Solid Strategy, Confident Execution

Morgan StanleyGlobal Chemical Conference

February 13, 2003

Dan SmithPresident and CEO

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 Company’s Annual Report on Form 10-K for the year ended December 31, 2001, Lyondell’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002 and Lyondell’s Annual Report on Form 10-K for the year ended December 31, 2002, which will be filed in March 2003.

3

Company Overview

Lyondell Chemical Company - Intermediate Chemicals and Derivatives (IC&D)

– A leading global producer of PO and derivatives

– Process technology strength Equistar - Petrochemicals and Polymers

– A leading North American producer of ethylene, propylene and polyethylene

– Low cost position based on feedstock flexibility and scale

LCR - Refining

– Unique capability to refine heavy crude oils

– Contractually stable business; strong cash flow generator

($ MM)

Revenues EBITDALyondell

Ownership

IC&D $3,262 $410 100.0%Equistar 5,537 256 70.5LCR 3,392 362 58.75

2002

4

Lyondell Has Built a Balanced Portfolio

Lyondell

IC&D

LCR

Equistar Commodity Leverage

Stability & Growth

Cash Generation

5

The Recent Years Have Been a Period of Optimization

Mid 1990’s

Formation years

LCR Contract and JV

Equistar JV

IC&D Acquisition

1999-2002Position and Optimize

Portfolio Adjustments

Capacity Rationalization

Project Reorientation

Organization Effectiveness– Best practices

– Organization design

6

A Firm Foundation Has Been Established

Portfolio Adjustments

Capacity Rationalization

Project Reorientation

Organization Effectiveness

$2.5B Revenue

– Divestitures - Specialties, polyols

– Acquisitions - Oxy transaction

2Blbs of Capacity

– Olefins, Polyethylene

Reinitiate : IC&D projects

Cancel/Delay : Equistar projects

Infrastructure Enhanced

Synergies - $300MM

7

0102030405060708090

1998 2002

Lyondell Equistar

0

30

60

90

120

150

180

Lyondell Equistar PO11 Spending

Processes and Systems Have Steadily Improved the Capital Utilization Within the Enterprise

$MM

1999 2002

Capital Spending Days of Working Capital

8

A Snapshot of Operating Metrics Highlights the Success

0

10

20

30

40

50

60

70

80

90

LYO/EQU EQU LYO/EQU Polymers

Safety Downtime Environment Quality

% Improvement*

* 1998 to 2002

9

A Brief Portfolio Review

IC&D

LCR

Equistar

10

Our Propylene Oxide and Derivatives Business (IC&D) Benefits from a Strong Position and a Stable Industry Structure

PG33%

Merchant PO33%

Deicer6%

P-Solvents10%

BDO18%

Bayer45%

ProductCapacityPosition

MarketGrowth

Global Share of“Top 3” Players

Merchant PO 1

PG 1 Moderate 62%

BDO 2 High 72%

P-Solvents 2 Low 81%

Deicers 1 Low 90%

PO 1 4-5%/yr 65%

Lyondell55%

Lyondell PO Capacity

Source: LYO databook and SRI

11

PO Technology is Entering its Third Generation of Innovation

1st Generation 2nd Generation 3rd Generation

Technology Chlorohydrin Peroxidation Direct Oxidation

Initial Application 1910 1960/70s 2000/10

Key Producers Dow POSM - Lyondell, Shell

China (several) POTBA - Lyondell

PO/Cumene - Sumitomo/ Lyondell JV

Development Efforts PO/H2O2 - Dow/BASF Lyondell

12

LCR Important Cash Generator

Operating Reliability and Crude Deliveries Drive Performance

1 4Q01: Scheduled maintenance turnaround

0

50

100

150

200

250

300

1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 Q402

0

20

40

60

80

100

120

140CSA Spot Mkt EBITDA

MB/day $MM

1

13

Equistar is a Leading Ethylene Producer

#2 in North America

#3 in world

Leader in industry consolidation

Competitive position based on feedstock flexibility

1991 2002

Top 5 North America

Shell9%

Dow9%

Equistar15%Nova

8%

Union Carbide7%

Exxon7%

Dow/Carbide19%

ExxonMobil12%

ChevronPhillips11%

Nova 8%

40%

65%

Source: CMAI

14

Commodity Exposure Drives Cash Flow

1 100% Basis for Equistar2 Net of minority equity interestsNote: EPS calculations assume common shares outstanding of 160 million

Impact of 1 cent/lb. Margin ImprovementCapacity (bn lbs.) EBITDA ($MM) LYO EPS

Equistar 1

Ethylene 11.6 $116 $0.34Polymers 5.7 $57 $0.17

IC&DStyrene 3.7 $13 2 $0.05 2

15

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

2002 1995 Margins¹ 1988 Margins¹

LCR IC&D Equistar

Significant Cash and Earnings Generation in Up-Cycle

Cycle EBITDA Potential

1 1988/1995 Chem Data/CMAI margins for Ethylene, Polyethylene and Styrene applied to current capacities and ownership Note: Assumes current capital structure; 160MM shares

($MM)

$6.20/share

$1.35/share

16

Ethylene Supply/Demand Balance - North America

40

50

60

70

80

90

100

110

120

130

1994 1996 1998 2000 2002 2004 2006 2008 2010

Bln

lb

s

60%

70%

80%

90%

100%

Eff

. Op

erat

ing

Rat

e

Na

me

pla

te C

ap

ac

ity

Effective Operating Rate

Source: CMAI/Equistar

Demand

World

N. American Supply/Demand Imbalance is Differential to Global Situation

N. America

17

Effective Ethylene Operating Rates Move Effective Ethylene Operating Rates Move Toward 95% Early in 2003Toward 95% Early in 2003

U.S. Ethylene Supply/Demand

Quarterly - 2002 > 2004

CMAI-2/03

2002 20032002 2003

12000

14000

16000

18000

20000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2004QtrlyAvg

Millio

ns

Ca

pa

cit

y L

bs

70

75

80

85

90

95

100

Op

era

tin

g R

ate

, %

Effective Capacity Downtime Operating Rate

18

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

PE MEG SM PO

Sh

are

of

20

02

-20

06

De

ma

nd

Gro

wth

China Asia Rest of World

Asia Will Represent 40-60% of Global Demand Growth for Chemicals and Plastics

Source: CMAI for PE and SM, LYO estimates for PO

19

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

ChinaIndia

Indonesia

Demand is Largely a Function of a Nation’s Standard of Living and Population

Source: CMAI 2001

20

Polyethylene Demand Illustrates the Shifting Demand Trends Within Asia

2000 PE Consumption, built from 1980 baseline, MMlb/yr

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

China Japan India Korea Taiw an OtherAsia

1980 1980-90 1990-00

21

Asia is the Most Economic Destination for Middle East Ethylene Derivatives

Delivered to China Delivered to U.S.

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

ME Ethane China Naphtha US Naphtha ME Ethane China Naphtha US Naphtha

LL

DP

E $

/lb, d

eliv

ere

d

Cash Cost Capital Recovery

Source: Chem Systems/Lyondell

22

2000-2006 Growth in Capacity/Demand

0

5

10

15

20

25

30

Middle East Asia

Eth

ylen

e E

qu

ival

ents

, B

lbs/

yr

Asia CapacityME/AF Demand

Excess

Shortfall

Probable Delay

Announced

CapacityAddition

s

As Such, Asia is the Natural Market for Middle East Production

AsiaDemandIncrease(6%/yr)

Probable Delay

23

Success in Asia Demands a Strategy That Addresses the Region’s Diverse Characteristics

Distance between markets

Wide ranging economic/political/social climates

Many producer and varying motivations

Hydrocarbon resources

24

Our Core Beliefs Guide Our Approach to the Asian Market

PO Chain:

– Current presence:

- US and European Export

- Nihon Oxirane JV

C2= Chain:

Not differential

25

Our Financial Strategy is Unchanged

Maintain Sufficient Liquidity

Repay Debt

26

We Have Maintained Significant Liquidity

Lyondell Equistar

Cash Balance - Dec 31 $330MM $27MM

Revolver - Dec 31 $350MM $450MM

Total Liquidity $680MM $477MM

1 1

1 – does not include 12/31 amounts committed against letters of credit : (LYO-$48MM, Equ-$16MM)

27

Cash Flow Has Supported the Interest and Dividend Requirements

0

10

20

30

40

50

60

70

80

90

100

1999-2000 Avg 2001-2002 Avg

0

20

40

60

80

100

120

140

160

180

1999-2000 Avg 2001-2002 Avg

Average 3 Month Cash Flow After Capex

Equistar

IC&D

Plus JV

Distributions

Qtrly. Int.

Expense

Qtrly. Int.

Expense +

Dividends

Pre-Trough Trough

28

We Have Actively Managed Our Maturity Profile

1. LYO Revolver matures2. Equ Revolver matures

2

Debt Maturities

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

2003 2004 2005

Lyondell Equistar($MM)

Note: does not include any pre-payable debt with make-whole.

Pre-Payable Debt

$0

$500

$1,000

$1,500

$2,000

$2,500

2003 2004 2005 2006

Lyondell Equistar

($MM)

1

29

1 Capitalization = debt + book value of equity + minority interest

De-leveraging Will Benefit All Stakeholders

Impact of Lyondell debt reduction at constant capitalization1:

Debt Reduction

$1B $2B

Debt to capitalization 54% 36%

Avoided interest expense $100MM/Yr $200MM/Yr

Earnings improvement 40¢/share 80¢/share

Share price improvement atconstant capitalization $6/share $12/share