 58.75% 222$ 225$ 225$ 225$

Lyondell and Proportionate Share of Equity Investments - EBITDA Lyondell EBITDA 245$ 615$ 940$ 990$ 70.5% of Equistar EBITDA 123 520 1,290 1,630 58.75% of LCR EBITDA 222 225 225 225

Lyondell and Proportionate Share of Equity Investments 590$ 1,360$ 2,455$ 2,845$

1

2 Assumes 35% tax rate for hypothetical data.3 Assumes constant capitalization and interest rates.4 Assumes current capacity, book values and estimated useful lives.

Using ChemData/CMAI industry margins for Lyondell and Equistar products, excluding MTBE, for the relevant periods applied to current Lyondell and Equistar capacities at 100% utilization and using constant LCR earnings at 2003 level. Except for 2003 Actual, this is not intended to present either historical or forecast earnings of Lyondell, Equistar or LCR.

Lyondell Chemical CompanyReconciliation of Net Income (Loss) to EBITDA

For the Twelve Months Ended December 31, 2003

Assuming Historical Industry Margin Conditionsand Hypothetical Net Income to Hypothetical EBITDA

Hypothetical Results Using

27


Dollars in Millions

Lyondell Equistar Lyondell Equistar (d)

Working Capital as of December 31: (b)

Accounts Receivable 479$ 522$ 449$ 608$

Inventories 550 549 347 408

Accounts Payable (310) (337) (431) (513)

Total 719 734 365 503

Add: Accounts Receivable Sold 160 130 75 102

Adjusted Working Capital 879$ 864$ 440$ 605$

Days of Working Capital:Fourth Quarter Sales Revenue 872$ 1,141$ 945$ 1,665$

Days in Quarter 92 92 92 92

Sales per Day $9.5 $12.4 $10.3 $18.1

Days of Working Capital (c) 93 70 43 33

(a)

(b)

(c)

(d)

Certain amounts for 1998 have been restated to conform to the 2003 presentation. Defined as the major controllable components of working capital - receivables, inventories and payables. Days of working capital are calculated as adjusted working capital divided by sales per day. In consideration of discounts offered to certain customers for early payment for the product delivered in December 2003, some receivable amounts were collected in December 2003 that otherwise would have been expected to be collected in January 2004, including $41 million of receivables from Occidental.

Days of Working CapitalReconciliation

1998 (a) 2003

28

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

29


Reconciliation of Net Loss to EBITDA

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

Millennium net loss (184)$ Add: Cumulative effect of accounting change 1

Benefit from income tax (65)Interest expense, net 92Depreciation and amortization 113Loss from equity investment in Equistar 100

Millennium EBITDA 57$

Add: Impairment costs 103$ Closure costs 18 Minority interest 5

EBITDA before impairment, closure costs and minority interest 183$

30

1Q 2001 2Q 2001 3Q 2001 (a) 4Q 2001 Q1 2002 Q2 2002 Q3 2002 Q4 2002 (b) Q1 2003 Q2 2003 Q3 2003 Q4 2003 1Q 2004 2Q 2004

Net income (loss) 42$ 66$ 78$ 17$ 41$ 63$ 50$ 59$ 28$ 58$ 69$ 73$ 91$ 103$

Add: Depreciation and amortization 28 27 26 27 29 30 28 29 28 29 28 28 30 28

Interest expense, net 16 15 10 10 8 7 8 9 10 9 8 9 10 8

LCR EBITDA 86$ 108$ 114$ 54$ 78$ 100$ 86$ 97$ 66$ 96$ 105$ 110$ 131$ 139$

________(a) EBITDA for LCR for the three months ended September 30, 2001 was originally reported as $116 million and was restated to include extraordinary charges

related to early debt retirement, currently reflected in other expense, net.

(b) EBITDA for the three months ended December 31, 2002 was originally reported as $98 million and was restated to include extraordinary charges related to early debt retirement, currently reflected in other expense, net.

1Q 2001 2Q 2001 3Q 2001 4Q 2001 Q1 2002 Q2 2002 Q3 2002 Q4 2002 Q1 2003 Q2 2003 Q3 2003 Q4 2003 1Q 2004 2Q 2004

Investment in LCR at beginning of quarter 20$ 27$ 44$ 33$ 29$ 54$ 71$ 54$ 68$ 20$ 1$ (14)$ 3 5

Add: Equity in income (loss) of LCR 27 41 48 13 27 39 32 37 19 37 43 45 56 63

Other comprehensive loss due to minimum pension liability - - - - - - - (16) - - - 4 - -

Accrued interest converted to capital - - - - - - - - - 10 - - - -

Contribution payable to LCR - - - - - - - - - 3 (3) - - -

Less: Investment in LCR at end of quarter (27) (44) (33) (29) (54) (71) (54) (68) (20) (1) 14 (3) (5) 20

Net cash distributions from (contributions to) LCR 20$ 24$ 59$ 17$ 2$ 22$ 49$ 7$ 67$ 69$ 55$ 32$ 54$ 88$

Distributions from LCR 22$ 30$ 79$ 34$ 24$ 27$ 63$ 12$ 88$ 69$ 58$ 38$ 63$ 97$ Contributions to LCR (2) (6) (20) (17) (22) (5) (14) (5) (21) - (3) (6) (9) (9)

Net cash distributions from (contributions to) LCR 20$ 24$ 59$ 17$ 2$ 22$ 49$ 7$ 67$ 69$ 55$ 32$ 54$ 88$

LYONDELL CHEMICAL COMPANYRECONCILIATION OF LCR NET INCOME (LOSS) TO EBITDA

(Millions of dollars)

RECONCILIATION OF LCR NET CASH DISTRIBUTIONS

Positioned For The Cyclical Upturn Credit Suisse First Boston 17 th Annual Chemical Conference...

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