09/06/2015

Synthetic Base Oil

Outlook - PAO

C h e v r o n Ph i l l i p s C h e mi c a l s In t e r n a t i o n a l N V

Chevron Phillips Chemicals International NV

Agenda
Overview of Chevron Phillips Chemical

Polyalphaolefins Industry Update:

A quick look at the production process and feedstock
Advantages of the properties of PAOs in todays and next generation
formulations
Polyalphaolefins Supply / Demand Outlook

Summary

Questions

Chevron Phillips Chemicals International NV

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Company Founded in 2000

Chevron Phillips Chemicals International NV

About Us
Manufacturer of petrochemicals that are
essential to manufacturing over 70,000
consumer and industrial products

Currently $12.3 billion in assets and

more than $14.1 billion in annual
revenues

Trusted supplier to customers in 140

countries

A highly educated and diverse

workforce of approximately 5,000
employees working on four continents
across the globe

Chevron Phillips Chemicals International NV

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Safety Culture
SAFETY is foremost in Chevron Phillips
Chemicals culture
Achieved a 60 percent reduction in the
combined employee and contractor
Recordable Incident Rate (RIR) since
2002
Active OSHA Voluntary Protection
Program (VPP) Participant 17 Star Sites
Combined employee and contractor
performance in 2013 was in the top
quartile among American Chemistry
Council (ACC) peer companies
Committed to companys Tenets of
Operation

Chevron Phillips Chemicals International NV

Manufacturing Locations

Belgium

South Korea United States

Qatar
Saudi Arabia China

Singapore Colombia

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Chevron Phillips Chemical: Next Planned

Investments
Alpha Olefin Expansion
100 kMTA expansion
Planned start-up in 2015
Low Viscosity PAO Expansion Study
10 kMTA expansion
Planned start-up in 2016
USGC Petrochemical Project
1,500 kMTA ethylene unit
2 - 500 kMTA polyethylene units
10,000 engineering and construction jobs
400 direct jobs
Planned start-up in 2017

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PAO Industry Update

Production of Polyalphaolefins

Advantages of Low and High Viscosity Polyalphaolefins

Polyalphaolefins Supply / Demand Outlook

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How PAO is Produced

Synfluid
Ethylene Cracker PAO 2 9
Feedstocks mPAO65 - 150
PAO Unit
Ethane Ethylene Ethylene, C2=
Propane Unit
Butane
Octene, C8=
Natural Gas Decene, C10=
Liquids Normal
Dodecene, C12=
Alpha
Naphtha Olefins
Others Unit

Chevron Phillips Chemicals International NV 9

NAO Applications
Carbon Number Fraction Overview
C4
Polyethylene Comonomer C6

C8
PAO C10

C12

Surfactants C14

C16

C18
Lube Oil Additives
C20
Wax Applications
Relative production Output

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Advantages of PAO

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PAO: Properties

PAOs offer the following advantages compared to mineral oils:

Improved heat transfer capabilities

Better low temperature viscometrics

Lower friction

Better oxidative stability

Better energy efficiencies

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Role of Base Oil in Fuel Economy

Engine oil related friction has
a great impact on energy
efficiency
Better energy efficiencies
results in improved fuel
economy
There is a friction reduction
from Group III to PAO of
~22%

less friction,
better energy efficiencies
Source: B. J. Hardy, K. K. Bjornen, S. F. Bell, Group III Base Oils: Their Role & How to Take Advantage of Them, 9th ICIS-LOR World Base Oils Conference, 2005

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Chevron Phillips Chemicals International NV

Improving Base Oil Improves Oxidation Time

Pressure (psi)

Group II Group III PAO

0 500 1000 1500 2000 2500

RBOT Time (min)
0.5wt% DPA for PAO
0.5wt% DPA/PhoenolicAO for Group II/III

less oil degradation, improved durability

Source: K. Hope and D. Twomey, SAE Paper 2002-01-1637, 2001

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Lower Volatility

less emissions, improved durability

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Chevron Phillips Chemicals International NV

Specific Heat / Thermal Conductivity

PAO has a 10-15% higher specific

heat than mineral oil
PAO will absorb more heat and
run at lower temperatures than
mineral oil
Furthermore, PAO has a 20% higher
thermal conductivity than
equiviscous mineral oil
PAO will better conduct heat
away from lubricated parts
less oil degradation,
improved durability

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Low & High Viscosity PAO

Supply and Demand

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PAO Global Producers

5
3
9
4 6
2
7
8 11
1 10

COMPANY LOCATION CAPACITY, kTA

1 CPChem Cedar Bayou, TX 48
2 CPChem Pasadena, TX 9
3 CPChem Beringen, Belgium 63
4 Chemtura Elmira, ON 16
5 Chemtura Ankerweg, Netherlands 15
6 ExxonMobil Gravenchon, France 60 Low Viscosity PAO
7 ExxonMobil Beaumont, TX 85 Manufacturing Facility
8 ExxonMobil Baytown, TX 50
High Viscosity PAO
9 Ineos Feluy, Belgium 120
Manufacturing Facility
10 Ineos La Porte, TX 90
11 NACO Shanghai, China 15 Low & High Viscosity
Manufacturing Facility
Source: Lubes'n'Greases / CPChem

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PAO Supply
CPChem PAO Capacity: 120 kMTA
U.S. and EU production
Cedar Bayou, TX
Pasadena, TX
Beringen, Belgium
High and Low Viscosity PAO
producer
2014 WW PAO Capacity
140
North America LV
Three regional offices to cover
120 North America HV
global sales
100 Europe LV
Capacity, kTA

Europe HV
80
Asia HV
Producer of ethylene and alpha
60

40
olefins (feedstock security)
20

-
XOM INEOS CPChem Chemtura Naco

Source: Lubes'n'Greases / CPChem

Chevron Phillips Chemicals International NV

PAO Demand Trends

Transportation
Low viscosity base oils improve energy efficiency
Emission and fuel economy standards and regulations driving movement towards higher
performance lubricants
EU has set a target of 95g/km CO2 emissions for passenger vehicles by 2020
Industrial
Modern manufacturing equipment is being employed in developing regions as economic
conditions recover
Lubricants being developed to provide improved energy efficiency, higher stress
operating conditions, and targeting reduced maintenance
Grease
Environmental drivers continue, longer life, energy savings

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Low Viscosity PAO Supply / Demand

Anticipate low viscosity PAO AAGR of 4 to 6% from 2013 through 2015

Low viscosity PAO operating rates expected to be elevated above 95% and
depend on feedstock availability due to the growing demand for PAO

Limited growth in feedstocks have constrained the growth of low viscosity

PAO

First grassroot expansion has been announced

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High Viscosity PAO Supply / Demand

High viscosity PAO demand forecast to grow at 4 to 7% AAGR from 2013 to
2015

Demand driven by higher performance requirements in industrial and

automotive applications

Recent expansion of HV PAO supply (Chemtura, ExxonMobil and NACO)

Limited growth in feedstocks have constrained growth of high viscosity PAO

Two technologies exist on high viscosity PAO: conventional and metallocene

Chevron Phillips Chemical produces high viscosity metallocene based mPAOs

based on Octene, C8= feedstock

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Synfluid mPAO in Industrial Oils

180 PAO 40
In blends with a low viscosity PAO,

Viscosity Index
160 mPAO 65
mPAO offers higher viscosity index and mPAO 100
140
lower pour points (<-50C) mPAO 150
120
1000 *All blends made with
PAO 8 to achieve the
These improved properties are

Percent HV PAO
-10 ISO PAO 40
320 target

achieved while requiring less HV PAO,

Savings
mPAO 65
which provides for a more economical -20
mPAO 100
formulation! mPAO 150
-30

-40

C h e v r o n P h i l l i p s C h e m i c a l s I n t e r n a t i o n23
al NV

Foaming Characteristics
(Sequence I ASTM D892)

mPAO 100 Conventional

PAO 100

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Summary
Next generation lubricants will require higher levels of PAO to meet increasing
performance requirements

PAOs provide a number of technical advantages when compared against

other base oils

Low and high viscosity PAO demand increasing at roughly 4 to 6 % AAGR

Chevron Phillips Chemical Company continues to show commitment for future

growth to help meet increasing customer demand

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Questions?

Forward Looking Statement Disclaimer

Certain statements in this presentation are forward-looking statements that are subject to risks and uncertainties. These statements are not guarantees of future
performance and actual outcomes and results may differ, perhaps materially, from what is expressed herein. Actual results could differ materially, based on a number of
uncertainties, factors and risks (collectively, the Risks), many of which are outside the control of the presenter or Chevron Phillips Chemical Company LLC and its
affiliates, employees, directors, or officers (collectively, CPChem). Any or all of the Risks could cause results to differ materially from those referred to in this
presentation. Recipients of this information are cautioned not to rely on these forward-looking statements. CPChem undertakes no obligation to update or revise any
forward-looking statement, whether as a result of new information, future events, or otherwise

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