INEOS

9th June 2009 : Langesund

2

Agenda

Impact of the recession on European Petrochemicals

INEOS response to recession

INEOS & Skanled

Future plans for Rafnes

Impact of the Recession

4

OECD Composite Leading Indicator: May 09

UK USA

Euro Zone China

5

INEOS Overall Global Weekly Order Trend

250

300

350

400

450

500

1 6 11 16 21 26 31 36 41 46 51

4wm

a V

olu

me

(kte

)

2007 2008 2009

6

0

100

200

300

400

500

600

700

800

900

1000

01 January 2008 01 April 2008 01 July 2008 01 October 2008 01 January 2009 01 April 2009

Eth

yle

ne t

o N

ap

hth

a s

pre

ad

($/t

)

Ethylene: margin improvement becoming evident

BOC : Feb 09

7

Propylene: margin improvement becoming evident

0

100

200

300

400

500

600

700

800

900

01 January 2008 01 April 2008 01 July 2008 01 October 2008 01 January 2009 01 April 2009

Pro

py

len

e t

o N

ap

hth

a s

pre

ad

($/t

)

BOC : March 09

8

-200

-100

0

100

200

300

400

500

01 January 2008 01 April 2008 01 July 2008 01 October 2008 01 January 2009 01 April 2009

Ben

zen

e to

Nap

hth

a sp

read

($/

t)Benzene: margin improvement becoming evident

BOC : Feb 09

9

Butadiene: margin improvement becoming evident

-400

0

400

800

1200

1600

01 January 2008 01 April 2008 01 July 2008 01 October 2008 01 January 2009 01 April 2009

Bu

tad

ien

e t

o N

ap

hth

a s

pre

ad

($/t

)

BOC : April 09

10

Pequiven (Venezuela) 400 KTe PVC 400 KTe EDC

Essar (India) 400 KTe Innovene G 400 KTe Innovene S 900 KTe Innovene P

BCPL/GAIL (India) 300 KTe Innovene G

Sinopec, Wuhan (China) 300 KTe Innovene S

Ineos Technologies: Major Licences won in 2008

SIBUR, Tomsk (Russia) 200 KTe Innovene P

Leshan (China) 150 KTe BiChlor

Braskem (Brazil) 200 KTe PVC 200 KTe EDC

Polimerica (Venezuela) 430 KTe Innovene G 400 KTe Innovene S

Example of Delays in new Plant Construction

11

Pequiven (Venezuela) 400 KTe PVC 400 KTe EDC

Essar (India) 400 KTe Innovene G 400 KTe Innovene S 900 KTe Innovene P

BCPL/GAIL (India) 300 KTe Innovene G

Sinopec, Wuhan (China) 300 KTe Innovene S

SIBUR, Tomsk (Russia) 200 KTe Innovene P

Leshan (China) 150 KTe BiChlor

Braskem (Brazil) 200 KTe PVC 200 KTe EDC

Polimerica (Venezuela) 430 KTe Innovene G 400 KTe Innovene S

Delayed min 1 year,

financing/m

arket Payments delayed,

6 months, b

anking

issues

Payments delayed,

6 months, b

anking

issues

Delayed min 1 year,

financing/m

arket

Payments delayed,

4 months, b

anking

issues

Delayed min 1 year,

financing / m

arket

Few untouched by financial crisis

Ineos Technologies: Major Licences won in 2008

12

OPAL, ONGC (India) 1,080 KTe Innovene G 340 KTe Innovene P

CNOOC (China) 400 KTe Innovene S300KTe Innovene G400KTe Innovene P

Ineos Technologies: 2009 Licencing Opportunities

Rosneft (Russia) 250 KTe Innovene P320KTe Innovene S

Sonatrach/Total (Algeria)450 KTe Innovene G

Unipetrol (Czech)250 KTe Innovene S200KTe Innovene P

Yanchang (China) 300 KTe Innovene S300KTe Innovene G300KTe Innovene P

Azerchimia (Azerbaijan) 400KTe Innovene S

TBC (Egypt) 900 KTe Innovene G

Salavat, Sibur (Russia) 300 KTe Innovene P500KTe Innovene G

Chimprom (Russia) 135 KTe BiChlor

35KTe PVC

China8 x 100KTe BiChlor

Miandoab (Iran) 200 KTe BiChlor

300KTe VCM300KTe PVC

Thai Plastic (Thailand)350KTe EDC

BASF (Germany)250 KTe EDC Jiangshan (China)

80 KTe MAN

13

OPAL, ONGC (India) 1,080 KTe Innovene G 340 KTe Innovene P

CNOOC (China) 400 KTe Innovene S300KTe Innovene G400KTe Innovene P

Ineos Technologies: 2009 Licencing Opportunities

Rosneft (Russia) 250 KTe Innovene P320KTe Innovene S

Sonatrach/Total (Algeria)450 KTe Innovene G

Unipetrol (Czech)250 KTe Innovene S200KTe Innovene P

Yanchang (China) 300 KTe Innovene S300KTe Innovene G300KTe Innovene P

Azerchimia (Azerbaijan) 400KTe Innovene S

TBC (Egypt) 900 KTe Innovene G

Salavat, Sibur (Russia) 300 KTe Innovene P500KTe Innovene G

Chimprom (Russia) 135 KTe BiChlor

35KTe PVC

China8 x 100KTe BiChlor

Miandoab (Iran) 200 KTe BiChlor

300KTe VCM300KTe PVC

Thai Plastic (Thailand)350KTe EDC

BASF (Germany)250 KTe EDC Jiangshan (China)

80 KTe MAN

Delayed,

min 1 year

Delayed

min 6 m

onths

Delayed,

min 6 mths

Delayed,

min 1 year

Delayed, min 1

year, financing

Delayed,

9 month

s

Delayed,

min 1 yearDelayed,

min 1 year,

financing

Significant delays across most projects

INEOS Response to Recession

15

Cost Management

10% Reduction in fixed costs during Q4 2008

Further 10% reduction in fixed costs for 2009

Pay freeze across organisation

Bonuses cancelled for 2009

Dividends cancelled for 2009

Contractors reduced by 26% in Q1 09 versus Q4 08

16

Cash Management

Capital expenditure reduced from €600m in 2008 to €250m in 2009

Capital spend limited to essential items

Stock volume reduction

Stocks reduced by 22.5% in Q1 09 versus Q4 2008

Cash release from stocks of €317m

17

Q1 Financial Performance

EBITDA in Q1 2008 was €420m

EBITDA in Q1 2009 was €200m

Operating cashflow of €428m

Net cash inflow after financing charges in excess of €100m

18

Q1 2009 Industry Performance

Major decrease in financial performance across the sector

INEOS EBITDA Q1 09 = €200m Q1 08 = €420m Reduction = 52%

•Determined from Financial Statements Q1 09•Considers Chemical Business Activities only as appropriate

EBITDA Changes Q1 09 vs Q1 08*

-150 -100 -50 0

Chevron Phillips

Westlake

Braskem

Bayer

Dupont

INEOS

PolyOne

Dow Corning

BASF

Hexion

Georgia Gulf

Lanxess

Huntsman

PPG

LyondellBasell

Momentive

SABIC

Dow

NOVA

Percentage Reduction Q1 09 vs Q1 08

INEOS and Skanled

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Original Concept for INEOS

Skanled pipe comes through Grenland

INEOS constructs and operates a Gas Separation Plant to extract … Ethane from dry gas Additional Ethane spiked into gas flow at Karsto

21

Cancellation of GSP

INEOS decided in January that the GSP project could not work

Return on Investment was very poor

World ethylene demand had collapsed further undermining the investment

INEOS cash availability was limited

Could not secure long term agreements for economic gas supply

22

Revised Skanled Scope

Branch line to Grenland

Would allow Yara to consume dry gas and release the ethane currently used by Yara

INEOS would use the Yara ethane to expand the cracker at Rafnes (+150kt NGL)

€70-75m investment in cracker expansion

Future Plans for INEOS in Grenland

24

The INEOS Cracker

Yara ethane expansion option not available without Skanled

Expansion based on additional LPG’s s feasible and will be the subject of further study

Expansion will need to be timed with recovery in European ethylene demand

INEOS still believes that the best option for the Rafnes cracker is a significant expansion based on additional ethane

25

Additional Ethane

Ethane is a valuable chemical feedstock

It should not be exported from Norway for fuel use when significant value can be added within Norway

The challenge is to find ways to economically extract ethane from the dry gas system

We believe that Norway can have a highly competitive petrochemical industry if a solution can be found to the ethane issue

26

INEOS ChlorVinyls

Securing feedstock for the Rafnes cracker opens the way for further expansion in ChlorVinyls chlorine/EDC in addition to cracker expansion

BUT

We need more confidence in the long term supply of economic power to Grenland

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Long Term Power

INEOS in Grenland is a large consumer of electricity, ~1,3 TWh annually

Electricity is a raw material and an important part of production costs

Final products are mainly exported and competition is global

Access to competitive, long-term power contracts is a key issue for investments

28

The Power Challenge

INEOS is partially covered by long term contracts to 2015

No long term contracts in place after 2015

Similar to many power intensive users in Norway

Need to secure competitive, long term contracts within current market framework

Indirect carbon costs increase power price (even for CO2 free generation)

Illiquid market for long term contracts of 15-20 years

Extensive up front guarantees required

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Summary

INEOS remains very committed to Grenland

Still seeking expansion options across our businesses

Need competitive long term power supplies

Opportunity for Norway to add significant value to Norwegian ethane in Grenland