As filed with the Securities and Exchange Commission on April 28, 2010

File No.             

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10

GENERAL FORM FOR REGISTRATION OF SECURITIES

PURSUANT TO SECTION 12(B) OR 12(G) OF

THE SECURITIES EXCHANGE ACT OF 1934

LYONDELLBASELL INDUSTRIES N.V.

(Exact name of registrant as specified in its charter)

The Netherlands	98-0646235
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Weena 737

3013AM Rotterdam

The Netherlands

31 10 275 5500

(Address, including zip code, and telephone number,

including area code, of registrant’s principal executive offices)

Securities to be registered pursuant to Section 12(b) of the Act:

Title of Each Class Registered	Name of Each Exchange on Which Such Class will be Registered
Class A ordinary shares	New York Stock Exchange
Class B ordinary shares	New York Stock Exchange
Warrants to purchase Class A ordinary shares	New York Stock Exchange

Securities to be registered pursuant to Section 12(g) of the Act:

None.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨	Accelerated filer  ¨
Non-accelerated filer  þ (Do not check if a smaller reporting company)	Smaller reporting company  ¨

LyondellBasell Industries N.V. was formed on October 15, 2009 to serve as the parent holding company for certain subsidiaries of LyondellBasell Industries AF S.C.A. (“LyondellBasell AF”) after completion of proceedings under chapter 11 (“Chapter 11”) of title 11 of the United States Bankruptcy Code (the “U.S. Bankruptcy Code”). LyondellBasell AF and 93 of its subsidiaries are currently debtors (the “Debtors”) in jointly administered bankruptcy cases (the “Bankruptcy Cases”) in the United States Bankruptcy Court in the Southern District of New York (the “Bankruptcy Court”). Additional subsidiaries of LyondellBasell AF are not involved in the Bankruptcy Cases. On April 23, 2010, the Bankruptcy Court approved our Third Amended and Restated Plan of Reorganization (the “Plan of Reorganization”). We currently expect to emerge from bankruptcy on or about April 30, 2010 (the date of our emergence from bankruptcy being the “Emergence Date”).

As of the date of this Registration Statement, LyondellBasell Industries N.V. has not conducted any business operations. Accordingly, unless otherwise noted or suggested by context, all historical financial information and data and accompanying financial statements and corresponding notes, as contained in this Registration Statement, reflect the actual historical consolidated results of operations and financial condition of LyondellBasell AF for the periods presented and do not give effect to the Plan of Reorganization or any of the transactions contemplated thereby or the adoption of “fresh-start” accounting. Thus, such financial information may not be representative of our performance or financial condition after the Emergence Date. Except with respect to such historical financial information and data and accompanying financial statements and corresponding notes or as otherwise noted or suggested by the context, all other information contained in this Registration Statement relates to LyondellBasell Industries N.V. and its subsidiaries following the Emergence Date. When we use the terms “LyondellBasell Industries N.V.,” “we,” “us,” “our” or similar words in this Registration Statement, unless the context otherwise requires, we are referring to LyondellBasell Industries N.V. and its subsidiaries following emergence from the Bankruptcy Cases. For more information on the Bankruptcy Cases, see “Item 8. Legal Proceedings—Bankruptcy Cases and Reorganization.”

As of the Emergence Date, LyondellBasell AF’s equity interests in its indirect subsidiaries will terminate and LyondellBasell Industries N.V. will own and operate, directly and indirectly, substantially the same business as LyondellBasell AF owned and operated prior to emergence from the Bankruptcy Cases. References herein to “our” historical consolidated financial information (or data derived therefrom) should be read to refer to the historical financial information of LyondellBasell AF.

There currently is no public trading market for LyondellBasell Industries N.V. class A ordinary shares, class B ordinary shares or warrants to purchase class A ordinary shares. We intend to apply for listing of our class A ordinary shares, our class B ordinary shares and warrants to purchase class A ordinary shares on the New York Stock Exchange (“NYSE”).

In reviewing this Registration Statement, you should carefully consider the matters described in the section entitled “Risk Factors” beginning on page 46 of this Registration Statement.

Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of any of the securities of LyondellBasell Industries N.V. or determined whether this Registration Statement is truthful or complete. Any representation to the contrary is a criminal offense.

This Registration Statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.

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WHERE YOU CAN FIND MORE INFORMATION

Statements contained in this Registration Statement as to the contents of any contract or document referred to are not necessarily complete and in each instance, if the contract or document is filed as an exhibit to this Registration Statement, we refer you to the copy of the contract or other document filed as an exhibit to this Registration Statement. Each such statement is qualified in all respects by reference to the applicable document.

After the SEC declares this Registration Statement effective, we will file annual, quarterly and special reports, proxy statements and other information with the SEC. We intend to furnish our stockholders with annual reports containing combined financial statements audited by an independent registered public accounting firm. This Registration Statement is, and any of these future filings with the SEC will be, available to the public over the Internet on the SEC’s web site at http://www.sec.gov. You may read and copy any filed document at the SEC’s public reference rooms in Washington, D.C. at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information.

We maintain an internet site at http://www.lyondellbasell.com. Our web site and the information contained on that site, or connected to that site, are not a part of, or incorporated by reference into, this Registration Statement.

You should rely only on the information contained in this Registration Statement or to which we have referred you. We have not authorized any person to provide you with different information or to make any representation not contained in this Registration Statement.

INDUSTRY AND MARKET DATA

This Registration Statement includes industry data that we obtained from periodic industry publications, including Chemical Marketing Associates, Incorporated (“CMAI”); Turner, Mason & Company; Platts (a reporting service of The McGraw-Hill Companies); SRI Consulting (“SRI”); Tecnon Orbicom; PIRA Energy Group; Chemical Market Resources; DeWitt & Company, Inc. (“DeWitt”); Oil and Gas Journal; Bloomberg L.P. (“Bloomberg”); Energy Information Administration (“EIA”); and LyondellBasell AF’s internal company reports and own estimates. Industry publications generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of included information. Neither we, our affiliates, nor any of the industry sources that we reference make any warranty, express or implied, as to the accuracy or completeness of, or assume any liability for, such information.

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Table of Contents

Item 1.	Business	1
Item 1A.	Risk Factors	46
Item 2.	Financial Information	66
Item 3.	Properties	101
Item 4.	Security Ownership of Certain Beneficial Owners and Management	104
Item 5.	Directors and Executive Officers	108
Item 6.	Executive Compensation	113
Item 7.	Certain Relationships and Related Transactions, and Director Independence	145
Item 8.	Legal Proceedings	146
Item 9.	Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters	153
Item 10.	Recent Sales of Unregistered Securities	155
Item 11.	Description of Registrant’s Securities to be Registered	156
Item 12.	Indemnification of Directors and Officers	166
Item 13.	Financial Statements and Supplementary Data	167
Item 14.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	167
Item 15.	Financial Statements and Exhibits	168

This Registration Statement is being filed to register the class A ordinary shares, class B ordinary shares and warrants to purchase class A ordinary shares to be issued in connection with the Plan of Reorganization. It is not and is not to be construed as an inducement or encouragement to buy or sell any of our securities. You should be aware of certain risks relating to our business and ownership of our class A or class B ordinary shares, which are described under the heading “Item 1A.—Risk Factors.”

You should not assume that the information contained in this Registration Statement is accurate as of any date other than the date set forth on the cover. Changes to the information contained in this Registration Statement may occur after that date, and we undertake no obligation to update the information, except in the normal course of our public disclosure obligations and practices.

All industry and statistical information included in this Registration Statement, other than information derived from our financial and accounting records, is presented as of December 31, 2009 unless otherwise indicated. Unless otherwise indicated, financial information and information derived from our accounting records which are presented as “current” are as of December 31, 2009.

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CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

Certain of the statements contained in this Registration Statement are “forward-looking statements” within the meaning of the U.S. federal securities laws. Forward-looking statements can be identified by words such as “estimate,” “believe,” “expect,” “anticipate,” “plan,” “may,” “should,” “budget” or other words that convey the uncertainty of future events or outcomes. Many of these forward-looking statements have been based on expectations and assumptions about future events that may prove to be inaccurate. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Our actual results (including the results of our joint ventures) could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to:

• our ability to develop, confirm and consummate one or more Chapter 11 plans of reorganization,

• our ability to comply with debt covenants and service our substantial debt,

• availability of cash and access to capital markets,

• the business cyclicality of the chemical, polymers and refining industries,

• the availability, cost and price volatility of raw materials and utilities, particularly the cost of oil and natural gas,

• competitive product and pricing pressures,

• uncertainties associated with the U.S. and worldwide capital markets and economies,

• operating interruptions (including leaks, explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, supplier disruptions, labor shortages, strikes, work stoppages or other labor difficulties, transportation interruptions, spills and releases and other environmental risks),

• the supply/demand balances for our and our joint ventures’ products, and the related effects of industry production capacities and operating rates,

• our ability to achieve expected cost savings and other synergies,

• legal and environmental proceedings,

• tax rulings, consequences or proceedings,

• technological developments, and our ability to develop new products and process technologies,

• current and potential governmental regulatory actions in the U.S. and in other countries, including potential climate change regulation,

• political unrest and terrorist acts, and

• risks and uncertainties posed by international operations, including foreign currency fluctuations.

Any of these factors, or a combination of these factors and other factors not currently known to us, could materially affect our future results of operations (including those of our joint ventures) and the ultimate accuracy of the forward-looking statements. These forward-looking statements are not guarantees of future performance, and our actual results and future developments (including those of our joint ventures) may differ materially from those projected in the forward-looking statements. Our management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or prior earnings levels.

All forward-looking statements in this Registration Statement are qualified in their entirety by the cautionary statements contained in this section and elsewhere in this Registration Statement. See “Item 1. Business,” “Item 1A. Risk Factors” and “Item 2. Financial Information—Management’s Discussion and Analysis

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of Financial Condition and Results of Operations” for additional information about factors that may affect our businesses and operating results (including those of our joint ventures). These factors are not necessarily all of the important factors that could affect us and our joint ventures. Use caution and common sense when considering these forward-looking statements. We do not intend to update these statements unless applicable securities laws require us to do so.

In addition, this Registration Statement contains summaries of contracts and other documents. These summaries may not contain all of the information that is important to an investor and reference is made to the actual contract or document for a more complete understanding of what is discussed in this Registration Statement regarding the contract or document involved.

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ITEM 1. BUSINESS

LyondellBasell Industries N.V. is a public company with limited liability (naamloze vennootschap) incorporated under Dutch law by deed of incorporation dated October 15, 2009.

LyondellBasell Industries N.V. was formed to serve as the parent holding company for certain subsidiaries of LyondellBasell AF after completion of the Bankruptcy Cases. LyondellBasell AF and 93 of its subsidiaries are currently Debtors in jointly administered Bankruptcy Cases in the Bankruptcy Court. As of the Emergence Date, LyondellBasell AF’s equity interests in its indirect subsidiaries will terminate and LyondellBasell Industries N.V. will own and operate, directly and indirectly, substantially the same business as LyondellBasell AF owned and operated prior to emergence from the Bankruptcy Cases, which business includes subsidiaries of LyondellBasell AF that are not involved in the Bankruptcy Cases.

LyondellBasell Industries N.V. will be the successor to the combination in December 2007 of Lyondell Chemical Company (“Lyondell Chemical”) and Basell AF S.C.A. (“Basell”), which created one of the world’s largest private petrochemical companies with significant worldwide scale and leading product positions.

Overview

We are the world’s third largest independent chemical company based on revenues and an industry leader in many of our product lines. We are the world’s largest producer of polypropylene and polypropylene compounds (“PP compounds”) and a top worldwide producer of propylene oxide (“PO”), polyethylene (“PE”), ethylene and propylene. Additionally, we are a leading provider of technology licenses and a supplier of catalysts for polyolefin production. Our refinery in Houston, Texas (the “Houston Refinery”) is among North America’s largest full conversion refineries capable of processing significant quantities of heavy, high-sulfur crude oil. We participate in the full petrochemical value chain, from refining to specialized end uses of petrochemical products, and we believe that our vertically integrated facilities, broad product portfolio, manufacturing flexibility, superior technology base and operational excellence allow us to extract value across the full value chain.

We have the size and scale to compete worldwide:

• For the year ended December 31, 2009, our revenues were $30.8 billion.

• As of December 31, 2009, our total assets were $21.4 billion.

We are geographically diverse:

• As of December 31, 2009, we manufactured products at 59 sites in 18 countries (including those operated through joint ventures).

• We sell products in more than 100 countries.

• For the year ended December 31, 2009, 54% of our revenues was generated from sales in North America, 35% from sales in Europe and 11% from sales in the rest of the world.

• We participate in 16 significant manufacturing joint ventures, 11 of which are outside of Western Europe and the U.S., primarily in regions that have cost-advantaged raw materials or high growth rates, including Asia, the Middle East and Eastern Europe.

We have leading positions in our key products:

• As of December 31, 2009, we are the worldwide rated capacity leader in polypropylene, PP compounds, polyolefin licensing, polypropylene catalysts and oxyfuels.

• As of December 31, 2009, we ranked second, third, fourth and fourth in worldwide capacity in propylene oxide, PE, ethylene and propylene, respectively.

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Our products are used in a broad range of applications and in products that people use every day, and have been increasingly in demand in developing markets:

• Key end uses for our products include: rigid and flexible packaging, transportation fuels (gasoline and diesel), containers, plastic pipe, detergents, cosmetics, electronics, appliances, automotive parts, paints and coatings, furnishings, construction and building materials and many other industrial and consumer goods applications.

• The diverse end-market uses for our products help to reduce volatility of demand for our products, and a majority of our revenues in 2009 was derived from sales of products utilized in consumable products (including fuels).

Our businesses and asset portfolio provide diversification and flexibility:

Our business portfolio of refining and oxyfuels, olefins and polyolefins, intermediate and derivative chemicals, and technology provides diversification and flexibility. Despite the current economic conditions generally and in our industry, parts of our businesses have performed in line with historical norms:

• In 2009, the oxygenated fuels products within our refining and oxyfuels segment showed margins which were consistent with recent years, due in part to the significant differential between gasoline prices and butane costs, coupled with increasing worldwide biofuels demand.

• The continued enhancement of feedstock flexibility in our North American olefin plants allowed us to improve the competitiveness of these assets in the current market conditions where natural gas liquids (“NGLs”) pricing has been much lower than most crude-oil-based feedstocks, partially offsetting the weak overall profit environment for producers using crude-oil-based feedstocks.

• In our olefins and polyolefins segments, our North American PE business has benefitted from strong export demand driven by the Asian economy, competitors’ project delays and relatively lower NGLs cost-based ethylene.

• The PO business within our intermediates and derivatives segment demonstrated results in 2009 consistent with recent years.

Competitive Strengths

We believe that our key competitive strengths are:

• Leading Positions in Worldwide Segments. We are the world’s third largest independent chemical company based on revenues and an industry leader in many of our product lines. We are the world’s largest producer of polypropylene, PP compounds and oxyfuels and a top worldwide producer of PO, PE, ethylene and propylene. Additionally, we are a leading provider of technology licenses and a supplier of catalysts for polyolefin production. Our Houston Refinery is among North America’s largest full conversion refineries capable of processing significant quantities of heavy, high-sulfur crude oil.

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Worldwide Position by Product

Products	Worldwide Rated Capacity	Worldwide Position
	(million lbs per year, unless noted)
Refining and Oxyfuels
Oxyfuels (bbl/day)	75,000	#1
Olefins and Polyolefins
Polypropylene	12,100	#1
Polyethylene	10,800	#3
Ethylene	14,400	#4
Propylene	8,800	#4
PP Compounds	2,300	#1
Intermediates and Derivatives
Propylene Oxide	2,500	#2
Technology
Polyolefin Licensing		#1
Polypropylene Catalysts		#1

Sources: CMAI, Chemical Market Resources, DeWitt and LyondellBasell AF’s internal data.

Note: Capacities and worldwide capacity position are as of December 31, 2009, except for Technology worldwide capacity position, which is as of December 31, 2008, and include our pro rata share of joint ventures.

• Geographic Diversity. Our worldwide manufacturing, sales and marketing network enables us to serve the needs of both local and worldwide customers. As of December 31, 2009, we operated (including through our joint venture network) 59 manufacturing sites in 18 countries. For the year ended December 31, 2009, 54% of our revenues was generated from sales in North America, 35% from sales in Europe and 11% from sales in the rest of the world. We market and sell our products in more than 100 countries, providing the opportunity to develop new markets for our products in higher-growth regions. We have worldwide exposure to many different economies as a result of our historical strength in Europe and the United States and our worldwide joint venture network. Our technology licensing platform has enabled us to make a number of investments in high-growth regions to broaden our worldwide reach.

Worldwide Network

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	North America	Europe	Rest of World	Total
Manufacturing Facilities(1)	23	19	17	59
Employees(2)	6,120	7,750	990	14,860
Revenues (millions)(3)	16,566	10,931	3,331	30,828

(1) As of December 31, 2009. Includes joint ventures and wholly owned manufacturing facilities.

(2) Approximate as of December 31, 2009.

(3) Revenues for the year ended December 31, 2009 based on delivery location.

• Participation in High-Growth, Low-Cost Markets through Joint Venture Relationships. We have pursued a strategy of leveraging our leading technology positions and worldwide marketing network to gain access to growing markets and low cost raw materials and feedstocks through the development of joint ventures. We participate in 16 significant manufacturing joint ventures in 11 countries throughout the world, most of which are in regions that have cost-advantaged feedstock or higher growth rates, including Asia, the Middle East and Eastern Europe, which have shown average annual GDP growth rates of 7% (outside of Japan), 5% and 4%, respectively, from 2005 through 2009. On a 100% basis, our joint ventures have 8.1 billion pounds of polypropylene capacity and 2.7 billion pounds of PE capacity. In 2007, 2008 and 2009 we received cash dividends from these joint ventures of $148 million, $98 million and $26 million, respectively, in addition to benefitting from profits relating to licensing revenue, catalyst sales and marketing joint venture products. Since late 2008, we have begun production at two new Saudi Arabian joint ventures, expanded production at two other joint ventures in Saudi Arabia and Mexico, and in 2010 we are anticipating the startup of a new joint venture in China and capacity additions at another joint venture in Thailand. Our equity stakes allow us to participate in higher growth regions of the world without the significant expense of constructing wholly owned facilities.

• Portfolio of Differentiated Products, Which Provides Premium Margins. We believe that our PP compounds, Catalloy process resins, polybutene-1 (“PB-1”), PO and intermediate products and our technology business help mitigate our exposure to the olefin and polyolefin cycles. The cycles for PO and its derivatives have historically tended to follow more independent supply and demand patterns than olefins and polyolefins. We also believe our technology and catalyst businesses further reduce the impact of petrochemical cycles on our operating results and provide a foundation for us to realize premium profit margins.

• Significant Achievable Cost Savings in Process. From June 30, 2008 through the end of 2009, we reduced our workforce by approximately 2,370 employees and approximately 1,650 contractors. Additionally, since the end of 2007, we have significantly rationalized our asset footprint by shutting down underperforming assets with 4 billion pounds of annual capacity of polymers and chemicals. Management expects additional fixed cost savings by reducing staff, rationalizing our worldwide asset base, restructuring our contracts and realizing savings in procurement and logistics. Our senior management continues to focus on streamlining our worldwide fixed cost infrastructure.

• We Operate One of the Largest High-Complexity Refineries in North America. We believe that our Houston Refinery is among the more flexible of major North American refineries with the ability to process 268,000 barrels per day of a wide array of feedstock grades, including heavy, high-sulfur crude oil. These grades of crude oil are more difficult to refine into gasoline than other high value fuel products, but have historically been less costly to purchase, giving us a cost advantage over many of our competitors. Processing heavy, high-sulfur crude oil in significant quantities requires a high-complexity refinery, which differentiates our Houston Refinery from the majority of competing facilities in the U.S. We have entered into a crude supply agreement with PDVSA Petróleo S.A. (“PDVSA Oil”) to buy crude at market-based pricing for the majority of our supply. Our Houston Refinery also benefits from its strategic location near various North American pipeline systems and a major port on the Gulf of Mexico, with its proximity to Venezuela and Mexico, which are among the largest producers of heavy, high-sulfur crude oil.

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• Integrated Portfolio Structure. We participate in the full petrochemical value chain, from refining to specialized end uses of petrochemical products. We extract value from optimization across the refining and oxyfuels, olefins and polyolefins and intermediates and derivatives businesses. We operate several major integrated olefin and olefin derivative sites, which provide cost efficiencies through shared services and infrastructure, economies of scale and optimization. Additionally, oxygenated fuel products produced from chemical assets offer further integration benefits with the fuels business. We utilize our flexibility by leveraging a portfolio of mixed feedstock crackers across the U.S. to reduce our exposure to volatility in feedstock prices, enabling us to process lower cost feedstocks. On a worldwide basis, we produce in excess of 100% of our ethylene requirements and approximately 50% of our propylene requirements.

World Scale Diversified & Vertically Integrated Portfolio Structure

• Superior Technology Platform. We are a technology-driven company that invests in research and development to maintain our leadership position, which we believe provides us with a significant competitive advantage. We estimate that approximately 43% of polypropylene and 35% of PE worldwide licensed capacity from 2003 through 2009 use our technologies. We believe that we are the global technologies leader in polyolefins. These proprietary technologies provide us with a cost-advantaged, market-preferred position.

Technology Portfolio
Polyolefins	Offering of complete polyolefin technology portfolio; proven processes with competitive capital and operating costs
Propylene Oxide	Proprietary technology basis for >30% of worldwide production
Propylene Oxide Derivatives	Environmentally advantaged solvents
Catalysts	Differentiated product portfolio at competitive use cost; ongoing innovation to enhance performance

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We are a technological leader in the manufacture of PO, using our proprietary propylene oxide/styrene monomer (“PO/SM”) and propylene oxide/tertiary butyl alcohol (“PO/TBA”) processes. We continue to increase our expertise in the production of butanediol from PO. As of March 1, 2010, approximately 960 of our employees are engaged in research and development activities.

• Focused, Experienced Management Team. We are led by James L. Gallogly. Mr. Gallogly was appointed as Chief Executive Officer in May 2009. Mr. Gallogly has over 29 years of operating and leadership experience in chemical, refining and related industries. He formerly worked at ConocoPhillips, most recently serving as executive vice president of exploration & production from October 2008 to May 2009. For the preceding two years, he was executive vice president of refining, marketing and transportation. He was president and chief executive officer of Chevron Phillips Chemical Company from 2000 to 2006 and served as a member of its Board of Directors. Mr. Gallogly is supported by a senior management team that has extensive operational and financial experience in the chemical, polymers and refining industries. Our senior management team is focused on managing through this current cyclical trough by implementing extensive fixed cost reduction measures, optimal asset utilization and initiatives to increase operational reliability. For more information on our executive officers, see “Item 5. Directors and Executive Officers—Executive Officers.”

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Our Strategy

Our principal focus is on reducing our cost structure, improving operations and revenues, realizing the synergies from the December 2007 combination of Lyondell Chemical and Basell and successfully emerging from the Bankruptcy Cases. Our efforts are directed by the following key business strategies:

• Operational Excellence. Operational excellence, which includes a commitment to safety, environmental stewardship, and improved reliability, is key to our future success. We believe optimal operations can be achieved through a systematic application of standards and improved maintenance procedures, which is also expected to result in improved personnel and process safety and environmental performance. We continue to set new, stricter operational excellence targets for each of our facilities based on industry benchmarks.

• Cost Reduction / Revenue Enhancement. We are pursuing cost reductions across our system with specific goals, based in large part on benchmarks of industry leading performance. We believe that our worldwide manufacturing scale provides the opportunity to minimize costs per unit, a critical operational measure for petrochemical and refining companies. We will continue to focus on upgrading our customer and product mix to realize premium pricing. By leveraging our leading technological platform, worldwide presence, strong customer relationships and reliability and quality, we also intend to increase our sales of value-added, differentiated products.

• Capital Discipline. Additionally, we remain focused on disciplined capital allocation. We intend to optimize our capital spending to address projects required to enhance reliability and maintain the overall asset portfolio. This includes key maintenance and repair activities (“turnarounds”) in each segment, necessary regulatory and maintenance spending, as well as a limited number of high return debottlenecking and energy reduction projects.

• Portfolio Management. We will also carefully manage our portfolio as demonstrated by the recent closure of certain underperforming assets. We continue to evaluate our asset portfolio and may initiate further rationalization, depending on market conditions.

• Performance-Driven Culture. The benchmarking, goal setting and results measurement previously described as part of the cost reduction and revenue enhancement efforts are central to the new performance driven, accountability culture that we are instilling. We believe we have outstanding people and assets, and with the right performance expectations, can rapidly increase our competitiveness. We have reshaped the management team to initiate a refocused effort around these basic strategic elements.

• Technology-Driven Growth. Our strong, industry leading technologies provide us with a platform for future growth. We intend to continue to improve our operations in the mature, highly sophisticated markets in Europe and North America, and, as our financial condition improves, we plan to grow in quickly developing markets like Asia and regions with access to low cost feedstocks.

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Segments

As of December 31, 2009, we began operating in five reportable business segments:

• Refining and Oxyfuels. Our Refining and Oxyfuels segment refines heavy, high-sulfur crude oil in the U.S. Gulf Coast, refines light and medium weight crude oil in southern France and produces oxyfuels at several of our olefin and PO units. Our Houston Refinery is among North America’s largest full conversion refineries capable of processing significant quantities of heavy, high-sulfur crude oil. Our refinery in Berre, France (the “Berre Refinery”) processes light to medium weight crude oils, and provides raw material and site integration benefits to our olefin and polyolefin business in Europe. We are also a significant manufacturer of oxygenated fuels at several facilities within the U.S. and Europe. For the year ended December 31, 2009, our Refining and Oxyfuels segment generated $10,835 million of revenues (excluding inter-segment revenue).

• Olefins and Polyolefins—Americas (“O&P—Americas”). Our O&P—Americas segment produces and markets polyolefins, ethylene and ethylene co-products. We are the largest polypropylene producer, the largest producer of light olefins (ethylene and propylene) and the third largest producer of PE in North America. In addition, we produce significant quantities of high-value specialty products such as Catalloy process resins. For the year ended December 31, 2009, our O&P—Americas segment generated $8,652 million of revenues (excluding inter-segment revenue).

• Olefins and Polyolefins—Europe, Asia, International (“O&P—EAI”). Our O&P—EAI segment produces and markets olefins (ethylene and ethylene co-products) and polyolefins. We are the largest producer of polypropylene and PE in Europe. We are also the largest worldwide producer of PP compounds, a high-value specialty product (global marketing of which is managed in our O&P—EAI segment). We also produce significant quantities of other high-value specialty products such as Catalloy process resins and PB-1. For the year ended December 31, 2009, our O&P—EAI segment generated $7,128 million of revenues (excluding inter-segment revenue).

• Intermediates and Derivatives (“I&D”). Our I&D segment produces and markets PO and its co-products and derivatives, acetyls, ethylene oxide and its derivatives, and flavor and fragrance chemicals. PO co-products include styrene monomer (“SM”) and C₄ chemicals (tertiary butyl alcohol (“TBA”), oxyfuels (which is managed in our Refining and Oxyfuels segment), isobutylene and tertiary butyl hydroperoxide (“TBHP”)), and PO derivatives include propylene glycol (“PG”), propylene glycol ethers (“PGE”) and butanediol (“BDO”). We believe that our proprietary PO and acetyls production process technologies provide us with a cost advantaged position for these products and their derivatives. For the year ended December 31, 2009, our I&D segment generated $3,777 million of revenues (excluding inter-segment revenue).

• Technology. Our Technology segment develops and licenses industry leading polyolefin process technologies and provides associated engineering and other services. Our Technology segment further develops, manufactures and sells polyolefin catalysts. We market our process technologies and our polyolefin catalysts to external customers and also use them for our own manufacturing operations. For the year ended December 31, 2009, our Technology segment generated $436 million of revenues (excluding inter-segment revenue).

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The following chart sets forth our business segments and key products:

Refining and Oxyfuels	O&P—Americas and O&P—EAI	I&D	Technology
Gasoline Ultra low sulfur diesel Jet fuel Lube oils Gasoline blending components –  Methyl tertiary butyl ether (MTBE) –  Ethyl tertiary butyl ether (ETBE) Alkylate Vacuum Gas Oil (VGO)	Polyolefins –  Polypropylene –  High density polyethylene (HDPE) –  Low density polyethylene (LDPE) –  Linear low density polyethylene (LLDPE) –  Propylene-based compounds, materials and alloys (PP compounds)* –  Catalloy process resins –  Polybutene-1 (PB-1)* Ethylene and co-products –  Ethylene –  Propylene –  Butadiene –  Benzene –  Toluene Ethylene derivatives –  Ethanol	Propylene oxide, co-products and derivatives –  Propylene oxide (PO) –  Styrene monomer (SM) –  Tertiary butyl alcohol (TBA) –  Isobutylene –  Tertiary butyl hydro-peroxide (TBHP) –  Propylene glycol (PG) –  Propylene glycol ethers (PGE) –  Butanediol (BDO) Acetyls –  Vinyl acetate monomer (VAM) –  Acetic acid –  Methanol Ethylene derivatives –  Ethylene oxide (EO) –  Ethylene glycol (EG) –  EO derivatives Flavor and fragrance chemicals	Polypropylene process technologies –  Spheripol –  Spherizone –  Metocene Polyethylene process technologies –  Lupotech –  Spherilene –  Hostalen Polyolefin catalysts –  Avant Selected chemical technologies

* O&P—EAI only.

For additional segment information and for geographic information for each of the years in the three year period ended December 31, 2009, see Note 29 to the Consolidated Financial Statements. For sales between segments, we generally transfer products at market-based prices.

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Our Corporate and Capital Structure

LyondellBasell Industries N.V. is a public company with limited liability (naamloze vennootschap) incorporated under Dutch law by deed of incorporation dated October 15, 2009. LyondellBasell Industries N.V. was formed to serve as the parent holding company for the remaining subsidiaries of LyondellBasell AF after completion of the Bankruptcy Cases. LyondellBasell AF and 93 of its direct and indirect subsidiaries are currently Debtors in jointly administered Bankruptcy Cases in the Bankruptcy Court. The Plan of Reorganization sets forth the structure of the Debtors that are being reorganized in connection with the Bankruptcy Cases (the “Reorganized Debtors”).

Upon the consummation of the Plan of Reorganization, LyondellBasell Industries N.V. will be the successor to the combination in December 2007 of Lyondell Chemical and Basell, which created one of the world’s largest private petrochemical companies with significant worldwide scale and leading product positions. Prior to the combination of Lyondell Chemical and Basell, Lyondell Chemical was the third-largest independent, publicly-traded chemical company in North America. It was a leading worldwide manufacturer of chemicals and plastics, a refiner of heavy crude oil and producer of fuel products. Since its spin-off from Atlantic Richfield Company (“ARCO”) in 1985, Lyondell Chemical had grown by strategic acquisitions of, among other assets, certain businesses and/or subsidiaries of ARCO, Millennium Chemicals Inc. (“Millennium Chemicals”), and Occidental Chemical Corporation, a subsidiary of Occidental Petroleum Corporation, as well as the non-Lyondell Chemical shares of joint ventures such as Equistar Chemicals, LP and Houston Refining LP, formerly known as Lyondell-CITGO Refining LP, which owned the Houston Refinery. Prior to the combination of Lyondell Chemical and Basell, Basell was the largest producer of polypropylene and advanced polyolefin products, a leading supplier of PE and catalysts, and the industry leader in licensing polypropylene processes. Basell was formed in September 2000 when BASF AG (“BASF”) and Shell Chemical Company (“Shell”) combined their respective polypropylene businesses with their then-existing PE joint venture.

Emergence Financing

In connection with the emergence from Chapter 11 proceedings, LyondellBasell Industries N.V. or its subsidiaries have entered into or will enter into credit or financing arrangements, a portion of the proceeds of which will be used to fund cash required for distributions in settlement of certain prepetition Chapter 11 claims and to repay Chapter 11 debtor-in-possession (“DIP”) loans. These arrangements include:

Senior Secured Notes. On April 8, 2010 LBI Escrow Corporation, a wholly-owned subsidiary of LyondellBasell Industries N.V., issued $2,250,000,000 of 8% senior secured notes due 2017 and €375,000,000 of 8% senior secured notes due 2017, the proceeds of which were placed in escrow pending release on the Emergence Date (collectively, the “Senior Secured Notes”).

Senior Term Loan Facility. On April 8, 2010, LBI Escrow Corporation entered into a $500,000,000 senior term loan facility (the “Senior Term Loan Facility”) and borrowed $500,000,000 thereunder, which was placed in escrow pending release on the Emergence Date.

U.S. ABL Facility. On April 8, 2010, LyondellBasell Industries N.V. entered into a $1,750,000,000 U.S. asset-based lending facility (the “U.S. ABL Facility”), none of which will be drawn as of the Emergence Date.

Rights Offering. In connection with the Plan of Reorganization, the Debtors raised $2.55 billion in an offering of rights to purchase class B ordinary shares (the “Rights Offering”), for which LyondellBasell Industries N.V. obtained backstop commitments from LeverageSource (Delaware), LLC (an affiliate of Apollo Global Management, LLC (together with its affiliates, “Apollo”)), Ares Corporate Opportunities Fund III, L.P. (“Ares”), and AI International Chemicals S.à.r.l., as assigned by AI LBI Investments LLC, each an affiliate of Access Industries (“Access Industries”), (Apollo, Ares and Access Industries, collectively, the “Rights Offering Sponsors”). In addition, as part of the equity commitment agreement pursuant to which the Rights Offering Sponsors agreed to backstop the Rights Offering, LyondellBasell Industries N.V. agreed to sell an additional $250 million of class B ordinary shares to the Rights Offering Sponsors.

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Plan Roll-Up Notes. On the Emergence Date, Lyondell Chemical will issue plan roll-up notes in an amount up to approximately $3,250 million (“Plan Roll-up Notes”) in exchange for DIP roll-up loans incurred in connection with the Chapter 11 proceedings.

European Securitization. On or prior to the Emergence Date, subsidiaries of LyondellBasell Industries N.V. will enter into an amended and restated European securitization facility that will provide for sales of up to €450,000,000 (“European Securitization”).

On the Emergence Date, LBI Escrow Corporation will merge with and into Lyondell Chemical, and Lyondell Chemical will replace LBI Escrow Corporation as the issuer of the Senior Secured Notes and the borrower under the $500,000,000 Senior Term Loan Facility.

The consummation of the Plan of Reorganization will significantly de-lever our capital structure. Assuming an April 30, 2010 Emergence Date, we expect LyondellBasell Industries N.V. to have approximately $7.2 billion of total consolidated debt, approximately $5.2 billion of net consolidated debt, including approximately $2.0 billion of cash and cash equivalents.

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Refining and Oxyfuels Segment

Overview

Our Refining and Oxyfuels segment refines heavy, high-sulfur crude oil in the U.S. Gulf Coast, refines light and medium weight crude oil in southern France and produces gasoline blending components at several of our olefin and PO units. In 2009, our Refining and Oxyfuels segment generated operating revenues of $10.8 billion (excluding inter-segment revenue).

The Houston Refinery, which is located on the Houston Ship Channel in Houston, Texas, has a heavy, high-sulfur crude oil processing capacity of approximately 268,000 barrels per day on a calendar day basis (normal operating basis), or approximately 292,000 barrels per day on a stream day basis (maximum achievable over a 24 hour period). The Houston Refinery has a Nelson Complexity Index of 11.4. The Houston Refinery is a full conversion refinery designed to refine heavy (16 to 18 degrees API), high-sulfur crude oil. This crude oil is more viscous and dense than traditional crude oil and contains higher concentrations of sulfur and heavy metals, making it more difficult to refine into gasoline and other high-value fuel products. However, this crude oil has historically been less costly to purchase than light, low-sulfur crude oil. Processing heavy, high-sulfur crude oil in significant quantities requires a refinery with extensive coking, catalytic cracking, hydrotreating and desulfurization capabilities, i.e., a “complex refinery.” The Houston Refinery’s complexity enables it to operate in full conversion mode, producing a slate of products that consists primarily of high-value, refined fuel products. The Houston Refinery’s refined fuel products include gasoline (including blendstocks for oxygenate blending), jet fuel and ultra low sulfur diesel. The Houston Refinery’s products also include heating oil, lube oils (industrial lubricants, white oils and process oils), carbon black oil, refinery-grade propylene, petrochemical raw materials, sulfur, residual fuel and petroleum coke. Houston Refining LP became a wholly owned consolidated subsidiary on August 16, 2006.

In April 2008, we acquired the Berre Refinery and related businesses in France from Société des Pétroles Shell. The Berre Refinery is designed to run light to medium sulfur crude oil and has a current capacity of approximately 105,000 barrels per day. It produces naphtha, vacuum gas oil, liquefied petroleum gas, gasoline, aviation fuel, diesel, bitumen and heating oil. The Berre Refinery provides raw material and site integration benefits for our operations in France and supports our polyolefin business in Europe. The Berre Refinery also provides us with access to significant logistics assets, including pipeline access, storage terminals and harbor access to the Mediterranean Sea. The Berre Refinery has a Nelson Complexity Index of 6.7.

The Refining and Oxyfuels segment also includes gasoline blending components such as methyl tertiary butyl ether (“MTBE”), ethyl tertiary butyl ether (“ETBE”) and alkylate. MTBE and ETBE are produced as co-products of the PO and olefin production process at four sites located in Texas, France and The Netherlands. In the fourth quarter of 2009, we completed a project to convert one of our MTBE units at Channelview, Texas to ETBE production. We currently have three sites that can produce either MTBE or ETBE with a combined capacity to produce 59,000 barrels per day of MTBE or ETBE; the Company’s total capacity for MTBE or ETBE production is 75,000 barrels per day. Alkylate is produced at one facility located in Texas.

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The chart below shows our position and capacities in key Refining and Oxyfuels businesses:

Sources: EIA; DeWitt; CMAI; LyondellBasell AF’s internal data

Note: Capacities are as of December 31, 2009. Positions are based on our wholly owned capacity and pro rata share of joint venture capacity.

(1) Thousands of barrels per day

(2) MTBE / ETBE split based on actual production at plants where there is swing capacity between the two fuels

The following table outlines:

• the primary products of our Refining and Oxyfuels segment;

• capacity as of December 31, 2009, unless otherwise noted; and

• the primary uses for those products.

See “Item 3. Properties” for the locations where we produce the primary products of our Refining and Oxyfuels segment.

Key Products	Capacity(1)	Primary Uses
Houston Refinery:
Gasoline and components	120,000 barrels per day	Automotive fuel
Ultra Low Sulfur Diesel	95,000 barrels per day	Diesel fuel for cars and trucks
Jet Fuel	25,000 barrels per day	Aviation fuel
Lube Oils	4,000 barrels per day	Automotive and industrial engine and lube oils, railroad engine additives and white oils for food-grade applications
Berre Refinery:
Diesel	42,000 barrels per day	Diesel fuel for cars and trucks
Cracker Feedstock	27,000 barrels per day	Raw material for Olefin unit
Fuel Oil	12,000 barrels per day	Heating fuel

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Key Products	Capacity(1)	Primary Uses
Gasoline	8,000 barrels per day	Automotive fuel
Bitumen	7,000 barrels per day	Asphalt
Gasoline Blending Components:
MTBE/ ETBE	75,000 barrels per day(2)	MTBE is a high octane gasoline blending component; ETBE is an alternative gasoline blending component based on agriculturally produced ethanol
Alkylate	22,000 barrels per day	Alkylate is a high octane gasoline blending component

(1) Only certain key products for the Houston Refinery and the Berre Refinery are identified. Thus, the sum of the capacities in this table will not equal either facility’s total capacity.

(2) Represents total combined MTBE and ETBE capacity.

Sales & Marketing / Customers

In 2009, no single Refining and Oxyfuels segment customer accounted for 10% or more of LyondellBasell AF’s total revenues.

In the U.S., we market and sell gasoline (including blendstocks for oxygenate blending), jet fuel, heating oil, ultra low sulfur diesel fuel, lube oils, coke and sulfur produced at the Houston Refinery. These products are sold in large commodity markets. The Houston Refinery evaluates and determines its optimal product output mix, based on market prices and conditions. As a result, we are subject to various risks associated with selling commodity products.

Gasoline sales accounted for 11% of LyondellBasell AF’s total revenues in 2009. The Houston Refinery’s products primarily are sold in bulk on the U.S. Gulf Coast to other refiners, marketers, distributors and wholesalers at market-related prices. Diesel fuel is produced to meet ultra low sulfur specifications for the on-road transportation market. Most of the Houston Refinery’s products are sold under contracts with a term of one year or less or are sold in the spot market. The Houston Refinery’s products generally are transported to customers via pipelines and terminals owned and operated by other parties. Products also are transported via rail car, barge, truck and ocean going vessel. In addition to sales of refined products produced by the Houston Refinery, we also sell refined products purchased or received on exchange from other parties. The exchange arrangements help optimize refinery supply operations and lower transportation costs. To meet market demands, we also from time to time purchase refined products manufactured by others for resale to our customers. However, purchased volumes have not historically had a significant impact on profitability.

In Europe, the Berre Refinery provides a significant portion of the raw materials requirements for our nearby steam cracker. The remaining products are sold into local markets under market-based sales agreements or in the spot market. Key customers of the Berre Refinery include other refiners, marketers and distributors, and its products are primarily transported via pipelines and other infrastructure assets owned by us.

MTBE and ETBE are derivatives of TBA, which is a co-product of the PO produced by our I&D segment. Production levels at the PO/TBA co-product production facilities primarily are determined by the demand for our PO and PO derivatives. Accordingly, the resulting production levels of the TBA derivatives (such as MTBE and ETBE) depend primarily on the demand for PO and PO derivatives and secondarily on the relative market demand for MTBE and ETBE, as well as the operational flexibility of our multiple production facilities in meeting this demand. Separately, MTBE and alkylate are also produced as derivatives of the ethylene co-products produced by our O&P—Americas segment. When necessary, we purchase MTBE for resale to satisfy customer demand for MTBE above our production levels. Volumes of MTBE purchased for resale can vary significantly from period to period. However, purchased volumes have not historically had a significant impact on profitability.

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We sell our MTBE and ETBE production under market-based sales agreements and in the spot market. We blend our alkylate into gasoline and also sell alkylate under short-term contracts and in the spot market. Sales of MTBE and ETBE together, and alkylate each accounted for less than 10% of LyondellBasell AF’s total revenues in 2009.

Substantially all refiners and blenders have discontinued the use of MTBE in the U.S., partly as a result of U.S. federal governmental initiatives to increase use of bio-ethanol in gasoline as well as some state legislation to reduce or effectively ban the use of MTBE. However, MTBE/ETBE demand for gasoline blending remains strong within the remaining worldwide market. Accordingly, we are marketing MTBE and ETBE produced in the U.S. for use outside of the U.S. Our European-based MTBE/ETBE plants generally have the flexibility to produce either MTBE or ETBE to accommodate market needs. We produce ETBE in Europe to address Europe’s demand for bio-based fuels.

Recently Japan opted to use ETBE principally as a means of meeting its carbon dioxide reduction commitments under the Kyoto Protocol. We and a partnership representing Japanese refiners have signed a supply contract, which will source a significant portion of Japan’s bio-fuels needs. As a result, we converted our Channelview facility to produce ETBE in the fourth quarter of 2009.

Sales of our MTBE, ETBE and alkylate are made by our marketing and sales personnel, and through distributors and independent agents located in the Americas, Europe, the Middle East, Africa and the Asia Pacific region. We have centralized certain sales and order fulfillment functions in regional customer service centers located in Houston, Texas, Rotterdam, The Netherlands and Hong Kong, China. We also have long-term contracts for distribution and logistics to ensure reliable and efficient supply to our customers. MTBE, ETBE and alkylate are transported by barge, ocean going vessel and tank truck.

Raw Materials

Most of the crude oil used as a raw material for the Houston Refinery is purchased under a crude supply agreement with PDVSA Oil, an affiliate of Petróleos de Venezuela S.A., the national oil company of Venezuela. The contract currently provides for the purchase and supply of 215,000 barrels per day of heavy, high-sulfur crude oil through July 31, 2011 and automatically renews annually subject to either party’s right to terminate at the end of a term by giving 12 months notice. The contract incorporates market-based pricing, which is determined using a formula reflecting published market indices. The pricing formula is designed to be consistent with published prices for similar grades of crude oil.

There are risks associated with reliance on PDVSA Oil for supplies of crude oil and with enforcing the provisions of contracts with companies such as PDVSA Oil that are non-U.S. commercial affiliates of a sovereign nation. For example, currently and from time to time in the past, PDVSA Oil has declared itself in a force majeure situation and has reduced deliveries of crude oil purportedly based on announced production cuts by the Organization of the Petroleum Exporting Countries (“OPEC”). Additionally, it has recently imposed certain credit terms that have effectively shortened the time the Houston Refinery has to pay for crude oil purchased under the contract. Any modification, breach or termination of the crude oil contract, or any interruption in this source of crude oil on its current terms, could adversely affect us. Our crude oil contract with PDVSA Oil is subject to the risk of enforcing contracts against non-U.S. commercial affiliates of a sovereign nation, political, force majeure and other risks.

Most of the crude oil used as a raw material for the Berre Refinery is sourced from North Africa and the Middle East region, Russia and the Caspian Sea region and West Africa.

We purchase our ethanol requirements for the production of ETBE from regional producers and importers in Europe at market-related prices. Additionally, we have entered into a supply contract with a Brazilian ethanol producer to supply a significant portion of the ethanol used for the manufacture of ETBE at our Channelview facility. For further discussion regarding the raw materials requirements for the production of MTBE, ETBE and alkylate, see “—Intermediates and Derivatives—Raw Materials.”

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Industry Dynamics / Competition

The markets for fuel products tend to be volatile as well as cyclical as a result of the changing global economy and changing crude oil and refined product prices. Crude oil prices are impacted by worldwide political events, the economics of exploration and production and refined products demand. Prices and demand for fuel products are influenced by seasonal and short-term factors such as weather and driving patterns, as well as by longer term issues such as the economy, energy conservation and alternative fuels. Industry fuel products supply is dependent on short-term industry operating capabilities and on long-term refining capacity.

With a throughput capacity of approximately 268,000 barrels per day (on a calendar day basis), we believe that the Houston Refinery is among North America’s largest full conversion refineries capable of processing significant quantities of heavy, high-sulfur crude oil.

In North America, we compete for the purchase of heavy, high-sulfur crude oil based on price and quality. Although most of our crude oil supplies are secured under contract with PDVSA Oil, supply disruptions could impact the availability and pricing for heavy, high-sulfur crudes. We compete in gasoline and distillate markets as a bulk supplier of fungible products satisfying industry and government specifications. Competition is based on price and location. Our refining competitors are major integrated oil companies, refineries owned or controlled by foreign governments and independent domestic refiners. Based on published data, as of January 2009, there were 150 operable crude oil refineries in the U.S., and total U.S. refinery capacity was approximately 17.8 million barrels per day.

During 2009, the Houston Refinery processed an average of approximately 244,000 barrels per day of crude oil, representing approximately 1% of all U.S. crude processing capacity.

The differential in price between a representative barrel of benchmark refined petroleum products, such as gasoline or heating oil, and a barrel of benchmark crude oil is known as the “crack spread.” The Maya 2-1-1 crack spread, based on two common industry benchmarks, the West Texas Intermediate (“WTI”), 2-1-1 crack spread and the WTI-Maya differential, represents the differential between one barrel of U.S. Gulf Coast 87 Octane Conventional Gasoline and one barrel of U.S. Gulf Coast No. 2 Heating Oil (high-sulfur diesel), on one hand, and the first month futures price of two barrels of Maya crude oil set by Petroleos Mexicanos (“Pemex”), on the other hand. The Berre Refinery refining spreads generally track the 4-1-2-1 Ural reported benchmark spread. This spread is calculated by adding the price of one barrel of gasoline to the price of two barrels of diesel and one barrel of #6 fuel oil and subtracting the price of four barrels of Mediterranean crude oil. The Berre Refinery provides a significant portion of the raw materials for our nearby olefin cracker. While these benchmark refining spreads are generally indicative of the level of profitability at both the Houston Refinery and the Berre Refinery, there are many other factors specific to each refinery that influence operating results.

We believe that we are the largest producer of MTBE/ETBE worldwide. We compete for sales of MTBE and ETBE with independent MTBE producers worldwide and independent ETBE producers mainly in Europe. The most significant MTBE competitor is Saudi Basic Industries Corp. (“SABIC”), and the most significant ETBE competitors are Repsol, Total, Neste and Braskem. MTBE and ETBE face competition from products such as ethanol and other octane components. Legislative and other actions have eliminated substantially all U.S. demand for MTBE. Therefore, we have been selling our U.S.-produced MTBE and ETBE for use outside of the U.S. We compete with other refiners and olefin manufacturers for sales of alkylate that we do not internally blend into gasoline.

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Olefins and Polyolefins Segments Generally

We are the world’s largest producer of polypropylene and PP compounds and a top worldwide producer of PE, ethylene and propylene. We manage our olefin and polyolefin business in two reportable segments, O&P—Americas and O&P—EAI.

• O&P—Americas. Our O&P—Americas segment produces and markets olefins (ethylene and ethylene co-products) and polyolefins. We are the largest producer of polypropylene and light olefins (ethylene and propylene) and the third largest producer of PE in North America. In addition, we produce significant quantities of high-value specialty products such as Catalloy process resins.

• O&P—EAI. Our O&P—EAI segment produces and markets olefins (ethylene and ethylene co-products) and polyolefins. We are the largest producer of polypropylene and PE in Europe and the largest worldwide producer of PP compounds, a high-value specialty product. We also produce significant quantities of other high-value specialty products such as Catalloy process resins and PB-1. Our O&P—EAI segment manages our worldwide PP compounds business, including our facilities in North and South America, manages our worldwide PB-1 business and manages our Catalloy process resins produced in Europe and Asia.

Polyolefins are thermoplastics and comprise approximately two-thirds of worldwide thermoplastics demand. Since their industrial commercialization, thermoplastics have found wide-ranging applications and continue to replace traditional materials such as metal, glass, paper and wood. Our products are used in consumer, automotive and industrial applications ranging from food and beverage packaging to house wares and construction materials. PE is the most widely used thermoplastic, measured on a production capacity basis. We produce high density polyethylene (“HDPE”), low density polyethylene (“LDPE”), linear low density polyethylene (“LLDPE”) and metallocene linear low density polyethylene. Polypropylene is the single largest polyolefin product produced worldwide, and we produce homopolymer, impact copolymer, random copolymer and metallocene polypropylene.

We specialize in several specialty product lines: PP compounds, Catalloy process resins and PB-1, focusing on specialty polyolefins and compounds that offer a wide range of performance characteristics superior to traditional polyolefins. Typical properties of such polyolefins include superior impact-stiffness balance, scratch resistance, soft touch and heat scalability. End uses include automotive and industrial products and materials. PP compounds consist of specialty products produced from blends of polyolefins and additives and are sold mainly to the automotive and white goods industries.

We are the only manufacturer of Catalloy process resins, which are our proprietary products. The Catalloy process resins business focuses on specialty polyolefins that offer a wide range of performance characteristics superior to traditional polyolefins. Catalloy process resins compete with a number of other materials, such as other polypropylene resins, flexible PVC, ethylene propylene rubber and acrylonitrile butadiene styrene (“ABS”), polycarbonate, metals and reinforced polyurethanes.

Sales of ethylene accounted for less than 10% of LyondellBasell AF’s total revenues in 2009. Sales of polypropylene accounted for approximately 13% of LyondellBasell AF’s total revenues in 2009. Sales of PE (HDPE, LDPE and LLDPE, collectively) accounted for 17% of LyondellBasell AF’s total revenues in 2009. Catalloy process resin sales accounted for less than 10% of LyondellBasell AF’s total revenues in 2009.

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The charts below show the combined position and annual capacity of our worldwide olefin and polymer businesses:

Sources: CMAI; LyondellBasell AF’s internal data

Note: Capacities are as of December 31, 2009. Positions are based on wholly owned capacity and pro rata share of joint venture capacity.

Sources: CMAI; LyondellBasell AF’s internal data

Note: Capacities are as of December 31, 2009. Positions are based on wholly owned capacity and pro rata share of joint venture capacity.

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Olefins and Polyolefins—Americas Segment

Overview

Our O&P—Americas segment produces and markets polyolefins, ethylene and ethylene co-products. We are the largest producer of polypropylene and light olefins (ethylene and propylene) and the third largest producer of PE in North America. In addition, we produce significant quantities of high-value specialty products such as Catalloy process resins. In 2009, our O&P—Americas segment generated operating revenues of $8.7 billion (excluding inter-segment revenue).

We currently produce ethylene at five sites in the U.S. The production of ethylene results in co-products such as propylene, butadiene and aromatics, which include benzene and toluene. Ethylene is the most significant petrochemical in terms of worldwide production volume and is the key building block for PE and a large number of other chemicals, plastics and synthetics. Ethylene and its co-products are fundamental to many segments of the economy, including the production of consumer products, packaging, housing and automotive components and other durable and nondurable goods.

We produce polyolefins (PE and polypropylene) at nine sites located in North America and one site located in South America. One of our joint ventures owns the polypropylene facility in Mexico.

Our O&P—Americas segment manufactures Catalloy process resins at two sites in North America.

The following table outlines:

• the primary products of our O&P—Americas segment;

• annual processing capacity as of December 31, 2009, unless otherwise noted; and

• the primary uses for those products.

See “Item 3. Properties” for the locations where we produce the primary products of our O&P—Americas segment. Annual processing capacity as of December 31, 2009 was calculated by estimating the average number of days in a typical year that a production unit of a plant is expected to operate, after allowing for downtime for regular maintenance, and multiplying that number by an amount equal to the unit’s optimal daily output based on the design raw material mix. Because the processing capacity of a production unit is an estimated amount, actual production volumes may be more or less than the capacities set forth below. Capacities shown include 100% of the capacity of joint venture facilities.

Product	Annual Capacity	Primary Uses
Olefins:
Ethylene	9.6 billion pounds(1)	Ethylene is used as a raw material to manufacture polyethylene, EO, ethanol, ethylene dichloride, styrene and VAM
Propylene	5.5 billion  pounds(1) (2)	Propylene is used to produce polypropylene, acrylonitrile and propylene oxide
Butadiene	1.1 billion pounds(1)	Butadiene is used to manufacture styrene-butadiene rubber and polybutadiene rubber, which are used in the manufacture of tires, hoses, gaskets and other rubber products. Butadiene is also used in the production of paints, adhesives, nylon clothing, carpets, paper coatings and engineered plastics
Aromatics:
Benzene	195 million gallons(1)	Benzene is used to produce styrene, phenol and cyclohexane. These products are used in the production of nylon, plastics, synthetic rubber and polystyrene. Polystyrene is used in insulation, packaging and drink cups

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Product	Annual Capacity	Primary Uses
Toluene	40 million gallons(1)	Toluene is used as an octane enhancer in gasoline, as a chemical raw material for benzene and/or paraxylene production and as a core ingredient in toluene diisocyanate, a compound used in urethane production
Polyolefins:
Polypropylene	4.4 billion pounds(3)	Polypropylene is primarily used to manufacture fibers for carpets, rugs and upholstery; house wares; medical products; automotive interior trim, fascia, running boards, battery cases, and bumpers; toys and sporting goods; fishing tackle boxes; and bottle caps and closures
High density polyethylene (HDPE)	3.3 billion pounds	HDPE is used to manufacture grocery, merchandise and trash bags; food containers for items from frozen desserts to margarine; plastic caps and closures; liners for boxes of cereal and crackers; plastic drink cups and toys; dairy crates; bread trays; pails for items from paint to fresh fruits and vegetables; safety equipment, such as hard hats; house wrap for insulation; bottles for household and industrial chemicals and motor oil; milk, water, and juice bottles; large (rotomolded) tanks for storing liquids such as agricultural and lawn care chemicals; and pipe
Low density polyethylene (LDPE)	1.3 billion pounds	LDPE is used to manufacture food packaging films; plastic bottles for packaging food and personal care items; dry cleaning bags; ice bags; pallet shrink wrap; heavy-duty bags for mulch and potting soil; boil-in-bag bags; coatings on flexible packaging products; and coatings on paper board such as milk cartons. Ethylene vinyl acetate is a specialized form of LDPE used in foamed sheets, bag-in-box bags, vacuum cleaner hoses, medical tubing, clear sheet protectors and flexible binders
Linear low density polyethylene (LLDPE)	1.3 billion pounds	LLDPE is used to manufacture garbage and lawn-leaf bags; industrial can liners; house wares; lids for coffee cans and margarine tubs; dishpans, home plastic storage containers, and kitchen trash containers; large (rotomolded) toys like outdoor gym sets; drip irrigation tubing; wire and cable insulating resins and compounds used to insulate copper and fiber optic wiring, and film; shrink wrap for multi-packaging canned food, bag-in-box bags, produce bags, and pallet stretch wrap
Specialty Polyolefins:
Catalloy process resins	600 million pounds	Catalloy process resins are used primarily in modifying polymer properties in film applications and molded products; for specialty films, geomembranes, and roofing materials; in bitumen modification for roofing and asphalt applications; and to manufacture automotive bumpers
Ethylene Derivatives:
Ethanol	50 million gallons	Ethanol is used as a fuel and a fuel additive and in the production of solvents as well as household, medicinal and personal care products

(1) Excludes capacities from our Chocolate Bayou, Texas facility which was permanently shut down in early 2009, including 1.12 billion pounds of ethylene, 700 million pounds of propylene, 150 million pounds of butadiene, 105 million gallons of benzene and 26 million gallons of toluene.

(2) Includes (1) refinery-grade material from our U.S. refinery and (2) 1 billion pounds per year of capacity from the product flex unit at the Channelview facility, which can convert ethylene and other light petrochemicals into propylene.

(3) Includes 100% of 1.31 billion pounds of capacity of Indelpro A.A. de C.V. (“Indelpro”). See “—Joint Venture Relationships.” Excludes 800 million pounds of an off-take agreement with ConocoPhillips, which expired on December 31, 2009.

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Sales & Marketing / Customers

In 2009, no single external O&P—Americas segment customer accounted for 10% or more of LyondellBasell AF’s total revenues.

We currently produce ethylene at five sites in the U.S. Our ethylene production in the U.S. generally is consumed internally as a raw material in the production of derivatives and polymers, or is shipped by pipeline to customers. In North America, we are a net seller of ethylene.

We currently produce propylene at six sites in the U.S., which includes production from the Houston Refinery’s fluid catalytic cracker coproduct stream. We use propylene as a raw material for production of PO and polypropylene. The propylene production within the U.S. that is not consumed internally is generally sold under multi-year contracts. In North America, we are a net seller of propylene.

We currently produce butadiene or aromatics (benzene and toluene) at two sites in the U.S. We generally sell our butadiene under multi-year contracts. We use the benzene as a raw material for production of styrene; in the U.S., we are a net purchaser of benzene. Our Refining and Oxyfuels business uses the toluene to blend into gasoline. Of the toluene production that is not consumed internally, a majority is sold on a spot basis.

We at times purchase ethylene, propylene, benzene and butadiene for resale, when necessary, to satisfy customer demand for these products above production levels. Volumes of ethylene, propylene, benzene and butadiene purchased for resale can vary significantly from period to period. However, purchased volumes have not historically had a significant impact on profits.

In the U.S., most of the ethylene and propylene production of our Channelview, Corpus Christi and La Porte facilities is shipped via a pipeline system, which has connections to numerous U.S. Gulf Coast consumers. This pipeline system, some of which is owned and some of which is leased, extends from Corpus Christi to Mont Belvieu to Port Arthur, Texas, as well as into the Lake Charles, Louisiana area. In addition, exchange agreements with other ethylene and co-products producers allow access to customers who are not directly connected to this pipeline system. Some ethylene is shipped by rail car from Clinton, Iowa to Morris, Illinois and also to customers. A pipeline owned and operated by an unrelated party is used to transport ethylene from Morris, Illinois to Tuscola, Illinois and is used as a raw material in the production of ethanol. Some propylene is shipped by ocean going vessel. Butadiene, benzene, toluene and other products are distributed by pipeline, rail car, truck, barge or ocean going vessel.

We produce polypropylene at three sites in North America and one site in South America. One of the sites in North America (Mexico) is owned by a joint venture. See “—Joint Venture Relationships.” We manufacture PE using a variety of technologies at six sites in the U.S.

With respect to polypropylene and PE, our production is typically sold to an extensive base of established customers. Our polypropylene and PE product volumes are typically sold to customers under annual contracts or under customary terms and conditions without formal contracts. We sell polypropylene into our PP compounds business, which is managed worldwide by our O&P—EAI segment. We also have a facility in Ohio that produces performance polymer products, which include enhanced grades of PE. We believe that, over a business cycle, average selling prices and profit margins for specialty polymers tend to be higher than average selling prices and profit margins for higher-volume commodity PEs.

The majority of our polyolefin products sold in North America is sold through our sales organization. We have regional sales offices in various locations throughout the U.S. Polyolefins primarily are distributed in North America by rail car or truck.

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We manufacture Catalloy process resins at two sites in the U.S. We sell these products into certain specialty applications, including construction, packaging and automotive as well as into our PP compounds business, which is managed in our O&P—EAI segment. Catalloy process resins are transported generally by tank truck and rail car.

Joint Venture Relationships

The following table describes our O&P—Americas segment’s significant manufacturing joint venture relationships.

Name	Location	Other Parties	LyondellBasell Ownership	Product	2009 Capacity (in millions of pounds)
Indelpro	Mexico	Alfa	49%	Polypropylene	1,310(1)
Olefin JV	La Porte, TX	Sunoco	—	Propylene	500(2)

(1) Represents the joint venture’s total capacity and not our proportional capacity.

(2) Represents long term off-take to which Sunoco is entitled.

Our Indelpro joint venture in Mexico operates a manufacturing facility with an annual polypropylene capacity of 1.31 billion pounds. We own 49% of this joint venture, and the output of the asset is marketed by the joint venture. Indelpro’s annual capacity includes 770 million pounds produced from our Spherizone process technology. This joint venture provides us with equity distributions and revenues from technology licensing and catalyst sales, as well as geographical diversification.

In addition, pursuant to a 15-year propylene supply arrangement entered into by Equistar Chemicals LP in 2003 with a subsidiary of Sunoco, Inc., we supply 500 million pounds of propylene annually to Sunoco from our facility located in La Porte, Texas under a cost-based formula.

Raw Materials

Raw material cost is the largest component of the total cost for the production of ethylene and its co-products. The primary raw materials used are heavy liquids and NGLs. Heavy liquids include crude oil-based naphtha and gas oil, as well as condensate, a very light crude oil resulting from natural gas production (collectively referred to as “heavy liquids”). NGLs include ethane, propane and butane. The use of heavy liquid raw materials results in the production of a significant amount of co-products such as propylene, butadiene, benzene and toluene, as well as gasoline blending components, while the use of NGLs results in the production of a smaller amount of co-products, such as propylene.

The flexibility for a plant to consume a wide range of raw materials has historically provided an advantage over plants that are restricted in their raw material processing capability. Facilities using heavy liquids historically have generated, on average, approximately four cents of additional variable margin per pound of ethylene produced compared to facilities restricted to using ethane. This margin advantage was based on an average of historical data over a period of years and is subject to fluctuations, which can be significant. The costs of producing ethylene from heavy liquids and NGLs can change, based on the relative values of crude oil and natural gas, as well as the relative values of the products generated through the use of those raw materials. For example, at certain of our U.S. ethylene facilities during 2008 and 2009, ethane had a cost advantage reflecting high crude oil prices as compared to NGLs. We have the capability to process significant quantities of either heavy liquids or NGLs, depending upon the relative economic advantage of the alternative raw materials. We estimate that in the U.S. we can process between 40% and 90% NGLs. Changes in the raw material feedstock will result in variances in production capacities among the products.

As described above, our management believes that our raw material flexibility in the U.S. is normally a key advantage in the production of ethylene and co-products. As a result, heavy liquids requirements for these businesses are sourced worldwide via a mix of contractual and spot arrangements. Spot market purchases are

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made in order to maintain raw material flexibility and to take advantage of raw material pricing opportunities. NGL requirements for these businesses are purchased via long term and spot contractual arrangements from a variety of sources. A portion of the heavy liquids requirements for these businesses are also obtained from our Refining and Oxyfuels segment. Heavy liquids generally are delivered by ship or barge, and NGLs are generally delivered via pipeline.

In North America, we also purchase large amounts of natural gas to be used for consumption (not as a raw material) in our business via market-based contractual arrangements with a variety of sources.

The principal raw materials used by our polyolefin business are ethylene and propylene. During 2009, our North American ethylene and propylene production exceeded the North American raw material requirements of our O&P—Americas segment. However, not all raw material requirements for ethylene and propylene in this region are sourced internally.

In North America, our Mexican joint venture, Indelpro, receives the majority of its chemical grade and refinery grade propylene needs from Pemex, the state owned oil company of Mexico, under a long-term contract. Our U.S. propylene requirements are produced internally and sourced by a few long-term contracts with third-party suppliers. Propylene not produced internally (on-site at the facility) is delivered via pipeline.

Substantially all of the ethylene and propylene used in our North American PE and polypropylene production is produced internally. Our polyolefin facilities generally can receive their olefins directly from our crackers via our pipeline system, pipelines owned by unrelated parties or on-site production. The PE plant at La Porte is connected by pipeline to facilities of unrelated parties and could receive substantially all of the ethylene via exchanges or purchases.

The raw materials for polyolefins and Catalloy process resins are, in general, commodity chemicals with numerous bulk suppliers and ready availability at competitive prices.

Industry Dynamics / Competition

With respect to olefins and polyolefins, competition is based on price, product quality, product delivery, reliability of supply, product performance and customer service. Industry consolidation in North America has led to fewer, although larger, competitors. Profitability is affected not only by supply and demand for olefins and polyolefins, but also by raw material costs and price competition among producers, which may intensify due to, among other things, the addition of new capacity. In general, demand is a function of worldwide economic growth, which fluctuates. It is not possible to accurately predict the changes in raw material costs, market conditions, capacity utilization and other factors that will affect industry profitability in the future. After a relatively strong start in 2008, demand in late 2008 fell rapidly as the global economies slid quickly into a deep recession. The relatively depressed conditions continued through 2009 and are expected to continue through 2010. We estimate that olefin operating rates in North America were approximately 81% in 2009, and are forecasted to rise to 91% in 2014, while PE and polypropylene operating rates were approximately 80% and 78%, respectively, in 2009, and are forecasted to rise to 89% and 91%, respectively, in 2014. Capacity share figures for us and our competitors, discussed below, are based on completed production facilities and, where appropriate, include our proportionate share of joint venture facilities and certain long-term supply arrangements.

Based on published rated production capacities, we were the second largest producer of ethylene in North America as of December 31, 2009. North American ethylene rated capacity at December 31, 2009 was approximately 74 billion pounds per year, with approximately 79% of that North American capacity located along the Gulf Coast. At December 31, 2009, our ethylene rated capacity in the U.S. was approximately 9.6 billion pounds per year, or approximately 13% of total North American ethylene production capacity. We compete in North America with other large marketers and producers for sales of ethylene and its co-products with Dow, ExxonMobil, International Petroleum Investment Company (“IPIC”), Shell, INEOS, ChevronPhillips, Texas Petrochemicals, Inc. and others.

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Based on published data regarding polypropylene capacity, we believe that, including our proportionate share of the joint venture, we are the largest producer of polypropylene in North America as of December 31, 2009, with a proportionate share capacity of 3.3 billion pounds, or approximately 17% of the total North American capacity. Our largest competitors for sales of polypropylene in North America are ExxonMobil, Total, Sunoco, Formosa Plastics Corporation and INEOS.

With respect to PE, we believe that we are the third largest producer of PE in North America as of December 31, 2009, with 5.8 billion pounds per year of capacity, or approximately 13% of North American capacity. Our largest competitors for sales of PE in North America are Dow, ExxonMobil, IPIC, Chevron Phillips, INEOS and Westlake.

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Olefins and Polyolefins—Europe, Asia, International Segment

Overview

Our O&P—EAI segment produces and markets olefins (ethylene and ethylene co-products) and polyolefins. We are the largest producer of polypropylene and PE in Europe and the largest worldwide producer of PP compounds, a high-value specialty product. We also produce significant quantities of other high-value specialty products such as Catalloy process resins and PB-1. Our O&P—EAI segment manages our worldwide PP compound business, including our facilities in North and South America, manages our worldwide PB-1 business and manages our Catalloy process resins produced in Europe and Asia. We have eight joint ventures located principally in regions with access to low cost feedstocks or access to growing markets. In 2009, our O&P—EAI segment generated operating revenues of $7.1 billion (excluding inter-segment revenue).

We currently produce ethylene at three sites in Europe and one joint venture site in the Middle East. The production of ethylene results in co-products such as propylene and butadiene. Ethylene is the most significant petrochemical in terms of worldwide production volume and is the key building block for PE and a large number of other chemicals, plastics and synthetics. Ethylene and its co-products are fundamental to many segments of the economy, including the production of consumer products, packaging, housing and automotive components and other durable and nondurable goods.

We produce polyolefins (polypropylene and PE) at 19 facilities internationally, including ten facilities located in Europe, four facilities located in Asia, three facilities located in the Middle East and two facilities located in Australia. In addition, we own a PE facility in Münchsmünster, Germany that is currently being rebuilt following a fire in 2005. Our joint ventures own one of the facilities in Europe, four of the facilities in Asia and three in the Middle East.

PP compounds consist of specialty products produced from blends of polyolefins and additives and are sold mainly to the automotive and white goods industries. We manufacture PP compounds at 15 facilities worldwide (a number of which are the same facilities as the polyolefin facilities described above), consisting of four facilities in Europe, five facilities in Asia, three in North America, two in South America and one facility in Australia. In February 2008, we acquired Solvay Engineered Polymers (“SEP”), a leading supplier of PP compounds in North America. The acquisition included two PP compounding sites in the U.S., one of which was closed after the acquisition. SEP’s primary products include Deflex TPOs, Sequel engineered polyolefins, and Indure engineered polyolefins. The acquisition of SEP complements our existing PP compounds business in North America.

Catalloy process resins are produced using a unique technology and three-step process allowing for very specific tailoring of the product properties that results in a superior range of resins compared to conventional polypropylene. We produce Catalloy process resins at two sites in the EAI region, including one site in The Netherlands and one site in Italy. The process is proprietary technology that is not licensed to third parties, and as a result, we are the only manufacturer of Catalloy process resins.

We produce PB-1 at one facility in Europe. We believe that we are the largest worldwide producer of PB-1, a unique family of highly flexible, strong and durable butene-based polymers. A majority of the current PB-1 we produce is used in pipe applications and for under-floor heating and thermo sanitary systems, where flexibility and creep resistance at high temperature are very important. PB-1 is being developed to target new opportunities in applications such as “easy-open” packaging (seal-peel film), construction, fibers and fabrics, compounds, adhesives and coatings.

The following table outlines:

• the primary products of our O&P—EAI segment;

• annual processing capacity as of December 31, 2009, unless otherwise noted; and

• the primary uses for those products.

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See “Item 3. Properties” for the locations where we produce the primary products of our O&P—EAI segment. Annual processing capacity as of December 31, 2009 was calculated by estimating the average number of days in a typical year that a production unit of a plant is expected to operate, after allowing for downtime for regular maintenance, and multiplying that number by an amount equal to the unit’s optimal daily output based on the design raw material mix. Because the processing capacity of a production unit is an estimated amount, actual production volumes may be more or less than the capacities set forth below. Capacities shown include 100% of the capacity of joint venture facilities.

Product	Annual Capacity	Primary Uses
Olefins
Ethylene	6.4 billion pounds(1)	Ethylene is used as a raw material to manufacture polyethylene, EO, ethanol, ethylene dichloride, styrene and VAM
Propylene	5.4 billion pounds(1)(2)	Propylene is used to produce polypropylene, acrylonitrile and propylene oxide
Butadiene	550 million pounds(1)	Butadiene is used to manufacture styrene-butadiene rubber and polybutadiene rubber, which are used in the manufacture of tires, hoses, gaskets and other rubber products. Butadiene is also used in the production of paints, adhesives, nylon clothing, carpets, paper coatings and engineered plastics
Polyolefins:
Polypropylene	12.8 billion  pounds(3)(4)	Polypropylene is primarily used to manufacture fibers for carpets, rugs and upholstery; house wares; medical products; automotive interior trim, fascia, running boards, battery cases, and bumpers; toys and sporting goods; fishing tackle boxes; and bottle caps and closures
High density polyethylene (HDPE)	4.0 billion pounds(4)(5)	HDPE is used to manufacture grocery, merchandise and trash bags; food containers for items from frozen desserts to margarine; plastic caps and closures; liners for boxes of cereal and crackers; plastic drink cups and toys; dairy crates; bread trays; pails for items from paint to fresh fruits and vegetables; safety equipment, such as hard hats; house wrap for insulation; bottles for household and industrial chemicals and motor oil; milk, water, and juice bottles; large (rotomolded) tanks for storing liquids such as agricultural and lawn care chemicals; and pipe
Low density polyethylene (LDPE)	2.8 billion pounds(4)(6)	LDPE is used to manufacture food packaging films; plastic bottles for packaging food and personal care items; dry cleaning bags; ice bags; pallet shrink wrap; heavy-duty bags for mulch and potting soil; boil-in-bag bags; coatings on flexible packaging products; and coatings on paper board such as milk cartons. Ethylene vinyl acetate is a specialized form of LDPE used in foamed sheets, bag-in-box bags, vacuum cleaner hoses, medical tubing, clear sheet protectors and flexible binders

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Product	Annual Capacity	Primary Uses
Specialty Polyolefins:
PP compounds	2.4 billion pounds(7)	PP compounds are used to manufacture automotive interior and exterior trims, dashboards, bumpers and under-hood applications; base material for products and parts used in appliances; anti-corrosion coatings for steel piping; wire and cable
Catalloy process resins	600 million pounds	Catalloy process resins are used primarily in modifying polymer properties in film applications and molded products; for specialty films, geomembranes, and roofing materials; in bitumen modification for roofing and asphalt applications; and to manufacture automotive bumpers
PB-1 resins	110 million pounds	PB-1 resins are used in flexible pipes, resins for seal-peel film, film modification, hot melt and polyolefin modification applications, consumer packaging and adhesives

(1) Includes 100% of olefin capacity of SEPC (described below) in Saudi Arabia, which includes 2.2 billion pounds of ethylene and 630 million pounds of propylene. The facility, of which we own 25%, began initial production in the third quarter of 2008.

(2) Includes (1) refinery-grade material from our French refinery; (2) 100% of the 1.015 billion pounds of capacity of the propane dehydrogenation (“PDH”) plant owned by SPC, a polymers joint venture of which we own 25%; and (3) 1.015 billion pounds of capacity from Al-Waha joint venture (described below), of which we currently own 21%.

(3) Includes: (1) 100% of the 1.59 billion pounds of capacity at SPC; (2) 100% of the 800 million pounds of capacity of SunAllomer Ltd. (“SunAllomer”); (3) 100% of the 880 million pounds of capacity of Basell Orlen Polyolefins Sp. Z.o.o. (“Orlen”); (4) 100% of the 990 million pounds of capacity of HMC Polymers Company Ltd. (“HMC”); (5) 100% of the 1.545 billion pounds of capacity of PolyMirae Co. Ltd. (“PolyMirae”); (6) 100% of the 990 million pounds of capacity at Al Waha, which began operations during late 2009; and (7) 550 million pounds of capacity at our Terni, Italy location, which we intend to shut down. See “—Joint Venture Relationships.” Excludes one 240 million pound line located at our Wesseling, Germany site, which was shut down during 2009.

(4) Includes (1) 100% of 880 million pounds of capacity of LDPE manufacturing complex which commenced operations in the second quarter of 2009 that is owned by SEPC, a joint venture of which we own 25% and (2) 880 million pounds of HDPE capacity from SEPC, which began operations in late 2008. Excludes 410 million pounds of LDPE capacity at a site located in Carrington, UK, which was shut down during 2009.

(5) Includes 100% of the 705 million pounds of capacity of Orlen. See “— Joint Venture Relationships.” Excludes 705 million pounds of capacity at a site in Münchsmünster, Germany that is currently being rebuilt following a fire in 2005.

(6) Includes: 100% of the 240 million pounds of capacity of Orlen. Excludes 240 million pounds of capacity at a site located in Fos-sur-Mer, France, which was shut down during 2009. See “—Joint Venture Relationships.”

(7) Includes 100% of the 165 million pounds of capacity of PolyPacific Pty Ltd. (“PolyPacific Pty”), a joint venture of which we own 50%, and 110 million pounds of capacity of SunAllomer, a joint venture of which we own 50%.

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Sales & Marketing / Customers

In 2009, no single external O&P—EAI segment customer accounted for 10% or more of LyondellBasell AF’s total revenues.

We currently produce ethylene at one site in France, two sites in Germany, and one joint venture site in the Middle East. Our ethylene production in Germany and France is generally consumed internally as a raw material in the production of polymers. In Western Europe, we are essentially balanced in our ethylene supply and demand.

We currently produce propylene at our olefin plants, including one site in France, two sites in Germany and the three joint venture sites in the Middle East (SPC, Saudi Ethylene & PE Company Ltd. (“SEPC”) and the recently started Al-Waha Petrochemicals Ltd. (“Al-Waha”) venture). In addition, we produce propylene at our Berre Refinery. We use propylene as a raw material for production of PO and polypropylene. In Europe, we are a net purchaser of propylene.

We currently produce butadiene at one site in France and one site in Germany. We generally sell our butadiene under multi-year contracts.

We at times purchase ethylene, propylene, benzene and butadiene for resale, when necessary, to satisfy customer demand for these products above production levels. Volumes of ethylene, propylene, benzene and butadiene purchased for resale can vary significantly from period to period. However, purchased volumes have not historically had a significant impact on profits.

European ethylene and propylene production is generally either fully integrated with, or is transported via pipeline to, our PE and polypropylene facilities in Europe.

We produce polypropylene at nine sites in Europe, four sites in Asia, two sites in Australia and two sites in the Middle East. All of the sites in Asia and the Middle East and one of the sites in Europe (Poland) are owned by a joint venture. See “—Joint Venture Relationships.”

We manufacture PE using a variety of technologies at four sites in Europe, including one joint venture facility in Poland, and at one joint venture site in the Middle East. Also, an HDPE facility in Münchsmünster, Germany is currently being rebuilt following a fire in 2005.

With respect to polypropylene and PE, our production is typically sold to an extensive base of established customers. Our polypropylene and PE product volumes are typically sold to customers under annual contracts or under customary terms and conditions without formal contracts. We believe that, over a business cycle, average selling prices and profit margins for specialty polymers tend to be higher than average selling prices and profit margins for higher-volume commodity polypropylenes.

For the O&P—EAI segment, we typically have exclusive marketing arrangements with our joint venture partners to sell and market polypropylene and PE outside the country where such a joint venture facility is located.

The majority of our polyolefin products sold in Europe is sold through our sales organization. We have three sales channels for polyolefins (Alastian, Direct Sales and Polyolefin Solutions) to distinguish between commodity and specialty business models and allow a focused approach to meet the needs of different buying requirements of our customers. The characteristics of these sales channels are as follows:

• Alastian has a “no-frills” offering for a limited range of commoditized products. All terms of sales are standard, and extra services, including technical service and freight, are charged separately. Prices are posted, and all transactions are highly automated.

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• Direct Sales offers a broad range of commoditized products and standard services via a direct local sales presence for those customers who value a traditional relationship and sales support.

• Polyolefin Solutions focuses on high growth and high value application segments in the polyolefin market. Through its two business lines and key account management, it offers a full service range and reliable supply and runs a dedicated innovation project team that draws on the expertise and strength of our research and development organization.

Polyolefins primarily are distributed in Europe by rail car or truck.

We and our joint ventures manufacture PP compounds at five sites in Asia (two of which are owned by joint ventures), four sites in Europe, three sites in North America, two sites in South America and one joint venture site in Australia. We manufacture Catalloy process resins at one facility in Italy and one facility in The Netherlands. We also manufacture PB-1 at the facility in The Netherlands.

We sell these high-value specialty polymers into certain specialty applications, including construction and automotive. Advanced polyolefins are transported generally by truck and rail car.

Our marketing and sales force for O&P—EAI segment is involved in sales related activities, including direct sales and customer service. Our regional sales offices are located in various locations, including The Netherlands; China; India; and United Arab Emirates. We also operate through a worldwide network of local sales and representative offices in Europe, North America and the rest of the world (primarily in importing countries) and through an extensive network of commercial representatives in over 50 countries. Our joint ventures typically manage their domestic sales and marketing efforts independently, and we typically operate as their agent/distributor for exports.

Joint Venture Relationships

The following table describes our O&P—EAI segment’s significant manufacturing joint venture relationships.

Name	Location	Other Parties	LyondellBasell Ownership		Product	2009 Capacity (1) (in millions of pounds)
SPC	Al-Jubail Industrial	Tasnee	25	%	Polypropylene	1,590
	City, Saudi Arabia				Propylene	1,015
SEPC	Al-Jubail Industrial	Tasnee, Sahara	25	%	Ethylene	2,200
	City, Saudi Arabia	Petrochemical			Propylene	630
		Company			HDPE	880
					LDPE	880
Al-Waha	Al-Jubail Industrial	Sahara Petrochemical	21	%(2)	Polypropylene	990
	City, Saudi Arabia	Company and others			Propylene	1,015
HMC	Thailand	PTT	29	%	Polypropylene	990
Basell Orlen Polyolefins	Poland	Orlen	50	%	Polypropylene	880
					HDPE	705
					LDPE	240
Polypacific	Australia, Malaysia	Mirlex Pty.	50	%	PP Compounding	165
SunAllomer	Japan	Showa Denko,	50	%	Polypropylene	800
		Nippon Oil			PP Compounding	110
Polymirae	South Korea	Dailem, SunAllomer	42	%(3)	Polypropylene	1,540

(1) Represents the joint venture’s total capacity and not our proportional capacity.

(2) Reflects our current ownership percentage. As the joint venture pays dividends over time, we anticipate our ownership will increase to a maximum of 25%.

(3) Reflects our direct (35%) and indirect ownership through SunAllomer.

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We have five polypropylene joint ventures, one PE joint venture, one joint venture that produces both polypropylene and PE and one joint venture that only produces PP compounds. Of the eight joint ventures, four are in Asia, three are in the Middle East and one is in Eastern Europe. These joint ventures provide us with additional income streams from cash dividends, licensing revenues, catalyst sales and marketing fees from selling joint venture products, as well as geographical diversification and access to local market skills and expertise. We believe that our technological leadership has enabled us to establish joint ventures in cost advantaged locations and developing regions with higher growth, including the Asia Pacific region and the Middle East. We generally license our polyolefin process technologies and supply catalysts to our joint ventures.

We believe that our joint venture approach to international growth allows us to leverage our capital and participate in a larger, more diversified mix of projects where the synergies between our worldwide position and the local joint venture party’s strengths can result in improved operations and financial returns. Some of our joint ventures source cost advantaged raw materials from their local shareholders. In the Middle East, our joint venture in Saudi Arabia, SPC, operates a PDH unit and a polypropylene manufacturing facility in Al-Jubail Industrial City with an annual polypropylene capacity of almost 1.6 billion pounds, which includes the 2009 capacity expansion. We own 25% of this joint venture and market approximately 70% of the polypropylene produced annually by the joint venture.

In 2006, we formed two new joint ventures in Saudi Arabia. The first of these, SEPC, is with Tasnee & Sahara Olefins Company (“TSOC”) and has a new integrated PE manufacturing complex operating in Al-Jubail Industrial City in Saudi Arabia. The ethylene cracker began production in the third quarter of 2008. One PE plant is based on our Hostalen process and produces HDPE, and the other is based on our Lupotech T technology and produces LDPE. The HDPE plant began operating in the fourth quarter of 2008 and the LDPE plant commenced operations in the second quarter of 2009. We own 25% of the joint venture, while the remaining 75% is owned by TSOC (which is owned by National Petrochemical Industrialization Company, also known as Tasnee Petrochemicals, our partner in its SPC joint venture, and Sahara Petrochemical Company, our partner in the Al-Waha joint venture).

Our second new joint venture in Saudi Arabia, Al-Waha, began production in the third quarter of 2009, operating polypropylene and PDH manufacturing plants in Al-Jubail Industrial City. We own 21% of the joint venture, with 75% owned by Sahara Petrochemical Company and a small percentage by another party. The plants use our most advanced polypropylene technology, the Spherizone process. We initially are the exclusive marketer for polypropylene produced by the joint venture that is sold outside of Saudi Arabia.

HMC, our joint venture in Thailand with Thai state oil company PTT, operates a polypropylene plant with an annual capacity of 990 million pounds, and are constructing a new PDH plant with an annual capacity of 660 million pounds and a new polypropylene plant using our newest proprietary Spherizone technology with a capacity of 660 million pounds, both of which are expected to start up in 2010. We own 29% of this joint venture.

In Europe, our Orlen joint venture in Poland operates a polyolefin manufacturing facility with an annual polypropylene capacity of 880 million pounds and an annual PE capacity of 945 million pounds, including 705 million pounds of HDPE and 240 million pounds of LDPE. We own 50% of this joint venture and market all of the product sales outside of Poland.

We have a joint venture, PolyPacific Pty., which operates two PP compounding facilities, one in Australia and one in Malaysia, with annual PP compounding capacities of 110 million pounds and 55 million pounds, respectively. We own 50% of this joint venture, and the joint venture markets all of the PP compounds production.

In Japan, we have a joint venture, SunAllomer, which operates two polypropylene facilities with an annual capacity of 800 million pounds and a PP compounding facility with an annual PP compounding capacity of 110 million pounds. We own 50% of this joint venture and market a portion of the polypropylene.

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In South Korea, we have a joint venture, PolyMirae, which operates a polypropylene facility with an annual capacity of 1.54 billion pounds. We own 35% of this joint venture and another 7% via our participation in SunAllomer, which holds 15% of PolyMirae.

Raw Materials

Raw material cost is the largest component of the total cost for the production of ethylene and its co-products. The primary raw materials used in our European olefin facilities are heavy liquids and, for our Saudi joint venture facilities, NGLs. NGLs include ethane, propane and butane. The use of heavy liquid raw materials results in the production of a significant amount of co-products such as propylene, butadiene, and gasoline blending components, while the use of NGLs results in the production of a smaller amount of co-products, such as propylene.

The principal raw materials used by our polyolefin and Catalloy process resins businesses are propylene and ethylene. In Western Europe, we have the capacity to produce approximately 50% of the propylene requirements of our European polypropylene business and essentially all of the ethylene requirements of our European PE business. European propylene and ethylene requirements that are not produced internally are purchased pursuant to long-term contracts with third-party suppliers and are delivered via pipeline. Prices under these third-party contracts are market related and are negotiated monthly, and are generally based on published market indicators, normally with discounts.

In our wholly owned operations in Australia, greater than 90% of our propylene normally comes from third-party refinery grade propylene purchased under long-term contracts linked to Saudi or Singapore fuel markers and is processed at our integrated splitters located on each manufacturing site. Some of our international joint ventures receive propylene from their local shareholders under long-term contracts. The remaining supply for the joint ventures is purchased from local suppliers under long-term contracts and some spot purchases. For the new joint ventures, we aim to achieve integration of monomer and polymer production. For example, our first Saudi polyolefin joint venture, SPC, which commenced production in 2004, operates a PDH unit fed with competitively priced propane. The Al-Waha joint venture is based on the same structure, while the SEPC joint venture is based on an integrated complex, including a gas cracker utilizing cost advantaged Saudi Arabian propane and ethane.

The raw materials for polyolefins are, in general, commodity chemicals with numerous bulk suppliers and ready availability at competitive prices.

A significant portion of our raw materials for our PP compounds are polypropylene and other polymers (primarily Catalloy process resins). Our PP compounding facilities generally receive their polypropylene and other polymers directly from one of our wholly owned or joint venture facilities via truck or rail car. In addition, there are four sites (two in Europe, one in North America and one in South America) that have both polypropylene and PP compounding operations co-located, thereby minimizing product handling. PB-1 raw materials are sourced solely from external supply.

Industry Dynamics / Competition

After a relatively strong start in 2008, demand in late 2008 fell rapidly as the global economies slid quickly into a deep recession. The relatively depressed conditions continued through 2009 and are expected to continue into 2010. We estimate that ethylene operating rates for Europe were approximately 80% in 2009, and are forecasted to rise to 90% in 2014, while PE and polypropylene operating rates were each approximately 79% in 2009, and are forecasted to rise to 88% and 86%, respectively, in 2014. Capacity share figures for us and our competitors, discussed below, are based on completed production facilities and, where appropriate, include our proportionate share of joint venture facilities and certain long-term supply arrangements.

Our ethylene rated capacity in Western Europe at December 31, 2009 was approximately 4.2 billion pounds per year, or approximately 8% of the 54 billion pounds per year of total Western Europe ethylene production

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capacity. Based on these published rated production capacities, we are the seventh largest producer of ethylene in Western Europe. In Western Europe, key ethylene competitors include INEOS, Dow, Polimeri Europa, Total S.A. (“Total”), SABIC, Shell, BASF and ExxonMobil.

Based on published data regarding polypropylene capacity, we believe that we are the largest producer of polypropylene in Western Europe as of December 31, 2009, with 5.4 billion pounds per year of capacity, or approximately 24% of the European capacity for polypropylene. Our largest competitors for sales of polypropylene are Polimeri Europa, Total, SABIC, INEOS and Dow.

With respect to PE, we believe that we are the largest producer of PE in Western Europe as of December 31, 2009, with 4.1 billion pounds per year of capacity, or approximately 12% of capacity for PE (HDPE and LDPE only), based on published data regarding PE capacity. Our largest competitors for sales of PE are INEOS, SABIC, Total, Polimeri Europe, Repsol, ExxonMobil and Dow.

We believe we are the largest PP compounds producer in the world with 2.3 billion pounds (which includes our proportionate share of joint ventures) of installed annual capacity as of December 31, 2009. Approximately 54% of our PP compounding capacity is in Europe, 20% is in North America, and 26% is in the rest of the world (including the capacity of our joint ventures). Our competitors for sales of PP compounds are SABIC, Borealis, ExxonMobil, Washington Penn, Mitsui, A. Schulman, Sumitomo Chemical Co., Ltd. (“Sumitomo”) and many other independent companies.

Our 110 million pound PB-1 capacity competes with a limited number of smaller polybutene producers, of which Mitsui is the largest. The unique balance of flexibility and toughness of PB-1 in this application makes it fit for the high end of the piping market. In the specialty area, PB-1 competes with a number of proprietary and sophisticated polymers, plastomers and elastomers, depending on the specific application.

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Intermediates and Derivatives Segment

Overview

Our I&D segment produces and markets PO and its co-products and derivatives, acetyls, ethylene oxide and its derivatives and flavor and fragrance chemicals. PO co-products include SM and C₄ chemicals (TBA, oxyfuels (which is managed in the Refining and Oxyfuels segment), isobutylene and TBHP), and PO derivatives include PG, PGE and BDO. We believe that our proprietary PO and acetyls production process technologies provide us with a cost advantaged position for these products and their derivatives. In 2009, our I&D segment generated $3.8 billion of revenues (excluding inter-segment revenue).

Including joint venture facilities, we produce PO, its co-products and derivatives at two sites in Texas, two sites in The Netherlands, one in Japan and one in France. We produce our PO through two distinct technologies based on indirect oxidation processes that yield co-products. One process yields TBA as the co-product; the other process yields SM as the co-product. The two technologies are mutually exclusive, necessitating that a manufacturing facility be dedicated either to PO/TBA or to PO/SM. Isobutylene and TBHP are derivatives of TBA. MTBE and ETBE are other derivatives of TBA and are gasoline blending components reported in our Refining and Oxyfuels segment. PG, PGE and BDO are derivatives of PO. PG collectively refers to mono-propylene glycol (“MPG”), PG meeting U.S. pharmacopeia standards and several grades of dipropylene glycol (“DPG”) and tri-propylene glycol (“TPG”).

We also produce flavor and fragrance chemicals. Facilities in Georgia and Florida manufacture terpene-based fragrance ingredients and flavor ingredients, primarily for the oral care markets. We also supply products for use in a number of other applications, including chemical reaction agents, or initiators, for the rubber industry and solvents and cleaners, such as pine oil, for the hard surface cleaner markets.

The chart below shows our position and capacities in key I&D businesses:

Sources: CMAI; LyondellBasell AF’s internal data

Note: Capacities are as of December 31, 2009. Positions are based on wholly owned capacity and pro rata share of joint venture capacity.

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The following table outlines:

• the primary products of our I&D segment;

• annual processing capacity as of December 31, 2009, unless otherwise noted; and

• the primary uses for those products.

See “Item 3. Properties” for the locations where we produce the primary products of our I&D segment. Annual processing capacity as of December 31, 2009 was calculated by estimating the average number of days in a typical year that a production unit of a plant is expected to operate, after allowing for downtime for regular maintenance, and multiplying that number by an amount equal to the unit’s optimal daily output based on the design raw material mix. Because the processing capacity of a production unit is an estimated amount, actual production volumes may be more or less than the capacities set forth below. Except as indicated, capacities shown include 100% of the capacity of joint venture facilities.

Product	Annual Capacity	Primary Uses
Propylene Oxide (PO)	4.6 billion pounds(1)	PO is a key component of polyols, PG, PGE and BDO
PO Co-Products:
Styrene Monomer (SM)	5.1 billion pounds(2)	SM is used to produce plastics, such as expandable polystyrene for packaging, foam cups and containers, insulation products and durables and engineering resins
TBA Derivative Isobutylene	1.4 billion pounds(3)	Isobutylene is a derivative of TBA used in the manufacture of synthetic rubber as well as fuel and lubricant additives, such as MTBE and ETBE
PO Derivatives:
Propylene Glycol (PG)	1.2 billion pounds(4)	PG is used to produce unsaturated polyester resins for bathroom fixtures and boat hulls; lower toxicity antifreeze, coolants and aircraft deicers; and cosmetics and cleaners
Propylene Glycol Ethers (PGE)	545 million pounds(5)	PGE are used as solvents for paints, coatings, cleaners and a variety of electronics applications
Butanediol (BDO)	395 million pounds	BDO is used in the manufacture of engineering resins, films, personal care products, pharmaceuticals, coatings, solvents and adhesives
Acetyls:
Vinyl Acetate Monomer (VAM)	700 million pounds	VAM is a petrochemical product used to produce a variety of polymers products used in adhesives, water-based paint, textile coatings and paper coatings
Acetic Acid	1.2 billion pounds	Acetic acid is a raw material used to produce VAM, terephthalic acid (used to produce polyester for textiles and plastic bottles), industrial solvents and a variety of other chemicals

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Product	Annual Capacity	Primary Uses
Methanol	190 million gallons(6)	Methanol is a raw material used to produce acetic acid, MTBE, formaldehyde and several other products
Ethylene Derivatives:
Ethylene Oxide (EO)	0.8 billion pounds EO equivalents; 400 million pounds as pure EO(7)	EO is used to produce surfactants, industrial cleaners, cosmetics, emulsifiers, paint, heat transfer fluids and ethylene glycol
Ethylene Glycol (EG)	0.7 billion pounds(7)	EG is used to produce polyester fibers and film, polyethylene terephthalate resin, heat transfer fluids and automobile antifreeze
Other Ethylene Oxide Derivatives	225 million pounds	EO derivatives include ethylene glycol ethers and ethanolamines, and are used to produce paint and coatings, polishes, solvents and chemical intermediates
Other:
Flavor and Fragrance Chemicals(8)		Flavor and fragrance chemicals include terpene-based fragrance ingredients and flavor ingredients, primarily for the oral care markets, and also include products used in applications such as chemical reaction agents, or initiators, for the rubber industry and solvents and cleaners, such as pine oil, for the hard surface cleaner markets

(1) Includes (1) 100% of the 385 million pounds of capacity of Nihon Oxirane Co. Ltd. (“Nihon Oxirane”), a joint venture of which we own 40%; (2) 1.5 billion pounds of capacity that represents Bayer Corporation’s (“Bayer”) share of PO production from the Channelview PO/SM I plant and the Bayport, Texas PO/TBA plants under the U.S. PO manufacturing joint venture (the “U.S. PO Joint Venture”) between Lyondell Chemical and Bayer; and (3) 100% of the 690 million pounds of capacity of the Maasvlakte PO/SM plant, which is owned by the European PO manufacturing joint venture (the “European PO Joint Venture”) with Bayer, as to which Bayer has the right to 50% of the production. Our net proportionate interest in PO capacity is approximately 2.5 billion pounds. See “—Joint Venture Relationships.”

(2) Includes (1) approximately 700 million pounds of SM production from the Channelview PO/SM II plant that is committed to unrelated equity investors under processing agreements; (2) 100% of the 830 million pounds of capacity of Nihon Oxirane; and (3) 100% of the 1.5 billion pounds of capacity of the Maasvlakte PO/SM plant. Our net proportionate interest in SM capacity, which includes the European PO Joint Venture with Bayer, is approximately 3.2 billion pounds. See “—Joint Venture Relationships.”

(3) Represents total high-purity isobutylene capacity and purified isobutylene capacity.

(4) PG capacity includes 100% of the approximately 220 million pounds of capacity of Nihon Oxirane. Our net proportionate interest in PG capacity is approximately 1 billion pounds. The capacity stated is MPG capacity. Smaller quantities of DPG and TPG are co-produced with MPG. At our facilities in the U.S. and Europe, these DPG and TPG products are purified and marketed. See “—Joint Venture Relationships.”

(5) Includes 100% of the 110 million pounds associated with a marketing arrangement with Shiny Chemical Co., Ltd. (“Shiny”).

(6) Represents 100% of the methanol capacity at the La Porte, Texas facility, which is owned by La Porte Methanol Company, a partnership owned 85% by us and 15% by Linde AG (“Linde”).

(7) Excludes the Beaumont, Texas facility owned by PD Glycol, a 50/50 partnership between Equistar Chemicals LP and E. I. du Pont de Nemours and Company (“DuPont”). The PD Glycol facility has not operated since it was damaged by Hurricane Ike in 2008 and will not operate in the future.

(8) With respect to flavor and fragrance chemicals, we frequently work closely with customers in developing products to satisfy the specific requirements of those customers, and capacity varies accordingly.

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Sales & Marketing / Customers

In 2009, no single I&D segment customer accounted for 10% or more of LyondellBasell AF’s total revenues.

Including joint ventures, we produce PO, its co-products, and its derivatives at two sites in The Netherlands, two sites in the U.S., one site in France and one site in Japan. We estimate, based in part on published data, that worldwide demand for PO was approximately 13.3 billion pounds in 2009. More than 75% of that volume was consumed in the manufacture of three families of PO derivative products: polyols, glycols and glycol ethers. The remainder was consumed in the manufacture of performance products, including BDO and its derivatives.

We produce and deliver our PO and PO co-products through sales agreements, processing agreements and spot sales as well as product exchanges. We have a number of multi-year processing (or tolling) and sales agreements to mitigate the adverse impact of competitive factors and economic business cycles on demand for our PO. In addition, Bayer’s ownership interest in the U.S. PO Joint Venture, which operates four of the U.S. operating units, represents ownership of an in-kind portion of the PO production. Bayer also has the right to 50% of the production of one of the facilities in The Netherlands. See “—Joint Venture Relationships.” Our PO derivatives are sold through market-based sales contracts and spot sales. PO sold in the merchant market accounted for less than 10% of LyondellBasell AF’s total revenues in 2009.

Production levels at the PO/SM and PO/TBA co-product production facilities are primarily determined by the demand for PO and PO derivatives. The resulting production levels of co-product SM and TBA and its derivatives (isobutylene and TBHP), which are reported in the I&D segment, and MTBE and ETBE, (which are reported in the Refining and Oxyfuels segment) thus depend primarily on the demand for PO and PO derivatives and secondarily on the relative market demand for SM, isobutylene, MTBE and ETBE, as well as the operational flexibility of our multiple production facilities in meeting this demand. See “Item 1. Business—Refining and Oxyfuels Segment” for additional information about the production of MTBE and ETBE.

Based on published data, worldwide demand for SM in 2009 is estimated to have been approximately 52 billion pounds. SM accounted for less than 10% of LyondellBasell AF’s total revenues in 2009. We sell most of our SM production into the North American and European merchant markets and to Asian and South American export markets through long-term sales contracts and processing agreements. See “—Joint Venture Relationships.”

We purchase SM for resale, when necessary, to satisfy customer demand for this co-product above co-product production levels. Volumes of SM purchases made for resale can vary significantly from period to period. However, purchased volumes have not historically had a significant impact on profits.

Our I&D segment converts most of its TBA, which is produced as a co-product to the PO process, to isobutylene and sells some of the TBA into the market. Over half of the isobutylene from the I&D segment is reacted with methanol or ethanol to produce MTBE and ETBE, which is marketed by the Refining and Oxyfuels segment. The remaining isobutylene is converted and sold as high purity and purity grade isobutylene by the I&D segment. Isobutylene sales accounted for less than 10% of LyondellBasell AF’s total revenues in 2009.

Sales of our PO, its co-products, and its derivatives are made by us, Nihon Oxirane (a joint venture of which we own 40%) and their affiliates directly, and through distributors and independent agents located in the Americas, Europe, the Middle East, Africa and the Asia Pacific region. We have centralized certain sales and order fulfillment functions in regional customer service centers located in Houston, Texas, Rotterdam, The Netherlands, and Hong Kong, China. We also have long-term contracts for distribution and logistics to ensure reliable and efficient supply to our customers. PO, PG and SM are transported by barge, ocean going vessel, pipeline, rail car and tank truck. BDO is primarily transported by tank truck and rail car.

Acetic acid and vinyl acetate monomer (“VAM”) are manufactured at a facility in La Porte, Texas, and are consumed internally, sold worldwide generally under multi-year contracts and sold on a spot basis. Acetic acid and VAM are shipped by barge, ocean going vessel, pipeline, rail car and tank truck. We have bulk storage

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arrangements in Europe and South America to better serve our customers’ requirements in those regions. Sales are made through a direct sales force, agents and distributors. Sales of acetyls, including VAM, collectively accounted for less than 10% of LyondellBasell AF’s total revenues in 2009.

We estimate based on published data that worldwide demand in 2009 for acetic acid and VAM was 20 billion pounds and 10 billion pounds, respectively.

Methanol is produced at a La Porte, Texas facility owned by La Porte Methanol Company, our 85%—owned joint venture with Linde. Each party to the joint venture receives its respective share of the methanol production. Our acetyls business uses the methanol as a raw material for acetic acid and also sells the methanol under annual contracts and on a spot basis to large U.S. customers. The product is shipped by barge and pipeline.

Ethyle oxide (“EO”) or EO equivalents, and EO’s primary derivative, ethylene gylcol (“EG”), are produced at a wholly owned facility located in Bayport, Texas. The Bayport facility also produces other derivatives of EO, principally glycol ethers and ethanolamines. A second facility, PD Glycol, was a 50/50 joint venture with DuPont and held an EO/EG asset in Beaumont, Texas. The plant has not operated since it was damaged during Hurricane Ike in September 2008 and will not operate in the future. By order dated August 11, 2009, the Bankruptcy Court approved an agreement between Equistar, PD Glycol and DuPont, which provided, among other things, that (i) certain agreements between Equistar Chemicals LP and PD Glycol are rejected; (ii) Equistar Chemicals LP’s general partnership interest in PD Glycol is converted into a limited partnership interest; and (iii) PD Glycol will be dissolved as expeditiously as commercially practicable.

EO and EG typically are sold under multi-year contracts, with market-based pricing. Glycol ethers and ethanolamines are sold primarily into the solvent and distributor markets at market prices. EO is shipped by rail car, and its derivatives are shipped by rail car, truck, isotank or ocean-going vessel. EO and EG sales accounted for less than 10% of LyondellBasell AF’s total revenues in 2009.

The vast majority of the ethylene derivative products are sold in North America and Asia, primarily through our sales organizations.

Joint Venture Relationships

The following table describes our I&D segment’s significant manufacturing joint venture relationships.

Name	Location	Other Parties	LyondellBasell Ownership		Product	2009 Capacity (1) (in millions of pounds unless noted)
U.S. PO Joint Venture	Channelview, TX	Bayer	—		Propylene Oxide	1,500(3)
	Bayport, TX
European PO Joint Venture	Rotterdam, The Netherlands	Bayer	50	%	Propylene Oxide Styrene Monomer	690 1,480
PO/ SM II LP	Channelview, TX	IPIC & BASF	—		Styrene Monomer	700(3)
Nihon Oxirane	Chiba, Japan	Sumitomo	40	%	Propylene Oxide	385
					Styrene Monomer	830
					Propylene Glycol	220
Ningbo ZRCC LCC Ltd. (2)	Ningbo, China	ZRCC	27	%	Propylene Oxide	600
					Styrene Monomer	1,300
La Porte Methanol	La Porte, TX	Linde	85	%	Methanol	190 million gallons

(1) Unless otherwise noted, represents the joint venture’s total capacity and not our proportional capacity.

(2) Anticipated startup in mid-2010.

(3) Amount of off-take by other parties in the joint venture.

On March 31, 2000, we contributed our Channelview, Texas, PO/SM I facility and our Bayport, Texas, PO/TBA facilities to the U.S. PO Joint Venture. Bayer’s ownership interest in the U.S. PO Joint Venture represented ownership of 1.5 billion pounds of PO production annually as of December 31, 2009. We take, in-kind, the

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remaining PO production and all co-product (SM and TBA) production from the U.S. PO Joint Venture. As part of the transaction, Lyondell Chemical and Bayer also formed a separate joint venture, the PO Technology Joint Venture, through which Bayer was granted a non-exclusive and non-transferable right to use certain of our proprietary PO technology in the U.S. PO Joint Venture. Under the terms of operating and logistics agreements, we operate the U.S. PO Joint Venture plants and arrange and coordinate the logistics of PO delivery from the plants. We do not share marketing or product sales with Bayer under the U.S. PO Joint Venture.

Lyondell Chemical and Bayer also formed a separate 50/50 joint venture, the European PO Joint Venture, for the construction and ownership of the Maasvlakte PO/SM plant near Rotterdam, The Netherlands, which began production in 2003. Each party takes in-kind 50% of the PO and SM production of the European PO Joint Venture.

Lyondell Chemical’s PO/SM II plant at the Channelview, Texas complex was created through a joint venture among Lyondell Chemical and unrelated equity investors. Lyondell Chemical retains a majority interest in the PO/SM II plant and is the operator of the plant. A portion of the SM output of the PO/SM II plant is committed to the unrelated equity investors under processing agreements. As of December 31, 2009, Lyondell Chemical had 700 million pounds of SM capacity committed to unrelated equity investors under these processing arrangements.

We have a 40% equity interest in Nihon Oxirane, a joint venture in Japan formed by Lyondell Chemical and Sumitomo. Since 1976, Nihon Oxirane has operated a PO/SM plant in Chiba, Japan. In 2005, Nihon Oxirane began production at its new PG plant in Chiba, Japan, with an annual PG capacity of 220 million pounds. Through the formation of Nihon Oxirane Company Asia (“NOCA”), we also will participate in marketing most of the PO capacity from a new 440 million pound facility constructed in Rabigh, Saudi Arabia by Sumitomo and Saudi Aramco, which began operations at the end of 2009. We have a 40% equity interest in NOCA.

During 2007, Lyondell Chemical announced the formation of a joint venture with Sinopec Zhenhai Refining & Chemical Co., Ltd. (“ZRCC”) for the construction of a world-scale PO/SM facility in Ningbo, China, with completion of construction expected in 2010. The new facility will have an annual PO production capacity of 600 million pounds and an annual SM production capacity of 1.3 billion pounds. Lyondell Chemical contributed a license right to its proprietary PO/SM technology in exchange for approximately 27% ownership of the venture. We will jointly market all the PO manufactured by the new facility with ZRCC.

We also have a multi-year processing agreement, entered into by Lyondell Chemical and Shiny, whereby we provide the raw materials used to produce the PGE at Shiny’s PGE plant in Tainan, Taiwan. Shiny’s PGE plant, which is based on our technology, commenced production during 2007.

Raw Materials

The primary raw materials used for the production of PO and its co-products and derivatives are propylene, mixed butane, ethylene and benzene. The market prices of these raw materials historically have been related to the price of crude oil and its principal refinery derivatives, NGLs and natural gas, as well as market conditions for these materials. These materials are received in bulk quantities via pipeline or ocean going vessels.

In the U.S., we obtain a large portion of our propylene, benzene and ethylene raw materials needed for the production of PO and its co-products and derivatives internally from our ethylene and ethylene co-products facilities. Raw materials for the non-U.S. production of PO and its co-products and derivatives primarily are obtained from unrelated parties. We consume a significant portion of our internally-produced PO in the production of PO derivatives.

We consume large volumes of mixed butane for the production of PO and its co-products and derivatives. We have invested in facilities, or entered into processing agreements with unrelated parties, to convert the widely available commodity, normal butane, to isobutane. We also are a large consumer of oxygen for our PO/TBA plants.

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The cost of raw materials generally is the largest component of total production cost for PO and its co-products and derivatives. Generally, the raw material requirements for these businesses are purchased at market-based prices from numerous suppliers in the U.S. and Europe with which we have established contractual relationships, as well as in the spot market. The raw materials for these businesses are, in general, commodity chemicals with ready availability at competitive prices. Historically, raw material availability has not been an issue. However, in order to enhance reliability and competitiveness of prices and rates for supplies of raw materials, industrial gas and other utilities, we have long-term agreements and other arrangements for a substantial portion of our production requirements.

The primary raw materials required for the production of acetic acid are carbon monoxide and methanol. We purchase the carbon monoxide from Linde pursuant to a long-term contract under which pricing is based primarily on cost of production. La Porte Methanol Company, our 85%-owned joint venture, supplies all of the methanol requirements for acetyls production. Natural gas is the primary raw material required for the production of methanol.

In addition to ethylene, acetic acid is a primary raw material for the production of VAM. For the production of VAM, we obtain our entire requirements for acetic acid and ethylene from our internal production. In 2009, we used a large percentage of our acetic acid production to produce VAM.

Industry Dynamics / Competition

With respect to PO, its co-products and derivatives, competition is based on a variety of factors, including product quality and price, reliability of supply, technical support, customer service and potential substitute materials. Profitability is affected by the worldwide level of demand along with price competition, which may intensify due to, among other things, new industry capacity. From 2010 to 2014, approximately 1.9 billion pounds of new industry PO capacity, or approximately 10% of 2009 worldwide PO capacity, is expected to be added, with approximately half of these additions in the Middle East and China. During this period, the average annual world demand growth is expected to be approximately 4%. However, demand is a function of worldwide economic growth, which fluctuates. The PO demand growth rate also could be impacted by further development of alternative bio-based PO derivatives. It is not possible to predict accurately the changes in raw material costs, market conditions and other factors that will affect industry profitability in the future. After a relatively strong start in 2008, demand in late 2008 fell rapidly as the global economies slid quickly into a deep recession. The relatively depressed conditions continued through 2009 and are expected to continue into 2010. Worldwide PO operating rates were approximately 70% during 2009, and our current forecast is that it will rise to 92% in 2014. Capacity share figures for us and our competitors, discussed below, are based on completed production facilities and, where appropriate, include the proportionate share of joint venture facilities and certain supply arrangements.

Based on published data regarding PO capacity, we believe that, including our share of Nihon Oxirane and the European PO Joint Venture, we are the second largest producer of PO worldwide, with approximately 13% of the total worldwide capacity for PO. Our major worldwide competitors for sales of PO and its derivatives are Dow and Shell.

Based on published data regarding SM capacity, we believe that we are one of the largest producers of SM worldwide, with approximately 5% of the total worldwide capacity for SM as of December 31, 2009. We compete worldwide for sales of SM with many marketers and producers, among which are BASF, Dow, Shell and Total.

We believe that we are the fourth and fifth largest producer of acetic acid and VAM, respectively, each with approximately 5% of the total worldwide capacity as of December 31, 2009. Our primary competitors include Celanese and BP for acetic acid and Celanese, ZRCC, Dow and DuPont for VAM.

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Technology Segment

Overview

Access to appropriate production process technology and catalysts is a key requirement for polyolefin and chemicals producers. Our Technology segment develops and licenses industry leading polyolefin process technologies and provides associated engineering and other services. Our Technology segment further develops, manufactures and sells polyolefin catalysts, providing polyolefin manufacturers with the capability to produce polyolefins. We market our process technologies and our polyolefin catalysts to external customers and also use them for our own manufacturing operations. Our ability to offer a complete PE and polypropylene technology portfolio enables polyolefin manufacturers to have a single provider for polyolefin processes technologies and catalyst systems. In 2009, our Technology segment generated operating revenues of $436 million (excluding inter-segment revenue).

Our process licenses are structured to provide a standard core technology, with individual customer needs met by adding customized modules that provide the required capabilities to produce the defined production grade slate and plant capacity. For licenses involving proven technologies, we typically receive the majority of our license fees in cash at or before the date of customer acceptance. For these licenses, we generally recognize revenue upon delivery of the process design package and the related license. Each license agreement includes long-term confidentiality provisions to protect the technology. In addition to the basic license agreement, a range of services can also be provided including project assistance, training, start-up assistance of the plant and possible supply of resins from our production for pre-marketing by the licensee. We may also offer marketing and sales services. In addition, licensees generally continue to purchase polyolefin catalysts that are consumed in the production process, generally under long-term catalyst supply agreements with us.

The chart below shows our position and installed capacity share in key polyolefin technology businesses:

Source: LyondellBasell AF’s internal estimates

Note: Capacities are as of December 31, 2008.

Process Technology Licensing

We are a leading licensor of polyolefin process technologies. Our polypropylene licensing portfolio includes our Spheripol and the more recently introduced Spherizone process technologies and the Metocene technology.

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Our PE licensing process portfolio focuses on the Lupotech T (high pressure tubular process for LDPE production), the Lupotech A (autoclave process mainly for ethylene vinyl acetate (“EVA”) copolymers), Hostalen (slurry process for multimodal HDPE production), and Spherilene (gas phase process for LLDPE to HDPE production) processes, all of which cover a wide range of PE products for the worldwide market. We also license a portfolio of chemical process technologies in the fields of olefin recovery, olefin conversion, aromatics extraction and acetyls.

Since the formation of Basell in 2000 and through December 31, 2009, we have sold licenses representing approximately 25 million tons of polyolefin capacity, which represents more than 40% of worldwide capacity growth. In 2009, we entered into licensing agreements representing more than one million tons of polyolefin capacity. Process licenses accounted for less than 10% of LyondellBasell AF’s total revenues in 2009.

Our Technology segment also provides technology services to our licensees. Such services include training and start-up assistance, engineering services for process and product improvements and manufacturing troubleshooting.

Polypropylene Process Technology

We license several polypropylene process technologies, including Spheripol, Spherizone and Metocene.

Our Spheripol technology produces homopolymers and random copolymers in a single stage and impact copolymers in a multi-stage process. We believe that Spheripol is the most widely used polypropylene production process in the world.

Spherizone, our newest process, commercialized in 2002 and introduced for licensing in 2003, is able to produce higher quality polypropylene and a wider product grade range than existing processes at similar operating cost. The Spherizone process introduces a single reactor concept, in which bimodality is created within one single reactor operating at different conditions between the different zones inside the reactor. The final product is a result of an intimate mixing of the different property determining phases at a “macro molecular” level.

Metocene polypropylene technology was introduced for licensing in 2006. This technology is used in the production of polypropylene based on single-site catalyst systems. Metocene technology can be adapted to virtually any polypropylene process, and its versatility expands the end use product range of conventional polypropylene. In 2009, Polymirae became the first licensee to commence commercial production of Metocene.

Polyethylene Processes Technology

The different families of PE (HDPE, LDPE and LLDPE) require specialized process technologies for production, which are available through our broad PE process licensing portfolio. The portfolio includes Lupotech, Spherilene and Hostalen process technologies.

Lupotech T is a leading high pressure, tubular reactor process for the production of LDPE. This high pressure technology does not use a catalyst system typical for low pressure processes, but rather peroxide-initiators to polymerize ethylene and optionally vinyl acetate (VAM) for EVA-copolymers. By adjusting the temperature profile along the reactor and adding different peroxide mixtures, process conditions are modified to produce the desired products. The process produces the entire melt flow ratio and density range of LDPEs with low investment costs and low utilities and raw material demand.

Lupotech A is a high pressure autoclave process using peroxide mixture for polymerization and is mainly utilized for specialty LDPE and for the production of EVA copolymers with high VAM content.

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Spherilene is an advanced swing gas phase process for the production of LLDPE, MDPE and monomodal and bimodal HDPE. This process represents a highly flexible technology platform for production of grades from low-cost commodity to the most sophisticated high performance PE. The process provides easier and lower cost product grade change and reduces environmental impact.

Hostalen is a leading low-pressure slurry cascade process for the production of high-end multimodal HDPE. This is desirable because a different product structure can be produced in each stage of the polymerization process, yielding products that are tailored for sophisticated end use applications in three main application fields: pipe, blow molding and film.

Chemical Process Technologies

We also offer for licensing several chemical process technologies, including Vacido, Glacido, Isomplus and Superflex.

Vacido is a fixed-bed tubular process for the production of high-quality VAM, from acetic acid and ethylene. It utilizes a proprietary heterogeneous catalyst system.

Glacido is a process technology for manufacturing of acetic acid by carbonylation of methanol. It utilizes a Rhodium-based homogeneous catalyst system.

Isomplus is a skeletal isomerisation process to convert linear olefins into branched ones. A zeolite-based catalyst provides conversion of normal butenes and pentenes to isobutylene and isoamylene, respectively.

Superflex technology is a process for the production of propylene from less refined feedstock such as coker or fluid catalytic cracking unit light gasoline as well as mixed C₄ and C₅ streams. The process is based on a fluidized catalytic reactor.

We also offer process technology for recovery of butadiene, C₅ chemicals and aromatics.

Polyolefin Catalysts

Under the Avant brand, we are a leading manufacturer and supplier of polyolefin catalysts. Polyolefin catalysts accounted for less than 10% of LyondellBasell AF’s total revenues in 2009. As a large polyolefin producer, approximately 30% of catalyst sales are inter-divisional. Polyolefin catalysts are packaged and shipped via road, sea or air to our customers.

We produce catalysts at two facilities in Germany, one facility in Italy and one facility in the U.S. Our polyolefin catalysts, which are consumed during the polyolefin production process and define the processing and mechanical properties of polyolefins, provide enhanced performance for our process technologies and are being developed to enhance performance when used in third-party process technologies. We also supply catalysts for producing sophisticated PEs.

One of our core competencies is our strength in the manufacturing and use of proprietary catalyst supports. Supports are a key ingredient in the production of high efficiency polyolefin catalysts that enhance process performance.

Our customers continually purchase polyolefin catalysts because they are consumed during the polyolefin production process. New licensees generally elect to enter into long-term catalyst supply agreements with us, as customers look primarily for top performance over an extended period of time and compatibility with the acquired technology. Our advanced catalysts provide enhanced performance for our process technologies and may also enhance performance when used in third-party processes.

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Sales & Marketing

In 2009, no single Technology segment customer accounted for 10% or more of LyondellBasell AF’s total revenues. We market our process technologies and catalysts to external customers and also use them for our own polyolefin manufacturing operations. Our ability to offer both PE and polypropylene technologies enables polyolefin manufacturers to have a single provider for polyolefin processes technologies and catalyst systems. We have a marketing and sales force dedicated to the Technology segment, including catalyst sales and customer technical support for licensees.

Industry Dynamics / Competition

We believe that competition in the polyolefin process licensing industry is based on the quality and efficiency of the process technology, product performance and product application, complemented by customer service and technical support. We are the leading licensor of polypropylene process technologies, and we believe we are the only licensor offering the full range of process technologies for production of all polypropylene and PE product families. Since the formation of Basell in 2000 through December 31, 2009, we have sold licenses representing approximately 25 million tons of capacity based on its six process technologies to polyolefin manufacturers. We estimate that approximately 43% of polypropylene and 35% of PE worldwide licensed capacity from 2003 through 2009 use our technologies. As of December 31, 2009, we estimate that over 200 polyolefin production lines use our licensed process technologies. Our major competitors in polypropylene technologies licensing are Dow Chemical, INEOS, Novelen Technology Holdings and Mitsui Chemicals. Our major competitors in PE technologies licensing are ChevronPhillips, INEOS, Mitsui Chemicals and Univation Technologies.

We are one of the world’s largest manufacturers and suppliers of polypropylene catalysts. We also supply catalysts for producing sophisticated PEs. Our major competitors in the worldwide catalyst business are Dow Chemical, BASF, Mitsui Chemicals, Toho Catalyst and WR Grace.

Research and Development

We develop and commercialize state-of-the-art chemicals and polyolefin process technologies, catalysts and products worldwide.

Our research and development activities are designed to improve our existing products and discover and commercialize new materials, catalysts and processes. These activities focus on product and application development, process development, catalyst development and fundamental polyolefin focused research.

We have four research and development facilities, each with a specific focus. Our facility in Frankfurt, Germany focuses on PE and metallocene catalysts. Our facility in Ferrara, Italy focuses on polypropylene, PB-1, PP compounds and Ziegler-Natta catalysts. Our facility in Cincinnati, Ohio focuses on polyolefin product and application development in North America. Our center in Newtown Square, Pennsylvania develops chemical catalysts and technologies.

Our financial performance and market position depend in substantial part on our ability to improve our existing products and discover and commercialize new materials, catalysts and processes. Our research and development activities are designed to deliver innovative and commercially relevant technologies at a competitive cost to our business segments. Our research and development is organized by core competence communities that manage and provide resources for projects, intellectual property and catalyst manufacturing. These include:

• Catalyst systems: catalyst research to enhance our polyolefin polymer properties, catalyst and process performance, including Ziegler Natta, chromium and metallocene catalyst.

• Manufacturing platforms: research to advance process development and pilot plant integration to industrialize technology with increased polymer properties.

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• Product and application development: working directly with customers to provide new products with enhanced properties.

• Processing testing and characterization: research to increase knowledge on polymers from production to processability.

• Process design and support: research to reduce production and investment costs while improving processability.

• Chemicals and fuels technologies: research to develop and improve catalysts for existing chemical processes and improve process unit operations.

We have core research and development projects that focus on initiatives in line with our strategic direction. These projects are closely aligned with our businesses and customers with a goal of commercialization of identified opportunities. Core projects currently include research and development in areas such as:

• Polypropylene product development with emphasis on the newly implemented Spherizone process technology.

• Next generation products from existing and in-development processes, using advanced catalyst technologies including metallocenes.

• Enhanced catalyst and process opportunities to extend gas phase PE technology.

• Enhanced catalysts and process opportunities for selected chemical technologies.

As of March 1, 2010, approximately 960 of our employees are directly engaged in research and development activities.

In addition to our research and development activities, we provide technical support to our customers. Our technical support centers are located in Bayreuth, Germany; Geelong, Australia; Lansing, Michigan; and Tarragona, Spain.

In 2009, 2008 and 2007, our research and development expenditures were $145 million, $194 million and $135 million, respectively. A portion of these expenses are related to technical support and customer service and are allocated primarily to the segments.

Intellectual Property

We maintain an extensive patent portfolio and continue to file new patent applications in the U.S. and other countries. As of December 31, 2009, we owned approximately 6,800 patents and patent applications worldwide. Our patents and trade secrets cover our processes, products and catalysts and are significant to our competitive position, particularly with regard to propylene oxide, intermediate chemicals, petrochemicals, flavor and fragrance chemicals, polymers and our process technologies such as Spheripol, Spherizone, Hostalen, Spherilene, Lupotech, Glacido, Vacido, Isomplus and Avant catalyst. We own globally registered and unregistered trademarks including the “LyondellBasell,” “Lyondell,” “Equistar” and “Houston Refining” trade names. While we believe that our intellectual property provides competitive advantages, we do not regard our businesses as being materially dependent upon any single patent, trade secret or trademark. Some of our heritage production capacity operates under licenses from third parties.

We rely on patent, copyright and trade secret laws of the U.S. and other countries to protect our investment in research and development, manufacturing and marketing. Our employees working on these technologies are required to enter into agreements, or are covered by other arrangements such as collective bargaining agreements, providing for confidentiality and the assignment of rights to inventions made by them while employed by us.

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Environmental Capital Expenditures

We (together with the industries in which we operate) are subject to extensive national, state, local and foreign environmental laws, regulations, directives, rules and ordinances concerning, and are required to have permits and licenses regulating, emissions to the air, discharges onto land or waters and the generation, handling, storage, transportation, treatment, disposal and remediation of hazardous substances and waste materials. In some cases, compliance with environmental, health and safety laws and regulations can only be achieved by capital expenditures. Regulatory-related capital expenditures at our facilities were $250 million, $202 million and $239 million in 2009, 2008 and 2007, respectively, and we estimate such expenditures to be approximately $233 million in 2010 and $229 million in 2011.

Our actual capital expenditures in 2009 include increased spending on projects related to air emission reductions, low sulfur fuels and wastewater management, principally at the U.S. Gulf Coast plants. Under the U.S. Clean Air Act Amendments (“Clean Air Act”), an eight-county gulf coast region in Texas was designated a severe non-attainment area for ozone by the U.S. Environmental Protection Agency (“EPA”). Emission reduction controls were installed at the Houston Refinery and each facility in the region to comply with the November 2007 deadline. Also under the Clean Air Act, the EPA adopted new standards for gasoline that required refiners to produce a low sulfur gasoline by 2006 and ultra low sulfur diesel by the end of 2009. The Houston Refinery met the 2006 low sulfur gasoline compliance target and complied with a requirement to produce 80% of on-road diesel fuel as ultra low sulfur diesel by June 2006.

Stricter environmental, safety and health laws, regulations and enforcement policies could result in increased environmental capital expenditures by us above current estimates. See “Item 1A. Risk Factors—Risks Relating to our Business—Our operations and assets are subject to extensive environmental, health and safety and other laws and regulations, which could result in material costs or liabilities.” For additional information regarding environmentally related capital expenditures, see “Item 2. Financial Information—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Liabilities for Environmental Remediation Costs.”

Employee Relations

As of December 31, 2009, we had approximately 14,860 full-time and part-time employees. Of these, approximately 6,120 (41%) were located in North America, approximately 7,750 (52%) were located in Europe and approximately 990 (7%) were in other locations.

As of December 31, 2009, approximately 930 of our employees located in North America are represented by labor unions. Approximately 50% of our unionized North American employees are covered by a collective bargaining agreement between Houston Refining LP and the United Steelworkers Union, which became effective on January 20, 2010 and expires on January 31, 2012.

The vast majority of our employees in Europe and South America are subject to staff council or works council coverage or collective bargaining agreements.

In addition to our own employees, we use the services of contractors in the routine conduct of our businesses. We believe our relations with our employees are good.

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ITEM 1A. RISK FACTORS

The risks and uncertainties that we describe below are not the only ones we face. Additional risks and uncertainties that we are not aware of or that we currently believe are immaterial may also adversely affect our business, financial condition or results of operations. If any of the possible events described below occur, our business, financial condition or results of operations could be materially and adversely affected.

This Registration Statement also contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including the risks described below and elsewhere in this Registration Statement. See “Item 1. Business,” “Item 2. Financial Information—Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Forward-Looking Statements.”

Risks Relating to Our Business

Disruptions in financial markets and the economic downturn continue to adversely affect our customers, and, therefore, our business.

Our results of operations have been and continue to be materially affected by adverse conditions in the financial markets and depressed economic conditions generally, both in the U.S. and elsewhere around the world. The current economic downturn in the businesses and geographic areas in which we sell our products has substantially reduced demand for our products and resulted in decreased sales volumes. Recently, concerns over inflation, energy costs, geopolitical issues, the availability and cost of credit and the instability of financial and credit markets in the U.S. and worldwide have contributed to increased volatility and diminished expectations for the global economy and markets. These factors, combined with volatile raw material prices, declining business and consumer confidence, increased unemployment and continuing financial market fluctuations, have precipitated a worldwide economic recession that could continue for an extended period of time. The recession has adversely affected our business because of a reduction in worldwide demand for our products, in particular from our customers in industrial markets generally and specifically in the automotive and housing industries. As a result of the weaker business environment, we have shut down certain production facilities and performed impairment reviews of our remaining productive assets. These actions have resulted in charges of $696 million for asset write-offs, primarily related to a lease rejection, and $228 million for impairment of the carrying value of our investments in certain joint ventures in 2009 and $5.207 billion of asset impairments during 2008, including a $4.982 billion write-off of all our remaining goodwill in 2008. Additional asset impairments could occur in future periods. Adverse changes in our future estimated operating results could result in non-cash impairment charges in the future related to our assets.

Moreover, many of our customers and suppliers rely on access to credit to adequately fund their operations. Disruptions in financial markets and economic slowdown may adversely impact the ability of our customers to finance the purchase of our products as well as the creditworthiness of those customers. These same factors may also impact the ability and willingness of suppliers to provide us with raw materials for our business.

The cyclicality and volatility of the industries in which we participate may cause significant fluctuations in our operating results.

Our business operations are subject to the cyclical and volatile nature of the supply-demand balance in the chemical and refining industries, and our future operating results are expected to continue to be affected by this cyclicality and volatility. These industries historically have experienced alternating periods of capacity shortages leading to tight supply conditions, causing prices and profit margins to increase, followed by periods when substantial capacity is added, resulting in oversupply, declining capacity utilization rates and declining prices and profit margins. In addition to changes in the supply and demand for products, the volatility these industries experience occurs as a result of changes in energy prices and changes in various other economic conditions around the world. The cyclicality and volatility of the chemical and refining industries results in significant fluctuations in profits and cash flow from period to period and over the business cycles.

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The global economic and political environment continues to be uncertain, and a decline in demand could place further pressure on our results of operations. In addition, new capacity additions, especially in Asia and the Middle East, are expected to lead to another period of oversupply and low profitability. The timing and extent of any changes to currently prevailing market conditions is uncertain and supply and demand may be unbalanced at any time. As a consequence, we are unable to accurately predict the extent or duration of future industry cycles or their effect on our business, financial condition or results of operations, and can give no assurances as to any predictions made herein with respect to the timing, extent or duration of future industry cycles.

As a result of such industry cycles, we may be required to reduce production at or idle certain facilities for an extended period of time or exit a business because of an oversupply of a particular product and/or a lack of demand for that particular product, or high raw material prices, which makes production uneconomical. We may also reduce production at certain of our facilities because we have either fixed or minimum off-take arrangements with joint ventures or third parties with respect to other facilities. Any decision to permanently close facilities or exit a business would result in impairment and other charges to earnings. Temporary outages sometimes last for several quarters or, in certain cases, longer, and could cause us to incur costs, including the expenses of maintaining and restarting these facilities. In addition, even though we may need to reduce production, we may still be required to continue to purchase or pay for utilities or raw materials under take-or-pay supply agreements. It is possible that factors such as increases in raw material costs or lower demand in the future will cause us to reduce operating rates, idle facilities or exit uncompetitive businesses.

Costs and limitations on supply of raw materials and energy may result in increased operating expenses.

The costs of raw materials and energy represent a substantial portion of our operating expenses, and energy costs generally follow price trends of, and vary with the market conditions for, crude oil and natural gas. These price trends may be highly volatile and cyclical. In the past, raw material and energy costs have experienced significant fluctuations that adversely affected our business segments. Moreover, fluctuations in currency exchange rates can add to this volatility.

There have been, and will likely continue to be, periods of time when we are unable to pass raw material and energy cost increases on to customers quickly enough to avoid adverse impacts on our results of operations. Our results of operations have been impacted by the volatility of these costs. Customer consolidation also has made it more difficult to pass along cost increases to customers. Cost increases also may increase working capital needs, which could reduce our liquidity and cash flow. In addition, when raw material and energy costs increase rapidly and are passed along to customers as product price increases, the credit risks associated with certain customers can be compounded. To the extent we increase our product sales prices to reflect rising raw material and energy costs, demand for products may decrease as customers reduce their consumption or use substitute products, which may have an adverse impact on our results of operations. See “—We sell products in highly competitive global markets and face significant price pressures.”

In addition, higher North American and European natural gas prices relative to natural gas cost-advantaged regions, such as the Middle East, could diminish the ability of many chemical producers to compete internationally since the price of natural gas and NGLs affects a significant portion of the industry’s raw materials and energy sources. This environment may cause a reduction in our exports from North America and Europe, and has in the past reduced, and may in the future reduce, the competitiveness of U.S. and European producers. This Middle East production may increase the competition for product sales within North America and Europe with respect to product which could otherwise be sold in other geographic regions if not for such regions’ natural gas cost advantage. This may result in lower margins in North America and Europe in the future.

Furthermore, across our business, there are a limited number of suppliers for some of our raw materials and utilities and, in some cases, the number of sources for and availability of raw materials and utilities is specific to the particular geographic region in which a facility is located. It is also common in the chemical and refining industries for a facility to have a sole, dedicated source for its utilities, such as steam, electricity and gas. Having

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a sole or limited number of suppliers may result in our having limited negotiating power, particularly in the case of rising raw material costs. Alternatively, where we have multiple suppliers for a raw material or utility, these suppliers may not make up for the loss of a major supplier. Any new supply agreements we enter into may not have terms as favorable as those contained in our current supply agreements. For some of our products, the facilities or distribution channels of raw material suppliers and utilities suppliers and our production facilities form an integrated system. This is especially true in the U.S. Gulf Coast where the infrastructure of the chemical and refining industries is tightly integrated such that a major disruption of supply of a given commodity or utility can negatively affect numerous participants, including suppliers of other raw materials.

If one or more of our significant raw material or utility suppliers were unable to meet its obligations under present supply arrangements, raw materials become unavailable within the geographic area from which they are now sourced, or supplies are otherwise disrupted, our businesses could suffer reduced supplies or be forced to incur increased costs for our raw materials or utilities, which would have a direct negative impact on plant operations. For example, hurricanes have in the past negatively affected crude oil and natural gas supplies, as well as supplies of other raw materials, utilities (such as electricity and steam), and industrial gases contributing to increases in operating costs and, in some cases, disrupting production. In addition, hurricane-related disruption of vessel, barge, rail, truck and pipeline traffic in the U.S. Gulf Coast area would negatively affect shipments of raw materials and product.

In addition, with increased volatility in raw material costs, our suppliers could impose more onerous terms on us, resulting in shorter payment cycles and increasing our working capital requirements.

External factors beyond our control may cause fluctuations in demand for our products and in our prices and margins.

External factors beyond our control may cause volatility in the price of raw materials and other operating costs, as well as significant fluctuations in demand for our products, and can magnify the impact of economic cycles on our businesses. Examples of external factors include:

• supply of and demand for crude oil and other raw materials;

• changes in customer buying patterns and demand for our products;

• general economic conditions;

• domestic and international events and circumstances;

• competitor actions;

• governmental regulation; and

• severe weather and natural disasters.

Also, we believe that worldwide events have had in recent years, and may continue to have, an impact on our businesses. We currently license our technology to customers in the Middle East and have three joint ventures in Saudi Arabia. We also have offices in Egypt, Dubai and Turkey and third-party commercial representatives throughout the Middle East. The uncertainty surrounding the continuing military action in Iraq and the threat of further armed hostilities or acts of terrorism may impact our businesses in the Middle East or elsewhere, or the businesses of our customers.

In addition, a number of our products are highly dependent on durable goods markets, such as the construction and automotive markets, which also are cyclical and impacted by many of the external factors referenced above. Many of our products are components of other chemical products that, in turn, are subject to the supply-demand balance of both the chemical and refining industries and general economic conditions. The recent volatility of prices for crude oil and natural gas resulted in more volatile raw material and utility costs as

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compared to prior years. The impact of the factors cited above and others beyond our control may once again contribute to a slowdown in the business cycle or impact economic recovery, reducing demand and lowering operating rates and, ultimately, reducing our profitability.

Further, volatility in costs and pricing can result in commercial disputes with customers and suppliers with respect to interpretations of complex contractual arrangements. Significant adverse resolution of any such disputes also could reduce our profitability.

We sell products in highly competitive global markets and face significant price pressures.

We sell our products in highly competitive global markets. Due to the commodity nature of many of our products, competition in these markets is based primarily on price and to a lesser extent on product performance, product quality, product deliverability, reliability of supply and customer service. As a result, we generally are not able to protect our market position for these products by product differentiation and may not be able to pass on cost increases to our customers.

In addition, we face increased competition from companies that may have greater financial resources and different cost structures or strategic goals than us, such as large integrated oil companies (many of which also have chemical businesses), government-owned businesses, and companies that receive subsidies or other government incentives to produce certain products in a specified geographic region. Increased competition from these companies, especially in our ethylene and refining businesses, could limit our ability to increase product sales prices in response to raw material and other cost increases, or could cause us to reduce product sales prices to compete effectively, which could reduce our profitability. Competitors that have greater financial resources than us may be able to invest significant capital into their businesses, including expenditures for research and development. In addition, specialty products we produce may become commoditized over time.

As a result of these competitive pressures, increases in raw material and other costs may not necessarily correlate with changes in prices for our products, either in the direction of the price change or in magnitude. In addition, our ability to increase product sales prices, and the timing of those increases, are affected by the supply-demand balances for our products, as well as the capacity utilization rates for those products. Timing differences in pricing between rising raw material costs, which may change daily, and contract product prices, which in many cases are negotiated only monthly or less often, sometimes with an additional lag in effective dates for increases, may reduce our profitability. Even in periods during which raw material prices decline, we may suffer decreasing profits if raw material price reductions occur at a slower rate than decreases in the selling prices of our products.

Interruptions of operations at our facilities may result in liabilities or lower operating results.

We own and operate large-scale facilities, and our operating results are dependent on the continued operation of our various production facilities and the ability to complete construction and maintenance projects on schedule. Material operating interruptions at our facilities, including interruptions caused by the events described below, may materially reduce the productivity and profitability of a particular manufacturing facility, or our business as a whole, during and after the period of such operational difficulties. In the past, we had to shut down plants on the U.S. Gulf Coast, including the temporary shutdown of the Houston Refinery, as a result of hurricanes striking the upper Texas coast.

In addition, because the Houston Refinery is our only North American refining operation, an outage at the refinery could have a particularly negative impact on our operating results. Unlike our chemical and polymer production facilities, which may at times have sufficient excess capacity to mitigate the negative impact of lost production at another similar facility of ours, we do not have the ability to increase refining production elsewhere in the U.S. in an effort to mitigate the negative impact on operating results resulting from an outage at the Houston Refinery.

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Although we take precautions to enhance the safety of our operations and minimize the risk of disruptions, our operations, along with the operations of other members of the chemical and refining industries, are subject to hazards inherent in chemical manufacturing and refining and the related storage and transportation of raw materials, products and wastes. These potential hazards include:

• pipeline leaks and ruptures;

• explosions;

• fires;

• severe weather and natural disasters;

• mechanical failure;

• unscheduled downtimes;

• supplier disruptions;

• labor shortages or other labor difficulties;

• transportation interruptions;

• remediation complications;

• chemical spills;

• discharges or releases of toxic or hazardous substances or gases;

• storage tank leaks;

• other environmental risks; and

• terrorist acts.

Some of these hazards may cause personal injury and loss of life, severe damage to or destruction of property and equipment and environmental damage, and may result in suspension of operations, the shutdown of affected facilities and the imposition of civil or criminal penalties. Furthermore, except for claims that are addressed by the Plan of Reorganization, we also will continue to be subject to present and future claims with respect to workplace exposure, exposure of contractors on our premises as well as other persons located nearby, workers’ compensation and other matters.

We maintain property, business interruption, product, general liability, casualty and other types of insurance, including pollution and legal liability, that we believe are in accordance with customary industry practices, but we are not fully insured against all potential hazards incident to our business, including losses resulting from natural disasters, war risks or terrorist acts. Changes in insurance market conditions have caused, and may in the future cause, premiums and deductibles for certain insurance policies to increase substantially and, in some instances, for certain insurance to become unavailable or available only for reduced amounts of coverage. If we were to incur a significant liability for which we were not fully insured, we might not be able to finance the amount of the uninsured liability on terms acceptable to us or at all, and might be obligated to divert a significant portion of our cash flow from normal business operations.

Further, because a part of our business involves licensing polyolefin process technology, our licensees are exposed to similar risks involved in the manufacture and marketing of polyolefins. Hazardous incidents involving our licensees, if they do result or are perceived to result from use of our technologies, may harm our reputation, threaten our relationships with other licensees and/or lead to customer attrition and financial losses. Our policy of covering these risks through contractual limitations of liability and indemnities and through insurance may not always be effective. As a result, our financial condition and results of operation would be adversely affected, and other companies with competing technologies may have the opportunity to secure a competitive advantage.

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Our crude oil supply agreement with PDVSA Oil is subject to the risk of enforcing contracts against non-U.S. commercial affiliates of a sovereign nation and political, force majeure and other risks.

Our crude oil supply agreement with PDVSA Oil provides for the purchase and supply of 215,000 barrels per day of heavy, high sulfur crude oil (approximately 81% of the refining capacity at the Houston Refinery). The contract runs through July 31, 2011 and automatically renews annually subject to either party’s right to terminate at the end of a term by giving 12 months’ notice. There are risks associated with reliance on PDVSA Oil for supplies of crude oil and with enforcing the provisions of contracts with companies such as PDVSA Oil that are non-U.S. commercial affiliates of a sovereign nation. For example, currently and from time to time in the past, PDVSA Oil has declared itself in a force majeure situation and subsequently reduced deliveries of crude oil purportedly based on announced OPEC production cuts. All of the crude oil supplied by PDVSA Oil under the crude oil contract is produced in Venezuela, and it is impossible to predict how governmental policies may change under the current or any subsequent Venezuelan government. In addition, there are risks associated with enforcing judgments of U.S. courts against entities whose assets are located outside of the U.S. and whose management does not reside in the U.S. Any modification, breach or termination of the crude oil contract, or any interruption in this source of crude oil on its current terms, may adversely affect us, as alternative crude oil supplies with similar margins may not always be available for purchase and may require modifications to the Houston Refinery that may result in significant costs or down time. In addition, the Venezuelan government has in recent times taken control of assets of foreign firms. As these firms pursue international arbitration awards as a result of these takings, our crude supply from PDVSA Oil could be threatened or interrupted by any awards in favor of these foreign firms that contemplate confiscation of PDVSA Oil crude supplies.

Certain activities related to a project raise compliance issues under U.S. law.

We have identified an agreement related to a project in Kazakhstan under which a payment was made that raises compliance concerns under the U.S. Foreign Corrupt Practices Act (the “FCPA”). We have engaged outside counsel to investigate these activities, under the oversight of a special committee established by the Supervisory Board, and to evaluate internal controls and compliance policies and procedures. We made a voluntary disclosure of these matters to the U.S. Department of Justice and are cooperating fully with that agency. We cannot predict the ultimate outcome of this matter at this time or whether we will discover other matters raising compliance issues, including under other statutes. In this respect, we may not have conducted our business in compliance with the FCPA and may not have had policies and procedures in place adequate to ensure compliance. We cannot reasonably estimate any potential penalty that may arise from these matters. We are in the process of adopting and implementing more stringent policies and procedures designed to ensure compliance. We cannot predict the ultimate outcome of this matter at this time since our investigations are ongoing. Violations of these laws could result in criminal and civil liabilities and other forms of relief that could be material to us.

Our non-U.S. operations conduct business in countries subject to U.S. economic sanctions and certain activities raise compliance issues under U.S. law.

Certain of our non-U.S. subsidiaries conduct business in countries subject to U.S. economic sanctions, including Iran. U.S. laws and regulations prohibit U.S. persons from engaging in business activities, in whole or in part, with sanctioned countries, organizations and individuals. The U.S. Congress is considering legislation that, if adopted, might result in U.S. sanctions being imposed on non-U.S. entities doing business with Iran. We intend to comply with all applicable sanctions laws and regulations and are adopting certain more significant compliance policies and procedures. These business activities present a potential risk that could subject the company to civil and criminal penalties. In connection with our continuing review of compliance risks in this area, we recently identified certain activities that raise compliance issues under applicable sanctions laws and regulations. We have made voluntary disclosure of these matters to the U.S. Treasury Department and we intend to cooperate fully with that agency. We cannot predict the ultimate outcome of this matter at this time since our investigations are ongoing. Violations of these laws could result in criminal and civil liabilities and other forms of relief that could be material to us.

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We are addressing certain significant deficiencies with respect to our internal controls.

In connection with our ongoing internal control reviews during the second half of 2009, our management identified three significant deficiencies in our internal control process relating to (i) supervision of freight contracting at our Houston Refinery, (ii) supervision and training of our internal accounting staff with respect to recording of our equity investments in joint ventures and (iii) inadequate support for review and reconciliation of a consolidation entry. While these deficiencies did not have a material impact on our financial results or operations, there can be no assurance that we will not identify internal control deficiencies in the future or that such deficiencies will not have a material impact on our operating results or financial statements.

Our operations could be adversely affected by labor relations.

Approximately 930 of our employees located in North America and the vast majority of our employees located in Europe and South America are represented by labor unions and work councils. Our operations have been in the past, and may be in the future, significantly and adversely affected by strikes, work stoppages and other labor disputes. Approximately 50% of our unionized North American employees are covered by a collective bargaining agreement between Houston Refining LP and the United Steelworkers Union, which became effective on January 20, 2010 and expires on January 31, 2012.

Our operations and assets are subject to extensive environmental, health and safety and other laws and regulations, which could result in material costs or liabilities.

We cannot predict with certainty the extent of future liabilities and costs under environmental, health and safety and other laws and regulations and whether any such liabilities and costs will be material. We also may face liability for alleged personal injury or property damage due to exposure to chemicals or other hazardous substances at our current or former facilities or chemicals that we manufacture, handle or own. In addition, because our products are components of a variety of other end-use products, we, along with other members of the chemical industry, are inherently subject to potential claims related to those end-use products. Although claims of the types described above have not historically had a material impact on our operations, a substantial increase in the success of these types of claims could result in the expenditure of a significant amount of cash by us to pay claims, and could reduce our operating results.

We (together with the industries in which we operate) are subject to extensive national, regional, state and local environmental laws, regulations, directives, rules and ordinances concerning, and are required to have permits and licenses regulating, emissions to the air, discharges onto land or surface waters or into groundwater and the generation, handling, storage, transportation, treatment, disposal and remediation of hazardous substances and waste materials. Many of these laws and regulations provide for substantial fines and potential criminal sanctions for violations, and such permits and licenses are subject to renewal, modification and in some circumstances, revocation. Some of these laws and regulations are subject to varying and conflicting interpretations. In addition, some of these laws and regulations require us to meet specific financial responsibility requirements. We generally expect that regulatory controls worldwide will become increasingly more demanding, including lower ozone ambient air standards in the U.S. and additional requirements related to climate change in the U.S. and other areas of the world where we operate, but cannot accurately predict future developments, such as increasingly strict environmental laws, and inspection and enforcement policies, as well as higher compliance costs, which might affect the handling, manufacture, use, emission or disposal of products, other materials or hazardous and non-hazardous waste. Stricter environmental, safety and health laws, regulations and enforcement policies could result in increased costs and liabilities to us or limitations on our operations, and could subject our handling, manufacture, use, reuse or disposal of substances or pollutants to more rigorous scrutiny than at present.

For example, under the European Union (“EU”) Integrated Pollution Prevention and Control Directive (“IPPC”), EU Member State governments are to adopt rules and implement an environmental permitting program relating to air, water and waste for individual facilities. While the EU countries are at varying stages in their

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respective implementation of the IPPC permit program, we have submitted all necessary IPPC permit applications required to date, and in some cases received completed permits from the applicable government agency. However, we do not know with certainty what future IPPC permits will require, or the costs of compliance with the IPPC permit program. The EU also has passed legislation governing the registration, evaluation and authorization of chemicals (Regulation on Registration, Evaluation, Authorisation and Restriction of Chemicals, or “REACH”). Under REACH, we are required to register chemicals and gain authorization for the use of certain substances. As an importer of chemicals and materials from outside the EU, we are subject to additional registration obligations. Legislation or rulings similar to REACH may also be adopted outside the EU Member States, which could add to our obligations. Some risk of environmental costs and liabilities is inherent in our operations and products, and there is no assurance that material costs and liabilities will not be incurred.

Environmental laws may have a significant effect on the nature and scope of cleanup of contamination at current and former operating facilities and at other sites at which hazardous substances generated by our current or former subsidiaries were disposed, the costs of transportation and storage of raw materials and finished products and the costs of the storage and disposal of wastewater. In the U.S., the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986 (“CERCLA”) may impose joint and several liability for the costs of remedial investigations and cleanup actions, as well as damages to natural resources, on the entities that generated hazardous substances, arranged for disposal of the hazardous substances, transported to or selected the disposal sites and the past and present owners and operators of such sites. All such responsible parties (or any one of them, including us) may be required to bear all of such costs regardless of fault, the legality of the original disposal or ownership of the disposal site. Under the EU Environmental Liability Directive, EU Member States may require the remediation of soil and groundwater contamination in certain circumstances, under the “polluter pays principle.” The scope of events and circumstances that could trigger remediation requirements and the level of remediation required vary from Member State to Member State. Similar environmental laws and regulations that have been or may be enacted in other countries outside of the U.S. may impose similar liabilities and costs upon us.

We also have liabilities under the U.S. Resource Conservation and Recovery Act and various U.S. state and non-U.S. government regulations related to several current and former plant sites. Some of our manufacturing sites have an extended history of industrial chemical manufacturing and use, including on-site waste disposal. We are aware of soil, groundwater and surface water contamination at some of our sites, and we may find contamination at other sites in the future. It is anticipated that corrective measures will be necessary to comply with federal and state requirements with respect to some of these facilities. We also are responsible under applicable environmental laws for a portion of the remediation of certain off-site waste disposal facilities. Prior to the filing of the Bankruptcy Cases, we contributed funds to the cleanup of several waste sites throughout the U.S. under CERCLA. We also have been named as a Potentially Responsible Party (“PRP”) under CERCLA or similar laws at several other sites. Our policy is to accrue remediation expenses when it is probable that such efforts will be required and the related expenses can be reasonably estimated. Estimated costs for future environmental compliance and remediation are necessarily imprecise due to such factors as the continuing evolution of environmental laws and regulatory requirements, the availability and application of technology, the identification of presently unknown remediation sites, uncertainties relating to the choice and cost of remedial actions at various sites and the allocation of costs among the potentially responsible parties under applicable statutes. Moreover, we are in the process of closing or shutting down more operating facilities, which may lead to increased remediation costs. In addition, the Debtors take the general position that claims and obligations owed to both governmental and private parties at sites not owned or leased by the Debtors as of the date of the petitions arose or are deemed to have arisen prior to January 6, 2009 and are general unsecured prepetition claims that will be discharged and satisfied through the Plan of Reorganization. The Debtors have ceased participation in remediation activities at such third party sites. Several government agencies have contested the Debtors’ position and actions. The Debtors’ general position is that they will continue to comply with certain ongoing environmental obligations at sites that are owned or leased by the Debtors as of the date of the petitions until resolution of their obligation is obtained through the Bankruptcy Cases. Whether, and the extent to which, those

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positions are supported or contested by adverse parties or upheld or rejected by the Bankruptcy Court in the Bankruptcy Cases adds further uncertainty to the Debtors’ assessment of their environmental liabilities. If actual expenditures exceed the amounts accrued, that could have an adverse effect on our results of operations and financial position. For further discussion regarding our environmental matters and related accruals, see “Item 1. Business—Environmental Capital Expenditures” and Note 25 to the Consolidated Financial Statements.

In addition to the matters described above, we are subject to other material regulatory requirements that could result in higher operating costs, such as regulatory requirements relating to the security of our facilities, and the transportation, exportation or registration of our products. Although we have compliance programs and other processes intended to ensure compliance with all such regulations, we are subject to the risk that our compliance with such regulations could be challenged. Non-compliance with certain of these regulations could result in the incurrence of additional costs, penalties or assessments that could be material.

We may incur substantial costs to comply with, and demand for our products may be reduced by, climate change legislation and regulatory initiatives.

There has been a broad range of proposed or promulgated state, national and international laws focusing on greenhouse gas (“GHG”) reduction. These proposed or promulgated laws apply or could apply in countries where we have interests or may have interests in the future. After the international meetings in Copenhagen, laws in this field continue to evolve and, while they are likely to be increasingly widespread and stringent, at this stage it is not possible to accurately estimate either a timetable for implementation or our future compliance costs relating to implementation.

Within the framework of EU emissions trading, we were allocated certain allowances of carbon dioxide per year for the affected plants of our European sites for the 2005 to 2007 period. For the second trading period (2008 to 2012), a number of our chemical plants are included in the Europe-wide trading system. We expect to incur additional costs as a result of the existing emissions trading scheme and could incur additional costs in relation to any future carbon or other greenhouse gas emission trading schemes. The costs could be higher to the extent that we decide to sell credits that we need in the future.

In the U.S., the EPA recently issued its final endangerment finding that is expected to lead to the agency promulgating federal GHG regulations and emissions limits under the Clean Air Act, even without Congressional action. The EPA has issued mandatory GHG reporting requirements which could lead to further obligations. The recent EPA action could be a precursor to further federal regulation of carbon dioxide emissions and other greenhouse gases, and may affect the outcome of other climate change lawsuits pending in United States federal courts in a manner unfavorable to our industry. In any event, some form of regulation is likely to be forthcoming at the United States federal level or the state level with respect to GHG emissions, and such regulation could result in the creation of additional costs in the form of taxes or required acquisition or trading of emission allowances.

Compliance with these or other changes in laws, regulations and obligations that create a GHG emissions trading scheme or GHG reduction policies generally could significantly increase our costs or reduce demand for products we produce. Depending on the nature of potential regulations and legislation, any future laws and regulations could result in increased compliance costs or additional operating restrictions, and could have a material adverse effect on our business and results of operations.

Legislative and other actions have eliminated substantially all U.S. demand for MTBE.

Substantially all refiners and blenders have discontinued the use of MTBE in the U.S., partly as a result of U.S. federal governmental initiatives to increase use of bio-ethanol in gasoline as well as some state legislation to reduce or ban the use of MTBE. Accordingly, we are marketing our U.S.-produced MTBE for use outside of the U.S. However, there are higher distribution costs and import duties associated with exporting MTBE outside the

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U.S., and the increased supply of MTBE may reduce profitability of MTBE in these export markets. Our U.S.-based and European-based MTBE plants generally have the flexibility to produce either MTBE or ETBE to accommodate market needs. We produce and sell ETBE to accommodate growing demand for bio-based fuels in Europe, Japan and elsewhere in the world. There is a risk that such markets may ban or stop the use of MTBE or ETBE. As a result, we may, in the future, be required to produce an alternative gasoline blending component to either MTBE or ETBE, the profit contribution of which may be significantly lower than that historically realized on MTBE or ETBE.

Our international operations are subject to exchange rate fluctuations, exchange controls, political risks and other risks relating to international operations.

We have substantial international operations, which are subject to the risks of doing business on a global level, including fluctuations in currency exchange rates, transportation delays and interruptions, war, terrorist activities, epidemics, pandemics, political and economic instability and disruptions, restrictions on the transfer of funds, the imposition of duties and tariffs, import and export controls, changes in governmental policies, labor unrest and current and changing regulatory environments. These events could reduce the demand for our products, decrease the prices at which we can sell our products, disrupt production or other operations, require substantial capital and other costs to comply, and/or increase security costs or insurance premiums, all of which could reduce our operating results. In addition, we obtain a substantial portion of our principal raw materials from international sources that are subject to these same risks. Our compliance with applicable customs, currency exchange control regulations, transfer pricing regulations or any other laws or regulations to which we may be subject could be challenged. Furthermore, these laws may be modified, the result of which may be to prevent or limit subsidiaries from transferring cash to us. For geographic data, see Note 29 to the Consolidated Financial Statements.

Furthermore, we may experience difficulty enforcing agreements in certain jurisdictions. In jurisdictions where bankruptcy laws and practices may vary, we may experience difficulty collecting receivables through the applicable legal systems. We are subject to certain existing, and may be subject to possible future, laws that limit or may limit our activities while some of our competitors may not be subject to such laws, which may adversely affect our competitiveness.

In addition, we generate revenues from export sales and operations that may be denominated in currencies other than the relevant functional currency. Exchange rates between these currencies and functional currencies in recent years have fluctuated significantly and may do so in the future. Future events, which may significantly increase or decrease the risk of future movement in currencies in which we conduct our business, cannot be predicted. We also may hedge certain revenues and costs using derivative instruments to minimize the impact of changes in the exchange rates of those currencies compared to the respective functional currencies. It is possible that fluctuations in exchange rates will result in reduced operating results.

Significant changes in pension fund investment performance or assumptions relating to pension costs may adversely affect the valuation of pension obligations, the funded status of pension plans, and our pension cost.

Our funding policy for pension plans is to accumulate plan assets that, over the long run, will approximate the present value of projected benefit obligations. Our pension cost is materially affected by the discount rate used to measure pension obligations, the level of plan assets available to fund those obligations at the measurement date and the expected long-term rate of return on plan assets. Significant changes in investment performance or a change in the portfolio mix of invested assets may result in corresponding increases and decreases in the valuation of plan assets, particularly equity securities, or in a change of the expected rate of return on plan assets. Any change in key actuarial assumptions, such as the discount rate, would impact the valuation of pension obligations, affecting the reported funded status of our pension plans as well as the net periodic pension cost in the following fiscal years. Certain of our current pension plans are underfunded. As of December 31, 2009, our pension plans were underfunded by $1,140 million. Any declines in the fair values of

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the pension plans assets could require additional payments by us in order to maintain specified funding levels. Our pension plans are subject to legislative and regulatory requirements of applicable jurisdictions, which could include, under certain circumstances, local governmental authority to terminate the plan. See Note 23 to the Consolidated Financial Statements.

Many of our businesses depend on our intellectual property. Our future success will depend in part on our ability to protect our intellectual property rights, and our inability to do so could reduce our ability to maintain our competitiveness and margins.

As of December 31, 2009, we had a significant worldwide patent portfolio of issued and pending patents. These patents, together with proprietary technical know-how, are significant to our competitive position, particularly with regard to PO, performance chemicals, petrochemicals, flavor and fragrance chemicals, and polymers, including process technologies such as Spheripol, Spherizone, Hostalen, Spherilene, Lupotech T and Lupotech G and Avant catalyst family technology rights. We rely on the patent, copyright and trade secret laws of the U.S. and other countries to protect our investment in research and development, manufacturing and marketing. However, we may be unable to prevent third parties from using our intellectual property without authorization. Proceedings to protect these rights could be costly and we may not prevail.

The protection afforded by patents varies from country to country and depends upon the type of patent and its scope of coverage. While a presumption of validity exists with respect to patents issued to us, our patents may be challenged, invalidated, circumvented or rendered unenforceable. In addition, if any pending patent application filed by us does not result in an issued patent, or if patents are issued to us, but such patents do not provide meaningful protection of our intellectual property, then our ability to exploit our intellectual property may be adversely affected. Furthermore, as patents expire, the products and processes described and claimed under those patents become generally available for use by competitors. Our continued growth strategy may also bring us to regions of the world where intellectual property protection may be limited and difficult to enforce. In addition, patent rights may not prevent our competitors from developing, using or selling products that are similar or functionally equivalent to our products. Moreover, our competitors or other third parties may obtain patents that restrict or preclude our ability to lawfully produce or sell our products in a competitive manner, which could result in significantly lower revenues, reduced profit margins or loss of market share.

We also rely upon unpatented proprietary know-how and continuing technological innovation and other trade secrets to develop and maintain our competitive position. While it is our policy to enter into confidentiality agreements with our employees and third parties to protect our intellectual property, these confidentiality agreements may be breached, may not provide meaningful protection for our trade secrets or proprietary know-how, or adequate remedies may not be available in the event of an unauthorized use or disclosure of our trade secrets and know-how. In addition, others could obtain knowledge of our trade secrets through independent development or other access by legal or illegal means.

The failure of our patents or confidentiality agreements to protect our processes, apparatuses, technology, trade secrets or proprietary know-how could result in significantly lower revenues, reduced profit margins and cash flows and/or loss of market share. Additionally, we may be subject to claims that our technology, patents or other intellectual property infringes on a third party’s intellectual property rights. Unfavorable resolution of these claims could either result in our being restricted from delivering the related service or result in a settlement that could be material to us.

The continued integration of the historical Lyondell Chemical businesses with the historical Basell businesses may be extremely time-consuming and the associated expected synergies and savings may not be realized.

The process of effectively integrating the historical Basell and Lyondell Chemical businesses into one business continues to require significant managerial and financial resources. The costs and time required to integrate these businesses into one organization could cause the interruption of, or a loss of momentum in, the

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activities of any one, or several, of the operations of the constituent entities. Furthermore, the combination of the Lyondell Chemical and Basell businesses has significantly increased our size and has also substantially increased the scope and complexity of our operations. There can be no assurance that we will be able to effectively manage the enlarged operation, or achieve the desired profitability from the combination of the Lyondell Chemical and Basell businesses. A failure to successfully integrate Lyondell Chemical with Basell’s legacy business operations within the expected time frame could adversely affect our business, financial condition and results of operations.

We have also undertaken significant and aggressive fixed cost reduction programs. Since the beginning of 2008, we have shut down or announced planned shutdowns of either units or entire facilities, including, in North America, three polypropylene sites, one olefin site, one ethylene glycol site, one PE site, one PP compounding site and one PP compounding unit and announced our intention to shutdown another polypropylene site. In Europe, we have closed one PE site, one PE unit and one polypropylene unit and announced our intention to shutdown another polypropylene site. We continue to evaluate our asset portfolio and may initiate further rationalization, depending on market conditions. Furthermore, we have expanded our cost reduction program to be broader and more substantial in anticipation of continued weak market conditions in olefins, polyolefins and refining. The key components of the program include reducing staff, rationalizing our worldwide asset base, restructuring our contracts and realizing savings in procurement and logistics. The full benefits of these programs may be difficult to realize and any short term synergies and savings realized may not be sustainable in the long term. Losses of key personnel pursuant to any employee reduction programs, could adversely affect our business, financial condition and results of operations.

Shared control or lack of control of joint ventures may delay decisions or actions regarding the joint ventures.

A portion of our operations currently are, and may in the future be, conducted through joint ventures, where control may be exercised by or shared with unaffiliated third parties. We cannot control the actions of our joint venture partners, including any nonperformance, default or bankruptcy of joint venture partners. The joint ventures that we do not control may also lack adequate internal controls systems.

In the event that any of our joint venture partners do not observe their joint venture obligations, it is possible that the affected joint venture would not be able to operate in accordance with our business plans or that we would be required to increase our level of commitment in order to give effect to such plans. As with any such joint venture arrangements, differences in views among the joint venture participants may result in delayed decisions or in failures to agree on major matters, potentially adversely affecting the business and operations of the joint ventures and in turn our business and operations.

Our results of operations could be adversely affected by litigation and other commitments and contingencies.

We face risks arising from various unasserted and asserted litigation matters, including, but not limited to, product liability, patent infringement, antitrust claims, and claims for third party property damage. We have also noted a nationwide trend in purported class actions against chemical manufacturers generally seeking relief such as medical monitoring, property damages, off-site remediation and punitive damages arising from alleged environmental torts without claiming present personal injuries. We have also noted a trend in public and private nuisance suits being filed on behalf of states, counties, cities and utilities alleging harm to the general public. Various factors or developments can lead to changes in current estimates of liabilities such as a final adverse judgment, significant settlement or changes in applicable law. A future adverse ruling or unfavorable development could result in future charges that could have a material adverse effect on us. An adverse outcome in any one or more of these matters could be material to our results of operations.

In the ordinary course of business, we may make certain commitments, including representations, warranties and indemnities relating to current and past operations, including those related to divested businesses and issue guarantees of third party obligations. If we were required to make payments as a result, they could exceed the amounts accrued, thereby adversely affecting our results of operations.

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We do not yet know all of the persons who will serve on the Supervisory Board of LyondellBasell Industries N.V. after the Emergence Date; we may be initially controlled by the Rights Offering Sponsors, and their interests in LyondellBasell Industries N.V. may conflict with your interests.

Our Supervisory Board will initially consist of nine members. Of the initial Supervisory Board, the Rights Offering Sponsors will have the right to nominate five initial Supervisory Board members. Apollo will have the right to nominate three initial Supervisory Board members, Access Industries will have the right to nominate one initial Supervisory Board member and Ares will have the right to nominate one initial Supervisory Board member. The remaining initial Supervisory Board members will be independent and will be identified by a search firm appointed by the Debtors, subject to the approval of the Rights Offering Sponsors (such approval not to be unreasonably withheld). We have not yet identified the independent members of the Supervisory Board. For so long as the Rights Offering Sponsors own specified percentages of our ordinary shares, they will be entitled to nominate members of the Supervisory Board. See “Item 4. Security Ownership of Certain Beneficial Owners and Management.”

Based on current information available to us, the Rights Offering Sponsors would collectively own approximately 39% of our then outstanding ordinary shares after the Emergence Date. We expect Apollo to be our largest shareholder after the Emergence Date, owning approximately 25% of our then outstanding ordinary shares. We expect that Ares and its affiliates will own approximately 7% of our ordinary shares and Access Industries will own approximately 7% of our ordinary shares after the Emergence Date. In addition to Apollo, Access and Ares, we currently expect at least one prepetition creditor will beneficially own more than 5% of our ordinary shares after the Emergence Date. See “Item 4. Security Ownership of Certain Beneficial Owners and Management.”

As long as the Rights Offering Sponsors and any other substantial shareholder own, directly or indirectly, a substantial portion of our outstanding shares, they will be able to exert significant control over us, including:

• the composition of our board of directors and, through it, any determination with respect to our business;

• direction and policies, including the appointment and removal of officers;

• the determination of incentive compensation, which may affect our ability to retain key employees;

• any determinations with respect to mergers or other business combinations;

• our acquisition or disposition of assets;

• our financing decisions and our capital raising activities;

• the payment of dividends;

• conduct in regulatory and legal proceedings; and

• amendments to our articles of association.

The Rights Offering Sponsors, in the event that they act collectively, may have the ability to elect or remove and replace a majority of the members of our Supervisory Board without calling a meeting of the shareholders. The concentration of ownership may also make some transactions more difficult or impossible without the support of the Rights Offering Sponsors or more likely with the support of the Rights Offering Sponsors. The interests of any of the Rights Offering Sponsors, any other substantial shareholder or any of their respective affiliates could conflict with or differ from our interests or the interests of shareholders. For example, the concentration of ownership held by the Rights Offering Sponsors could delay, defer or prevent a change of control of our company or impede a merger, takeover or other business combination which may otherwise be favorable for us. A Rights Offering Sponsor, substantial shareholder or affiliate thereof may also pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us.

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Risks Relating to Our Bankruptcy Cases and Emergence

Our actual financial results may vary significantly from the projections filed with the Bankruptcy Court.

In connection with our disclosure statement relating to the Plan of Reorganization (the “Disclosure Statement”), and the hearing to consider confirmation of the Plan of Reorganization, we prepared projected financial information to demonstrate to the Bankruptcy Court the feasibility of the Plan of Reorganization and our ability to continue operations upon our emergence from the Bankruptcy Cases. This information was not audited or reviewed by our independent public accountants. These projections were prepared solely for the purpose of the Bankruptcy Cases and have not been, and will not be, updated on an ongoing basis. These projections are not included in this Registration Statement and have not been incorporated by reference into this Registration Statement and should not be relied upon in connection with the purchase or sale of ordinary shares. At the time they were prepared, the projections reflected numerous assumptions concerning our anticipated future performance and with respect to prevailing and anticipated market and economic conditions that were and remain beyond our control and that may not materialize. Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks and the assumptions underlying the projections and/or valuation estimates may prove to be wrong in material respects. Actual results may vary significantly from those contemplated by the projections that were prepared in connection with the Disclosure Statement and the hearing to consider confirmation the Plan of Reorganization. As a result, you should not consider or rely on such projections in deciding whether to invest in the ordinary shares.

Our financial condition or results of operations will not be comparable to the financial condition or results of operations reflected in our historical financial statements.

Following the Emergence Date, we will operate our existing business under a new capital structure. In addition, we will be subject to the “fresh-start” accounting rules. As required by fresh-start accounting, assets and liabilities will be recorded at fair value, based on values determined in connection with the implementation of our Plan of Reorganization. Certain reported assets do not yet give effect to the adjustments that may result from the adoption of fresh-start accounting and, as a result, would change materially. Accordingly, our financial condition and results of operations from and after the Emergence Date will not be comparable to the financial condition or results of operations reflected in our historical financial statements included elsewhere in this Registration Statement.

Bankruptcy Court relief against contingent liability exposure may not be as broad as is contemplated by the Plan of Reorganization.

Our Plan of Reorganization provides for the creation of an Environmental Custodial Trust (the “Environmental Custodial Trust”) and a Millennium Custodial Trust (the “Millennium Custodial Trust”), which will assume certain alleged liabilities and into which certain assets of the Debtors and other assets will be contributed. The Environmental Custodial Trust will assume the alleged liabilities for environmental matters associated with certain environmentally contaminated properties owned by certain Debtors and receive related clean-up funds.

The Millennium Custodial Trust will receive, directly or indirectly, all the equity interests of Millennium Chemicals and its direct or indirect subsidiaries (collectively, the “Schedule III Debtors” as defined in the Plan of Reorganization) after consummation of certain transactions as provided for in the Plan of Reorganization, and the Schedule III Debtors will be liquidated and their assets distributed in satisfaction of their respective obligations. Under the Plan of Reorganization, certain of the Debtors and their affiliates will receive broad releases of and indemnities regarding any claims that any Schedule III Debtor, or any entity or person claiming by, through or under a Schedule III Debtor, could assert against any such Debtor or affiliate, as set forth in more detail in the Plan of Reorganization. However, we cannot assure you that the Plan of Reorganization and the releases contained therein and the trusts to be used to implement the Plan of Reorganization (even if approved by the

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Bankruptcy Court in the form as currently proposed) will protect us as broadly as contemplated by the terms of the Plan of Reorganization. Any claims or liabilities not ultimately barred by these releases or covered by these trusts could have a material adverse affect on our financial condition and results of operations.

The Millennium Custodial Trust will assume ownership, directly and indirectly through its direct ownership of the equity of Millennium Chemicals, its direct and indirect subsidiaries, (together with Millennium Chemicals, the “Millennium Chain”), subject to all the alleged liabilities of the Millennium Chain, including environmental liabilities of the Millennium Chain arising from or related to the Kalamazoo River Superfund Site and other sites not owned or leased by the Millennium Chain but excluding any liabilities that are resolved through the Environmental Custodial Trust or the settlement with the relevant governmental authorities. Creditors of the Schedule III Debtors may attempt to assert claims for these alleged liabilities against the Reorganized Debtors, as defined in the Plan of Reorganization. We believe that we have meritorious defenses to any such claims, however, there can be no assurance these defenses will be successful or that we will not be held liable for some or all of these claims. See “Item 8. Legal Proceedings—Environmental Custodial Trust and Millennium Custodial Trust.”

Our historical financial statements state that uncertainties related to our emergence from Chapter 11 protection raise substantial doubt about our ability to continue as a going concern.

This Registration Statement includes the audited consolidated financial statements of LyondellBasell AF as of December 31, 2009 and 2008 and for each of the years in the three-year period ended December 31, 2009, prepared in accordance with generally accepted accounting principles (“GAAP”). These financial statements state that uncertainties related to our emergence from Chapter 11 protection raise substantial doubt about our ability to continue as a going concern. Although we believe that as of the Emergence Date, the basis for the uncertainties relating to our ability to continue as a going concern will no longer exist, we cannot assure you that a similar disclosure will not be included in future financial statements.

Regardless of the foregoing, the historical financial statements of LyondellBasell AF have been prepared in accordance with GAAP applicable to a going concern, which assumes that we will be able to meet our obligations and continue our operations over a reasonable length of time. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should we be unable to continue as a going concern.

Our emergence from Chapter 11 may trigger consent rights or termination rights in certain material contracts.

We and our affiliates are parties to certain material contracts that contain various consent rights or potential termination rights that may or may not be triggered in connection with our emergence from Chapter 11. In the event that such rights are triggered, we or our affiliates may not be able to obtain the relevant consents or waivers on commercially reasonable terms, or at all. Accordingly, the counterparties to such contracts could have a right to terminate such contracts, and such termination could have a material adverse effect on our financial performance or affect our ability to carry out our business plan.

The bankruptcy may have affected our relationship with key employees, suppliers, customers and others.

Our bankruptcy may have significantly harmed relationships we have with key customers, joint venture partners, suppliers, employees, hedging counterparties and others, which in turn could materially and adversely affect our business and financial condition following our emergence from bankruptcy. Our ability to attract, motivate and retain key employees and managers has been affected by bankruptcy, which has limited our ability to take some measures intended to motivate key employees and managers to remain with us until our emergence from bankruptcy and following such emergence.

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Risks Relating to Our Indebtedness

We expect to have a significant level of debt as of the Emergence Date, and we could incur additional debt in the future. Our debt could have significant consequences for our business and future prospects.

We expect LyondellBasell Industries N.V. to have approximately $7.2 billion of total consolidated debt and approximately $5.2 billion of net consolidated debt, assuming an April 30, 2010 Emergence Date. Total outstanding debt of approximately $7.2 billion would represent approximately 47% of our total book capitalization. In addition, we would have had no borrowings outstanding under our U.S. ABL Facility and approximately $2.4 billion lending commitments under our U.S. ABL Facility and European Securitization arrangements (availability is subject to borrowing base and advance rate calculations; there will be an estimated $650.0 million of letter of credit usage of such commitments as of the Emergence Date).

Our debt and the limitations imposed on us by our financing arrangements in place following consummation of our Plan of Reorganization could have significant consequences for our business and future prospects, including the following:

• we may be required to dedicate a substantial portion, or all, of our cash flow from operations to payments of principal and interest on our debt;

• we may not be able to obtain necessary financing in the future for working capital, capital expenditures, acquisitions, debt service requirements or other purposes and we may be required under the terms of those financing arrangements to use the proceeds of any financing we obtain to repay or prepay existing debt;

• we may be exposed to risks inherent in interest rate fluctuations to the extent our borrowings are at variable rates of interest, which would result in higher interest expense in the event of increases in interest rates;

• we could be more vulnerable during downturns in our business and be less able to take advantage of significant business opportunities and to react to changes in our business and in market or industry conditions; and

• we may have a competitive disadvantage relative to our competitors that have less debt.

Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, regulatory and other factors that are beyond our control. Our future cash flows may be insufficient to meet all of our debt obligations and other commitments and any insufficiency could negatively impact our business. To the extent we are unable to repay our indebtedness as it becomes due or at maturity with cash on hand, we will need to refinance our debt, sell assets or repay the debt with the proceeds from equity offerings. Additional indebtedness or equity financing may not be available to us in the future for the refinancing or repayment of existing indebtedness, and we may not be able to complete asset sales in a timely manner sufficient to make such repayments. In that case, we would be unable to make principal and interest payments, and our continued viability would be threatened.

Our interest expense also could increase if interest rates increase because we have significant financings with variable rates, including our Senior Term Loan Facility and U.S. ABL Facility. An increase of 1% in the interest rate payable on our variable rate indebtedness would increase our current annual estimated debt service requirements by between $10 million and $27 million, depending on the amount outstanding under the U.S. ABL Facility.

We may not be able to generate sufficient cash to service our debt obligations; there can be no assurance that our post-emergence capital resources will be sufficient to meet our working capital requirements.

Our ability to meet our obligations will depend upon our financial and operating performance, which is subject to prevailing economic and competitive conditions and financial, business and other factors beyond our

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control. We may be unable to maintain a level of cash flows sufficient to permit us to meet our obligations. We expect to have a significant level of debt as of the Emergence Date, and we may incur additional debt in the future. Our debt could have significant consequences for our business and future business prospects.

Following emergence, we will finance our ongoing working capital, capital expenditure, debt service and other funding requirements through a combination of cash and cash equivalents, cash flows from operations, borrowings under the U.S. ABL Facility, the European Securitization and other receivables securitization and financing arrangements. We will need to access the cash flow from our foreign subsidiaries on an efficient basis. Upon emergence, assuming the Emergence Date occurs on April 30, 2010, we expect to have approximately $2.0 billion of cash and cash equivalents. Our working capital swings can be very wide and the expected cash balance at emergence may materially differ, especially if the Emergence Date is delayed. We believe that these liquidity arrangements will provide us with sufficient financing to meet our funding requirements, but we are subject to risks attendant to the cyclicality and volatility of our businesses which can materially impact our working capital needs. Among other things, we are subject to risks that our working capital requirements can spike with high oil prices. To address this, we may seek to put in place a $750 million Oil-Indexed Credit Facility following emergence. There can be no assurance that this facility will be available on commercially acceptable terms or that we will be successful in maintaining our current liquidity arrangements on satisfactory terms or otherwise. In any event, our ability to meet our funding requirements will depend upon many factors outside of our control, including prevailing economic conditions, the costs of raw materials, energy prices and the direction of the current financial and economic downturn and there can be no assurance that our liquidity arrangements, including our starting cash balances, will be satisfactory to meet our obligations, including our substantial debt service obligations.

If our cash flow from operations and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and we cannot assure you that we would be able to implement such alternative measures on satisfactory terms or at all. Our debt instruments may limit our ability to effect such actions as well.

Failure to comply with covenants or to pay principal of, and interest on, indebtedness when due could result in an acceleration of debt.

A breach of covenants of or the failure to pay principal and interest when due under our debt or other financing arrangements in place following consummation of the Plan of Reorganization could result in a default or cross-default under all or some of those instruments. If any such default or cross-default occurs, the applicable lenders or noteholders may elect to declare all outstanding borrowings, together with accrued interest and other amounts payable thereunder, to be immediately due and payable. In such circumstances, such lenders or noteholders may also have the right to terminate any commitments they have to provide further borrowings, and the counterparties under securitization programs or facilities may be entitled to terminate further purchases of interests in accounts receivable and receive all collections from previously sold interests until they have collected on their interests in those receivables, thus reducing our liquidity. In addition, following such an event of default, lenders or noteholders may have the right to proceed against the collateral granted to them to secure the obligations, which in some cases may include available cash. If the obligations under any material financing arrangement were to be accelerated, it is likely that we would not have, or be able to obtain, sufficient funds to make these accelerated payments, and as a result we could be forced to again file for bankruptcy protection or liquidation.

We expect that our debt or other financing arrangements in place following consummation of our Plan of Reorganization will contain a number of restrictive covenants that will impose significant operating and financial restrictions on us. These are likely to include covenants restricting, among other things, our ability to: (i) incur, assume or permit to exist indebtedness or guarantees; (ii) incur, assume or permit to exist liens; (iii) make loans and investments; (iv) make external dividends or distributions; (v) engage in mergers, acquisitions, and other

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business combinations; (vi) prepay, redeem or purchase certain indebtedness; (vii) amend or otherwise alter terms of certain indebtedness, and other material agreements; (viii) make dispositions of assets; (ix) engage in transactions with affiliates; (x) enter into or permit to exist contractual obligations limiting the ability to make distributions or to incur or permit to exist liens; (xi) limit capital expenditures; and (xii) alter the conduct of business. There will also be financial covenants requiring us to maintain a maximum senior secured leverage ratio and a minimum fixed charge coverage ratio. The ability to meet financial requirements can be affected by events beyond our control and, over time, these covenants may not be satisfied.

The current instability and uncertainty in the worldwide financial markets have created increased counterparty risk.

We have exposure to various financial institutions under commodity hedging contracts and the risk of counterparty default is currently higher in light of existing capital market and economic conditions. Reduced liquidity or financial losses resulting from exposure to the risk of counterparties could have a material adverse effect on our cash flow and financial condition.

Our disclosure of our liquidity constraints and the Bankruptcy Cases have reduced the availability of trade credit.

The public disclosure of our liquidity constraints and the Bankruptcy Cases have impaired our ability to maintain normal credit terms with certain of our suppliers. As a result, we have been required to pay cash in advance to certain vendors and have experienced restrictions on the availability of trade credit, which has further reduced our liquidity. If liquidity problems persist following our emergence from bankruptcy, our suppliers could refuse to provide key products and services.

Risks Associated with Our Common Stock

The trading price of our ordinary shares may fluctuate and trading in the ordinary shares may be limited, which might lead to shareholders not being able to sell their ordinary shares at a reasonable price or at all.

Prior to the listing of our class A ordinary shares, our class B ordinary shares and our warrants to purchase class A ordinary shares on the NYSE, there has been no market for our ordinary shares or warrants. We cannot assure you that an active trading market in our ordinary shares or warrants will develop or be sustained. If such a market fails to develop or be sustained, this could adversely affect the liquidity and price of our ordinary shares or warrants, as well as increase their price volatility. Accordingly, we cannot assure investors of the liquidity of any such market, any ability to sell the ordinary shares or warrants or the prices that may be obtained for the ordinary shares or warrants.

The trading price of our ordinary shares and warrants may experience volatility and may fluctuate, depending upon many factors beyond our control. The trading price of our ordinary shares and warrants may be significantly affected by, among others the following factors: (i) our actual or anticipated operational results, (ii) the level of our debt, (iii) future issues of ordinary shares, (iv) changes in, or our failure to meet, securities analysts’ expectations, (v) general market conditions and the factors listed above under “—Risks Relating to Our Business.”

Uncertainty in enforcing U.S. judgments against The Netherlands corporations, directors and others could create difficulties for holders of our securities in enforcing any judgments obtained against us.

We are a company organized under the laws of The Netherlands and a significant portion of our assets are located outside the U.S. In addition, members of our Management and Supervisory Boards may be residents of countries other than the U.S. As a result, effecting service of process on each person may be difficult, and judgments of U.S. courts, including judgments against us or members of our Management or Supervisory Boards

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predicated on the civil liability provisions of the federal or state securities laws of the U.S., may be difficult to enforce. Because there is no treaty between certain countries and The Netherlands providing for the reciprocal recognition and enforcement of judgments, some countries’ judgments are not automatically enforceable in The Netherlands or in the United States, where the principal market for our shares is located. In addition, it is uncertain as to whether a court in one country would impose civil liability on us or on the members of our Management and Supervisory Boards in an original action brought against us or our management or supervisory directors in a court of competent jurisdiction in another country and predicated solely upon the securities laws of that other country.

We are subject to Dutch law and the rights of our ordinary shareholders may be different from those rights associated with companies governed by other laws.

As a result of being organized under the laws of The Netherlands, our corporate structure as well as the rights and obligations of our ordinary shareholders may be different from the rights and obligations of shareholders in companies incorporated in other jurisdictions. Resolutions of the general meeting of shareholders may be taken with majorities different from the majorities required for adoption of equivalent resolutions in, for example, Delaware companies. Additionally, like other Dutch companies, our articles of association and our board charter contain control-enhancing rights that may have the effect of preventing, discouraging or delaying a change of control.

In addition, Dutch law provides certain obligations on companies that are domiciled in The Netherlands and whose shares are admitted to trading on a “regulated market,” as well as on certain shareholders of such companies. The NYSE may qualify as a regulated market, in which case these laws will apply to us and to certain of our shareholders. Among other things, these laws may require shareholders to notify the Dutch financial markets regulator (Authoriteit Financiële Markten, or AFM) of their holding of ordinary shares and changes to their holding if they increase or decrease their shareholding over or below 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95% of our ordinary shares and may require certain shareholders that acquire 30% or more of the voting rights attached to our ordinary shares, subject to certain exceptions, acting alone or in concert with others, to make an unconditional offer to all our shareholders. See “Item 11. Description of Registrant’s Securities to be Registered—Description of Certain Provisions of Dutch Law.”

Risks Relating to Tax Matters

We have a risk of being classified as a controlled foreign corporation, which could adversely affect any 10% U.S. shareholder.

As a company incorporated in The Netherlands, we would be classified as a “controlled foreign corporation” for U.S. federal income tax purposes if:

• any “United States person” (as defined in the U.S. Internal Revenue Code of 1986, as amended (the “U.S. Tax Code”)) possesses, directly, indirectly, or constructively, at least 10% of the combined voting power of all classes of our ordinary shares (each such person, a “10% U.S. shareholder”), and

• the sum of the percentage ownership by all 10% U.S. shareholders exceeds 50% (by voting power or value) of our ordinary shares.

Because controlled foreign corporation status will depend upon the identity of our future shareholders and their respective stock ownership, there can be no assurance that LyondellBasell Industries N.V. will not be treated as a controlled foreign corporation for any taxable year. In the event that such a determination were made, all 10% U.S. shareholders would be subject to taxation under Subpart F of the U.S. Tax Code. The ultimate consequences of this determination are fact-specific to each 10% U.S. shareholder, but could include possible taxation of such 10% U.S. shareholder on a pro rata portion of our income, even in the absence of any distribution of such income.

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U.S. anti-inversion rules may apply to LyondellBasell Industries N.V. resulting in certain adverse U.S. federal income tax consequences.

The United States Internal Revenue Service (“IRS”) could seek to apply section 7874 of the U.S. Tax Code to treat LyondellBasell Industries N.V. as a U.S. corporation for U.S. federal income tax purposes if, in connection with our emergence from the Bankruptcy Cases, the former creditors and shareholders of our top U.S. holding company and its direct and indirect subsidiaries (our “U.S. Group”) are entitled to at least 80% of the stock issued in our emergence from Chapter 11 by reason of holding claims against those entities. Application of the 80% test could result in significantly increased U.S. federal income tax liability to us.

Alternatively, the IRS could seek to impose U.S. federal income tax on our U.S. subsidiaries’ “inversion gain” if, in connection with our emergence from the Bankruptcy Cases, the former creditors and shareholders of our U.S. Group are entitled to at least 60%, but less than 80%, of the stock issued in our emergence from the Bankruptcy Cases by reason of holding such claims. Inversion gain generally includes gain from the transfer of stock or properties (other than inventory) and certain licensing income; tax on inversion gain generally cannot be offset by net operating losses, foreign tax credits or other tax attributes.

The 80% and 60% calculations are subject to certain adjustments. Although no assurance can be given that the IRS would not take a contrary position regarding section 7874’s application or that such position, if asserted, would not be sustained, we believe that the stock issued in connection with our emergence from the Bankruptcy Cases that is attributable to the value of claims against our companies outside the U.S. Group should exceed 40% of all stock issued for any claims against us, making section 7874 inapplicable to us under the numerical stock ownership tests described above. In addition, we believe that strong arguments can be made that section 7874 should not in any event apply to us because of the business activities that we and our affiliates will conduct in The Netherlands.

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ITEM 2. FINANCIAL INFORMATION

Selected Financial Data

The following selected financial data should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2009 and “—Management’s Discussion and Analysis of Financial Condition and Results of Operations” below.

	For the year ended December 31,
	2009			2008			2007(a)			2006
	(in millions)
Results of Operations Data:
Sales and other operating revenues	$	30,828		$	50,706		$	17,120		$	13,175
Interest expense		(1,795	)		(2,476	)		(353	)		(332	)
Income (loss) from equity investments(b)		(181	)		38			162			130
Income (loss) from continuing operations(c)		(2,866	)		(7,336	)		661			396
Balance Sheet Data:
Total assets		27,761			28,651			39,728			9,549
Short-term debt		6,182			774			2,415			779
Long-term debt		305			304			21,541			3,223
Cash and cash equivalents		558			858			560			830
Accounts receivable		3,287			2,585			4,165			2,041
Inventories		3,277			3,314			5,178			1,339
Working capital		4,436			3,237			5,019			1,900
Liabilities subject to compromise		22,494			—			—			—
Cash Flow Data:
Cash provided by (used in):
Operating activities		(787	)		1,090			1,180			1,034
Investing activities		(611	)		(1,884	)		(11,899	)		(535	)
Expenditures for property, plant and equipment		(779	)		(1,000	)		(411	)		(263	)
Financing activities		1,101			1,083			10,416			(190	)

(a) Results of operations and cash flow data reflect the acquisition of Lyondell Chemical from December 21, 2007. Balance sheet data include Lyondell Chemical balances as of December 31, 2007. Results of operations and cash flow data for the year ended December 31, 2006 do not reflect Lyondell Chemical, and balance sheet data as of December 31, 2006 does not reflect Lyondell Chemical.

(b) Loss from equity investments in 2009 includes pre-tax charges of $228 million for impairment of the carrying value of our investments in certain joint ventures.

(c) Loss from continuing operations in 2009 included after-tax charges of $1,925 million related to reorganization items and $11 million for impairments of goodwill and other assets and $228 million for the impairment of the carrying value of our investments in certain joint ventures, partially offset by $78 million of involuntary conversion gains related to insurance proceeds for damages sustained in 2005 at a polymers plant in Münchsmünster, Germany. Loss from continuing operations in 2008 included after-tax charges of $4,982 million related to the impairment of goodwill, $816 million to adjust the value of inventory to market value and $146 million, primarily for impairment of the carrying value of the Berre Refinery, all of which were partially offset by $51 million of involuntary conversion gains related to insurance proceeds for damages sustained at the Münchsmünster polymers plant. Income from continuing operations in 2007 included after-tax benefits of $130 million from the $200 million break-up fee related to a proposed merger with the Huntsman group, partially offset by after tax-charges of $95 million related to the in-process research and development acquired in the acquisition of Lyondell Chemical, and $13 million related to asset impairments of the carrying value of a plant in Canada and capitalized engineering costs for a new polymers plant in Germany. Income from continuing operations in 2006 included after-tax asset impairment charges of $27 million primarily for goodwill related to a 2005 acquisition of an ethylene business in France. After-tax amounts included herein have been tax effected using the U.S. statutory rate of 35%.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the information contained in the LyondellBasell Industries AF S.C.A. (formerly known as Basell AF S.C.A. or “Basell”) audited Consolidated Financial Statements for the year ended December 31, 2009 and the related notes thereto. This discussion contains forward-looking statements that involve risks and uncertainties. LyondellBasell AF’s actual results could differ materially from those discussed in the forward-looking statements as a result of numerous factors.

In reviewing the following discussion and analysis, certain points concerning the historical and future results of operations of LyondellBasell AF should be considered:

• Following our emergence from bankruptcy, our historical financial statements will not be comparable to financial statements for future periods. LyondellBasell AF acquired Lyondell Chemical on December 20, 2007. Operating results prior to such date in 2007 do not include the results of Lyondell Chemical. Some significant changes in operating results are due to the effects of the acquisition of Lyondell Chemical, rather than changes in the business performance of LyondellBasell AF’s predecessor, Basell. As a result, the financial information for 2008 is generally not comparable to 2007. Moreover, on January 6, 2009, April 24, 2009 and May 8, 2009, the Debtors filed voluntary petitions for relief under Chapter 11. The effects of operating the businesses of the Debtors as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court likely affected our operations in ways that would make 2009 more difficult to compare with 2008.

• As a result of its recent reorganization, LyondellBasell AF reassessed segment reporting based on the current management structure. Based on this analysis, LyondellBasell AF concluded that management is focused on the Refining and Oxyfuels segment; the O&P—Americas segment; the O&P—EAI segment; the I&D segment; and the Technology segment. See “—Segment Analysis” below for a description of the segments.

• LyondellBasell AF’s consolidated operating results, which are discussed in “—Overview” and “—Results of Operations” below, are determined using both the first-in, first-out (“FIFO”) and last in, first out (“LIFO”) methods of accounting to determine inventory cost. The LIFO method is used for certain U.S. inventories to maintain consistency with LyondellBasell AF’s U.S. federal income tax treatment of those inventories (see Note 2 to the Consolidated Financial Statements). This discussion is supplemented by a discussion of LyondellBasell AF’s segment operating results under “—Segment Analysis” below. For purposes of evaluating segment results, management reviews operating results determined using current cost, which approximates results using the LIFO method of accounting for inventory. LyondellBasell AF intends to adopt the LIFO method of accounting for inventory on a company-wide basis upon emergence from bankruptcy and adoption of fresh-start accounting.

• In addition to comparisons of current operating results with the same period in the prior year, LyondellBasell AF has included, as additional disclosure, certain “trailing quarter” comparisons of fourth quarter 2009 operating results to third quarter 2009 operating results. LyondellBasell AF’s businesses are highly cyclical, in addition to experiencing some less significant seasonal effects. Trailing quarter comparisons may offer important insight into current business direction.

• After tax amounts referred to in the discussion herein are tax effected using the U.S. statutory rate of 35%.

References to industry benchmark prices or costs, including the weighted average cost of ethylene production, are generally to industry prices and costs reported by CMAI, except that references to industry benchmarks for refining and oxyfuels market margins are to industry prices reported by Platts and crude oil and natural gas benchmark price references are to Bloomberg.

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Overview

LyondellBasell AF is a global manufacturer of chemicals and plastics, a refiner of crude oil, including heavy, high-sulfur crude oil, a significant producer of gasoline blending components and a licensor of technology processes. LyondellBasell AF has five reporting segments: Refining and Oxyfuels, O&P—Americas, O&P—EAI, I&D and Technology.

Our performance is driven by, among other things, global economic conditions generally and their impact on demand for our products, raw material and energy prices, and industry-specific issues, such as production capacity. Our businesses are subject to the cyclicality and volatility seen in the chemicals and refining industries generally. While the global financial crisis and recession, and other factors discussed below, contributed to our filing under Chapter 11, industry analysts believe many of our products are currently near or at their trough levels and forecast cyclical upside in the coming years. We have seen some favorable developments in late 2009 that may continue to be reflected in our 2010 performance, such as continued delays in the construction of Middle Eastern and Asian production capacity which was expected to exacerbate current excess capacity issues, raw material pricing improvements and extensive government intervention globally. However, there can be no assurance that these positive developments will continue or that there will not be further adverse developments.

Chapter 11 Filing

The global financial crisis and recession have created substantial uncertainty for the global economy and the markets in which LyondellBasell AF operates. By December 2008, it became apparent that LyondellBasell AF was experiencing a substantial tightening in liquidity, as the significant decline in crude oil and raw material prices negatively affected the availability of borrowing under LyondellBasell AF’s asset-based working capital and credit facilities. This, coupled with the simultaneous decline in demand for LyondellBasell AF’s products, resulted in a further deterioration of LyondellBasell AF’s liquidity.

In December 2008, LyondellBasell AF entered into agreements with the lenders under the Interim Loan Agreement extending the payment dates for certain payments due in December 2008. LyondellBasell AF also hired advisors in December 2008, including a Chief Restructuring Officer, to assist in evaluating the strategic options available to LyondellBasell AF and continued to work collaboratively with its lenders and other parties to extend payment dates and restructure its debt obligations.

On January 6, 2009, certain of LyondellBasell AF’s U.S. subsidiaries and one of its European holding companies, Basell Germany Holdings GmbH (“Germany Holdings”) filed voluntary petitions for relief under Chapter 11 in the Bankruptcy Court. In addition, voluntary petitions for relief under Chapter 11 were filed by LyondellBasell AF and its general partner, LyondellBasell AF GP S.à r.l. on April 24, 2009 and by thirteen additional U.S. subsidiaries on May 8, 2009. All 94 of these Bankruptcy Cases are being jointly administered under the caption “In re Lyondell Chemical Company, et al,” and the Debtors are continuing to operate their businesses and manage their properties as “debtors in possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the U.S. Bankruptcy Code and orders of the Bankruptcy Court.

Although under applicable non-bankruptcy law the commencement of the Bankruptcy Cases constituted an event of default under many of the debt agreements of LyondellBasell AF and many of its direct and indirect subsidiaries and affiliates, and an event of termination under certain of their asset-based facilities, the ability of the lenders to enforce their rights under the credit facilities and the ability of other creditors to seek payment of prepetition liabilities or to take actions against the Debtors under other agreements has been stayed with respect to the Debtors in substantially all cases in accordance with applicable provisions of the U.S. Bankruptcy Code. Moreover, the termination provisions in many agreements with the Debtors triggered by the commencement of the Bankruptcy Cases are not enforceable under the U.S. Bankruptcy Code. Since the commencement of the Bankruptcy Cases, the Debtors have replaced certain of their asset-based facilities through new, DIP financing. In addition, the required number of secured lenders entered into

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forbearance agreements, as applicable, with respect to the exercise of certain remedies under the amended and restated prepetition senior secured credit agreement and bridge loan, each originally dated as of December 20, 2007. For additional information on the DIP Financing and the amendments thereto, see Note 16 to the Consolidated Financial Statements.

In connection with the Bankruptcy Cases, on January 7, 2009 LyondellBasell AF received Bankruptcy Court authorization to obtain emergency post-petition financing in an aggregate amount of up to $100 million, which matured on January 9, 2009. The Debtors received Bankruptcy Court approval of DIP Financing, which provided senior secured super priority debtor-in-possession financing facilities in an aggregate amount of up to $8,040 million on March 1, 2009, with an option to increase one of the facilities by up to $460 million through the addition of new lenders. Of this total, $3,250 million consisted of new funding under a term loan facility; $3,250 million represented a dollar-for-dollar roll-up, or conversion, of previously outstanding senior secured loans; and up to $1,540 million, subject to a borrowing base, represented a new asset-based facility. On March 12, 2009 and July 15, 2009, new lenders were added increasing the DIP Financing by $30 million and $50 million, respectively, to $8,120 million.

• The DIP Financing credit agreements have been amended a number of times to, among other things, address certain changes in reporting requirements, to increase certain investment and indebtedness limitations for the purpose of permitting certain business operations and opportunities, to provide for the confidentiality of certain proprietary business information, modify and extend certain milestones related to the Plan of Reorganization and Disclosure Statement and to extend the maturity of the DIP Financing agreements from December 15, 2009 to April 6, 2010, with a one-time option to extend the maturity to June 3, 2010. The maturity date of the DIP Financing agreements also will be adjusted with the plan confirmation milestone, if that milestone is adjusted based on the Bankruptcy Court’s availability.

• The Debtors have operated and continue to operate their businesses and manage their properties as debtors-in-possession. In general, this means that the Debtors operate in the ordinary course without Bankruptcy Court intervention. Prior approval is required, however, where the Debtors intend to engage in certain transactions out of the ordinary course of business. As part of the bankruptcy process, the Debtors have been negotiating a plan of reorganization with their creditors.

• The amended DIP Financing matures on, and requires the Debtors to emerge from the Bankruptcy Cases by April 6, 2010, unless extended by the Debtors to June 3, 2010, provided that if the confirmation hearing of the Plan of Reorganization is extended due to the lack of the Bankruptcy Court’s availability, the maturity date of the DIP Financing will be extended by up to twenty-one days. The capital structure of the Debtors on emergence from Chapter 11 will be set in the Plan of Reorganization that must be confirmed by the Bankruptcy Court.

• On April 23, 2010, the Bankruptcy Court approved our Plan of Reorganization. We expect the Emergence Date to be on or about April 30, 2010.

• On April 8, 2010, in connection with the anticipated emergence from Chapter 11 proceedings,

• LBI Escrow Corporation, a wholly-owned subsidiary of LyondellBasell Industries N.V.

• issued $2,250,000,000 of 8% Senior Secured Notes due 2017 and €375,000,000 of Senior Secured Notes due 2017 (collectively, the “Senior Secured Notes”), the proceeds of which were placed in escrow pending release on the Emergence Date,

• entered into a $500,000,000 Senior Term Loan Facility and borrowed $500,000,000 thereunder, which was placed in escrow pending release on the Emergence Date, and

• LyondellBasell Industries N.V. entered into the $1,750,000,000 U.S. ABL Facility, none of which has been drawn.

• On the Emergence Date, LBI Escrow Corporation will merge with and into Lyondell Chemical, which will be an indirect wholly owned subsidiary of LyondellBasell Industries N.V., and Lyondell Chemical

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will replace LBI Escrow Corporation as the issuer of the Senior Secured Notes and the borrower under the $500,000,000 Senior Term Loan Facility.

• The consummation of the Plan of Reorganization will significantly de-lever our capital structure. Assuming an April 30, 2010 Emergence Date, we expect LyondellBasell Industries N.V. to have approximately $7.2 billion of total consolidated debt, approximately $5.2 billion of net consolidated debt, including approximately $2.0 billion of cash and cash equivalents.

As part of the Plan of Reorganization, the Debtors have developed and finalized a new long range plan, which encompasses reductions in the total workforce and the closure of at least 10 or more manufacturing sites, many of which have already been announced, and at least 20 offices, including research and development sites. The planned reduction in workforce currently includes more than 3,000 employees, or approximately 17% of the employees in all subsidiaries of LyondellBasell AF, and 1,800 contractors, or approximately 30% of contractors of all subsidiaries of LyondellBasell AF. In April 2009, the Debtors announced a voluntary separation program for eligible U.S. employees and in May 2009 announced voluntary separation programs for The Netherlands and Germany.

On July 2, 2009, Nell Limited (“Nell”), an Access Industries affiliate and the indirect owner of 100% of the share capital of LyondellBasell AF, transferred its indirect ownership interest in LyondellBasell AF to Prochemie GmbH (“Prochemie”), a wholly owned subsidiary of ProChemie Holding Ltd. (“ProChemie Holding”). As of July 2, 2009, Nell and ProChemie Holding each owned 50% of Prochemie, which owned 100% of the share capital of LyondellBasell AF.

2009 Versus 2008—Although global market conditions in 2009 improved compared to late 2008, market conditions in 2009 were significantly weaker. Demand was particularly weak in durable goods market sectors, including housing and automotive markets. Similarly, while industry operating rates and sales volumes improved during the course of 2009 compared to late 2008, for the full year 2009 they were below the levels experienced for the full year 2008, despite the significant decline in business activity late in 2008.

Refining margins were significantly lower in 2009 as a result of weak demand for distillates, such as diesel and heating oil. Heavy crude oil refining margins were also negatively affected by a contraction in the differential between the price of light and heavy crude oil. After peaking at a record-setting level in mid-2008, prices for crude oil and NGLs on average were significantly lower in 2009. In 2009, chemical product margins also generally declined because of the weaker pricing environment and lower average sales prices. An exception was the U.S. PE market, which experienced strong export demand and higher product margins during the latter half of 2009.

LyondellBasell AF’s underlying operating results in 2009, compared to 2008, primarily reflected the negative effects of significantly lower product margins and sales volumes. These were partly offset by the benefits of lower fixed costs, strong margins for LyondellBasell AF’s propylene oxide and advanced polyolefin products and higher U.S. PE margins. A substantial portion of the lower product margins was due to refining operations, while the lower sales volumes were concentrated in the base chemicals and polymers products and reflected the weakness in demand. The lower fixed costs resulted from LyondellBasell AF’s aggressive cost reduction program.

Net income in 2009 also reflected charges related to LyondellBasell AF’s planned reorganization under Chapter 11, including professional fees, write-offs of plant asset values, contract rejection claims, employee severance costs and other costs associated with the Chapter 11 proceedings and plant closures. For a detailed description of reorganization charges, see “—Results of Operations” below.

Net income in 2008 included charges for asset impairments, reflecting declines in the value of inventory, goodwill and other intangible assets, as markets weakened and product sales prices and margins declined significantly at the end of 2008.

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2008 Versus 2007—Compared to 2007, the 2008 business environment for refiners and manufacturers of chemicals and polymers was marked by significant volatility in crude oil and raw material prices and, in the latter part of the year, a rapid deterioration in the global economy. During 2007, benchmark crude oil prices steadily rose to then-record levels in December 2007. During 2008, these benchmark crude oil prices continued to increase through June 2008, rising nearly 50%. Benchmark heavy crude refining margins benefited from strong demand for diesel fuel and the cost differential between light crude oil and heavy crude oil, while margins for fuels products, such as MTBE and ETBE, benefited from high gasoline prices. However, the significant escalation of crude oil and raw material prices put downward pressure on chemical and polymer product margins and upward pressure on working capital requirements.

The second half of 2008 was pivotal, marked by a number of significant events, including a fourth quarter contraction of the U.S. and Western European economies of 6.3% and 5.9%, respectively, a 70% decrease in crude oil prices, two U.S. Gulf Coast hurricanes, an extended maintenance turnaround at the Houston Refinery that was prolonged by a crane incident, and a crisis in the global financial markets. Demand in markets for LyondellBasell AF’s products was significantly lower in the fourth quarter 2008 as customers reduced inventories. At the same time, the rapid decline in crude oil and raw material prices negatively impacted inventory carrying values.

LyondellBasell AF had an operating loss in 2008 compared to a profit in 2007, despite the acquisition of Lyondell Chemical and the addition of fuels products to its product portfolio. The 2008 operating loss was primarily due to asset impairment losses, reflecting declines in the value of inventory, goodwill and other intangible assets as well as the significant decline in market conditions that led to substantial erosion of product profit margins, lower sales volumes and plant operating rates.

LyondellBasell AF’s operating loss in 2008 was also adversely affected by lost production at its Houston Refinery attributable to the following: a major planned maintenance turnaround; a fluid catalytic cracker (“FCC”) unit upgrade and catalyst changes; unplanned maintenance on the Houston Refinery’s FCC unit; an incident involving a contractor company’s crane at the Houston Refinery in July 2008, which in turn lead to a re-scoping and time extension of the major maintenance turnaround; and finally, an approximately two- to three-week period in September 2008 when substantially all of LyondellBasell AF’s U.S. Gulf Coast operations were temporarily off-line as a result of Hurricane Ike.

The segment operating results are reviewed on a current cost basis in “—Segment Analysis” below.

Results of Operations

Revenues—LyondellBasell AF had revenues of $30,828 million in 2009 compared to revenues of $50,706 million in 2008 and $17,120 million in 2007. The $19,878 million decrease in 2009 compared to 2008 reflected the effect of significantly lower sales prices and sales volumes due to lower crude oil and natural gas prices and weaker demand. LyondellBasell AF’s revenues in 2008 and 2007 increased $33,801 million, or 67%, and $990 million, or 6%, respectively, solely as a result of LyondellBasell AF’s acquisition of Lyondell Chemical in 2007 and the Berre Refinery in 2008. The remaining $775 million, or 5%, increase in 2008 revenues reflected higher average sales prices partially offset by the effect of lower sales volumes.

Cost of Sales—LyondellBasell AF’s cost of sales were $29,372 million in 2009 compared to $48,780 million in 2008 and $15,196 in 2007. The $19,408 million decrease in 2009 compared to 2008 was primarily due to lower market prices for crude oil, crude oil-based and NGLs raw materials, lower fixed and variable costs, and lower sales volumes and operating rates, reflecting the weak demand. The increases in 2008 and 2007 reflected the acquisitions of Lyondell Chemical and the Berre Refinery, which added $34,313 million and $1,045 million, respectively to cost of sales. The remaining increase of $316 million, or 2% in 2008 primarily reflected higher raw material and energy costs, compared to 2007.

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SG&A Expenses—Selling, general and administrative (“SG&A”) expenses were $850 million in 2009 compared to $1,197 million in 2008 and $740 million in 2007. The $347 million decrease in 2009 compared to 2008 was primarily the result of LyondellBasell AF’s 2009 cost reduction program, and a favorable effect from changes in currency exchange rates. Currency exchange rates had a favorable effect on costs of non-U.S. operations as the U.S. dollar strengthened versus the euro in 2009 compared to 2008. LyondellBasell AF’s SG&A expenses in 2008 included $564 million of expenses solely as a result of the Lyondell Chemical and the Berre Refinery acquisitions. The remaining SG&A decrease of $107 million in 2008, which was primarily due to the favorable currency translation effects of a stronger U.S. dollar in 2008 compared to 2007.

In-process Research and Development—LyondellBasell AF recognized a $95 million charge for in-process research and development (“IPR&D”) related to the December 20, 2007 acquisition of Lyondell Chemical. For a discussion of IPR&D, see Note 7 to the Consolidated Financial Statements.

Operating Income—LyondellBasell AF had operating income of $317 million in 2009 compared to an operating loss of $5,928 million in 2008 and operating income of $934 million in 2007. Results in 2009 compared to 2008 reflected the benefits of LyondellBasell AF’s cost reduction program, offset by the unfavorable effects of lower product margins, sales volumes, and currency exchange rates on non-U.S. operating income. Results in 2008 were impacted by charges of $4,982 million and $225 million, respectively, for impairment of goodwill related to the December 20, 2007 acquisition of Lyondell Chemical and the carrying value of the Berre Refinery; and a charge of $1,256 million to adjust LyondellBasell AF’s inventory to market value. The remainder of the decrease in operating income in 2008 was primarily due to lower product margins and the effect of lower sales volumes across all business segments compared to 2007. The declines in product margins and sales volumes in 2008 were attributable to the negative effects of Hurricane Ike and the refinery turnaround as well as to the higher cost of raw materials.

Operating results for each of LyondellBasell AF’s business segments are reviewed further in “—Segment Analysis” below.

Interest Expense—Interest expense was $1,795 million in 2009 compared to $2,476 million in 2008 and $353 million in 2007. The decrease in interest expense in 2009 was primarily due to various debt instruments becoming subject to compromise as a result of the Chapter 11 filing. LyondellBasell AF’s contractual interest expense was $2,720 million for 2009, $2,476 million for 2008 and $353 million for 2007. The increase in interest expense in 2008 was primarily due to an increase in debt used to fund the acquisition of Lyondell Chemical in December 2007, including the $7,506 million of debt retained by Lyondell Chemical. Interest expense in 2008 also included a $55 million non-cash charge related to the termination of an interest rate swap.

Other Income, net—LyondellBasell AF had other income, net, of $325 million in 2009 compared to $113 million in 2008 and $127 million in 2007. In 2009 and 2008, LyondellBasell AF recognized involuntary conversion gains of $120 million and $79 million, respectively, representing partial insurance settlements of outstanding insurance claims related to damages sustained in 2005 at the polymers plant in Münchsmünster, Germany, and foreign exchange gains of $113 million and $20 million, respectively, as a result of changes in currency exchange rates. Other income, net, in 2009 also included benefits totaling $72 million resulting from indemnifications received from previous plant owner for employee benefit and environmental remediation costs related to plant closures and a $15 million gain related to settlement of a U.K. pension claim. Other income, net, in 2007 included the benefit from a $200 million break-up fee related to the proposed merger with Huntsman, partially offset by a $57 million charge related to a 2005 exit fee from a U.K. pension plan.

Reorganization Items—LyondellBasell AF had reorganization items totaling $2,961 million in 2009, including charges for the write-off of assets associated with a lease rejection; damage claims related to certain executory contracts; the net write-off of unamortized debt issuance costs, premiums and discounts; environmental liabilities; professional fees associated with the Chapter 11 proceedings; shutdown costs related

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primarily to the shutdown of its olefins plant at Chocolate Bayou, Texas and its EG facility in Beaumont, Texas; as well as employee severance and other costs. For additional information on reorganization items, see Note 4 to the Consolidated Financial Statements.

Income Tax—LyondellBasell AF’s effective income tax rate for 2009 was 33%, resulting in a tax benefit of $1,411 million on a pretax loss of $4,277 million. The 2009 estimated annual effective income tax rate was lower than the statutory 35% rate primarily due to the effects of non-deductible costs partially related to the voluntary filings of petitions for relief under Chapter 11, and the provision of valuation allowances in jurisdictions where future tax benefits are not expected to be recognized. The negative rate impact was partially offset by the recognition of tax benefits related to a favorable tax ruling in The Netherlands. During 2008, LyondellBasell AF had a tax benefit of $848 million on a pretax loss of $8,184 million. The effective income tax rate of 10.4% in 2008 primarily reflected the effect of goodwill impairment charges, which are not deductible for tax purposes and the provision of valuation allowances in jurisdictions where future tax benefits are not expected to be realized. The effective income tax rate of 29.7% in 2007 primarily reflected the effect of decreases in statutory and other tax rates in Germany and Italy partly offset by the effect of the purchased IPR&D charge, which was not deductible for tax purposes.

Income (loss) from Continuing Operations—LyondellBasell AF had a loss of $2,866 million in 2009 compared to a loss of $7,336 million in 2008 and income of $661 million in 2007. The following table summarizes the major components contributing to the income (loss) from continuing operations:

	For the twelve months ended December 31,
Millions of dollars	2009			2008			2007
Operating income (loss)	$	317		$	(5,928	)	$	934
Income (loss) from equity investments		(181	)		38			162
Interest expense, net		(1,777	)		(2,407	)		(283	)
Other income, net		325			113			127
Reorganization items		(2,961	)		—			—
Provision for (benefit from) income taxes		(1,411	)		(848	)		279
Income (loss) from continuing operations	$	(2,866	)	$	(7,336	)	$	661

In 2009, the loss from equity investments for the O&P—EAI segment included charges of $228 million for impairment of the carrying value of LyondellBasell AF’s equity investments in certain joint ventures (see Note 11 to the Consolidated Financial Statements).

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The table below summarizes some of the items of special note with regards to LyondellBasell AF’s income (loss) from continuing operations for the periods shown:

	For the twelve months ended December 31,
Millions of dollars	2009			2008			2007
Pretax charges (benefits):
Impairments	$	245		$	5,207		$	20
Reorganization items		2,961			—
Inventory valuation adjustment to market value		127			1,256			—
Huntsman breakage fee		—			—			(200	)
Management fees		—			—			100
Purchased IPR&D		—			—			95
Benefit from employee pension and post-retirement plan amendments		—			—			(48	)
Merger and acquisition costs		—			—			46
Interest rate swap termination—Structured Financing Transaction		—			55			—
Hurricane costs		5			55			—
Gains related to insurance settlements		(120	)		(79	)		—
Provisions for uncollectible accounts receivable		18			47			(14	)
Total pretax income effect		3,236			6,541			(1	)
Tax effect of above items		(1,133	)		(546	)		34
Decrease in non-U.S. statutory tax rates		—						(117	)
Total	$	2,103		$	5,995		$	(84	)

Impairments in 2009 include an adjustment related to prior periods which increased LyondellBasell AF’s income from operations and net income for the three-month period ended December 31, 2009, by $65 million. The adjustment related to an overstatement of goodwill impairment in 2008.

Income (Loss) from Discontinued Operations, Net of Tax—LyondellBasell AF had income from discontinued operations of $1 million and $15 million, respectively, in 2009 and 2008 related to the sale of a toluene di-isocyanate business in September 2008.

Fourth Quarter 2009 versus Third Quarter 2009—LyondellBasell AF had a loss from continuing operations of $852 million in the fourth quarter 2009 compared to $649 million in the third quarter 2009 as lower underlying operating results were more than offset by the effects of lower reorganization and impairment charges. Underlying operating results were lower in the fourth quarter 2009 due to lower margins on chemical products and the effect of lower oxyfuels sales volumes and margins. The fourth quarter 2009 included after tax charges of $644 million and $11 million related to reorganization items and impairments, respectively, compared to $603 million and $140 million, respectively, in the third quarter 2009. The fourth quarter 2009 impairment charges primarily related to emissions allowances, while the third quarter 2009 impairment charges related to the carrying value of certain equity investments as a result of weak current and projected market conditions.

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Segment Analysis

LyondellBasell AF’s operations are primarily in five reportable segments: Refining and Oxyfuels; O&P—Americas; O&P—EAI; I&D; and Technology. The following tables reflect selected financial information for LyondellBasell AF’s reportable segments. Operating income (loss) is reported on a current cost basis for segment reporting.

	For the twelve months ended December 31,
Millions of dollars	2009			2008			2007
Sales and other operating revenues:
Refining and Oxyfuels segment	$	11,439		$	18,362		$	478
O&P—Americas segment		10,530			16,412			2,817
O&P—EAI segment		7,437			13,489			13,145
I&D segment		3,778			6,218			429
Technology segment		523			583			497
Other, including intersegment eliminations		(2,879	)		(4,358	)		(246	)
Total	$	30,828		$	50,706		$	17,120
Operating income (loss) (a):
Refining and Oxyfuels segment	$	(357	)	$	(2,378	)	$	21
O&P—Americas segment		169			(1,355	)		61
O&P—EAI segment		(13	)		220			934
I&D segment		250			(1,915	)		(42	)
Technology segment		210			202			152
Other, including intersegment eliminations		29			(134	)		(248	)
Current cost adjustment		29			(568	)		56
Total	$	317		$	(5,928	)	$	934
Income (loss) from equity investments:
O&P—Americas segment	$	7		$	6		$	12
O&P—EAI segment		(172	)		34			150
I&D segment		(16	)		(2	)		—
Total	$	(181	)	$	38		$	162

(a) Certain data for 2008 were revised. See Note 29 to the Consolidated Financial Statements.

Refining and Oxyfuels Segment

Overview—In its Refining and Oxyfuels segment, LyondellBasell AF produces refined petroleum products, including gasoline, ultra low sulfur diesel, jet fuel, aromatics, lubricants and oxygenated fuels, or oxyfuels, such as MTBE, ETBE and alkylate. LyondellBasell AF’s full-conversion Houston Refinery processes heavy, high sulfur Venezuelan crude oil supplied under a long-term contract with PDVSA Oil. Under the crude oil contract the refinery purchases 230,000 barrels per day of heavy, high sulfur crude oil, which constitutes approximately 86% of its rated crude oil refining capacity of 268,000 barrels per day. In early 2009, the Houston Refinery exercised an option to reduce the contractual volume to 215,000 barrels per day through July 31, 2011. The pricing under the crude oil contract is market-based. The Houston Refinery generally purchases the balance of its crude oil requirements on the spot market.

On April 1, 2008, LyondellBasell AF completed the purchase of the Berre Refinery. The Berre Refinery provides raw materials for one of LyondellBasell AF’s European sites that operates a world-scale steam cracker and polypropylene and PE plants, as well as a butadiene extraction unit at Berre l’Etang and a PE plant at nearby Fos sur Mer. The Berre Refinery’s products include naphtha, liquefied petroleum gas, gasoline, diesel and jet fuel, heating oil and bitumen.

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2009 Versus 2008—Benchmark refining margins for 2009 were lower compared to the same period in 2008, generally reflecting the weaker global economy and consequent weaker demand for gasoline and distillate products, such as diesel and heating oil. The weaker demand resulted in lower prices for light crude oil, while OPEC-mandated production cuts resulted in lower supplies of heavy crude oil and lower price discounts relative to light crude oil. Both factors compressed the price differential between light and heavy crude oil. Benchmark margins for oxyfuels in 2009 were comparable to 2008.

Refining and Oxyfuels segment operating results in 2009 primarily reflected the effects of significantly lower U.S. refining margins compared to the same period in 2008. The operating results of the Berre Refinery, which was acquired on April 1, 2008, reflected the weak distillate markets in 2009. Operating results in 2009 benefited from higher margins for gasoline blending components and lower utility and fixed costs, but were negatively affected by outages of some of the Houston Refinery’s sulfur recovery units during the second quarter 2009 and of a crude unit during the fourth quarter 2009. As a result of LyondellBasell AF’s cost reduction program, fixed costs were significantly lower in 2009 compared to 2008.

In 2008, as further discussed below, operating results were negatively impacted by lost production at the Houston Refinery due to the effects of a hurricane and a scheduled maintenance turnaround of one of the Houston Refinery’s crude trains and coker units during the third quarter 2008 that was delayed by an incident involving a contractor’s crane and an unplanned second quarter 2008 outage of a FCC unit.

2008 Versus 2007—During 2008, LyondellBasell AF’s Refining and Oxyfuels segment comprised the refining and fuels businesses of Lyondell Chemical, acquired on December 20, 2007, and, beginning on April 1, 2008, the Berre Refinery.

Benchmark heavy crude refining margins in 2008 benefited from strong demand for diesel fuel and the cost differential between light crude oil and heavy crude oil, while margins for oxyfuels products, MTBE and ETBE, benefited from high gasoline prices.

During 2008, the Refining and Oxyfuels segment benefited from strong margins for heavy crude at the Houston Refinery and for the segment’s oxyfuels products. The operating results for the Berre Refinery were breakeven. Operating results were negatively affected by planned and unplanned outages at the Houston Refinery.

LyondellBasell AF scheduled a maintenance turnaround at the Houston Refinery in 2008 for one of the refinery’s crude trains and coker units. As a result of an incident in July 2008, involving a contractor company’s crane, and Hurricane Ike later in the third quarter 2008, the coker unit was not restarted until early December 2008. In addition, operating results in the 2008 period were negatively impacted by the unplanned outage of a fluid catalytic cracker unit and other operating units at the Houston Refinery, all of which resulted in lost production and additional maintenance costs.

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The following table sets forth the Refining and Oxyfuels segment’s sales and other operating revenues, operating income and sales volumes for certain gasoline blending components for the applicable periods. The 2007 period reflected the acquired Lyondell Chemical refining and oxyfuels business from December 21, 2007.

	For the twelve months ended December 31,
Millions of dollars	2009			2008			2007
Sales and other operating revenues	$	11,439		$	18,362		$	478
Operating income (loss)		(357	)		(2,378	)		21
Sales volumes, in millions
Gasoline blending components—MTBE/ETBE (gallons)		831			1,018			39
Crude processing rates (thousands of barrels per day):
Houston Refining		244			222			279
Berre Refinery(1)		86			102			—

(1) Berre Refinery purchased April 1, 2008

The following table shows market refining margins for the U.S. and Europe and ETBE margins in Northwest Europe (“NWE”). In the U.S., WTI, is a light crude oil, while “Maya” is a heavy crude oil. In Europe, “Urals—4-1-2-1” is a measure of West European refining margins.

	For the twelve months  ended December 31,
	2009	2008	2007
Market margins—$ per barrel
WTI—2-1-1	6.98	12.37	13.37
WTI Maya	5.18	15.71	12.41
Total	12.16	28.08	25.78
Urals—4-1-2-1	5.57	10.98	8.67
Market margins—cents per gallon
ETBE—NWE	68.86	68.61	53.33

Revenues—The Refining and Oxyfuels segment had revenues of $11,439 million in 2009 compared to revenues of $18,362 million in 2008 and $478 million in 2007. The decrease in revenues in 2009 from 2008 was primarily due to lower sales prices, partially offset by higher sales volumes at the Houston Refinery. The decrease during 2009 was partially offset by the effect of a full year of operation of the Berre Refinery, which was acquired April 1, 2008. The 2007 period reflected the revenues of the acquired Lyondell Chemical refining and oxyfuels business from December 21, 2007.

Operating Income—The Refining and Oxyfuels segment had an operating loss of $357 million in 2009 compared to an operating loss of $2,378 million in 2008 and operating income of $21 million in 2007. Operating results in 2009 were negatively affected by lower crude refining margins, partially offset by lower utility costs due to lower natural gas prices and lower fixed costs. The latter reflected LyondellBasell AF’s cost reduction program. The lower refining margins were primarily attributable to U.S. refining markets, although margins were lower for both the Houston and Berre refineries.

In 2008, operating results were negatively impacted by scheduled maintenance turnarounds of crude and coker units and the related July 2008 crane incident at the Houston Refinery, as well as by operating disruptions

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related to Hurricane Ike by an estimated $205 million. In addition to the turnaround and hurricane effects, operating results were negatively affected by an estimated $220 million as a result of lost production due to unplanned maintenance at the Houston Refinery’s FCC and other operating units. Operating results were also negatively impacted by impairment charges against goodwill of $2,305 million and other assets of $218 million and inventory valuation adjustments of $442 million.

The 2007 period reflected the operating results of the acquired Lyondell Chemical refining and oxyfuels business from December 21, 2007.

Fourth Quarter 2009 versus Third Quarter 2009—The Refining and Oxyfuels segment had an operating loss of $200 million in the fourth quarter 2009 compared to $33 million in the third quarter 2009. Operating results in the fourth quarter 2009 primarily reflected the negative effects of lower sales volumes for oxyfuels and the Houston Refinery. In addition to seasonality, the lower oxyfuels sales volumes reflected the fourth quarter 2009 conversion of a U.S. facility from MTBE production to ETBE production and a fourth quarter 2009 maintenance turnaround at a facility in France. The lower Houston Refinery volumes reflected a scheduled maintenance turnaround of a crude and coker unit as well as an unplanned 10-day outage of a crude unit.

Olefins and Polyolefins—Americas Segment

Overview—In its O&P—Americas segment, LyondellBasell AF manufactures and markets olefins, including ethylene and its co-products, primarily propylene, butadiene and aromatics, which include benzene and toluene, as well as ethanol; and polyolefins, which include PE, comprising HDPE, LDPE and LLDPE, and polypropylene and Catalloy process resins. The manufacturing and marketing is generally in the Americas, which includes the U.S., Canada, Mexico and South America.

2009 Versus 2008—While improving during the course of 2009, ethylene market demand in the U.S. remained weak, resulting in lower industry operating rates compared to rates in the 90% to 95% range during 2008. Ethylene margins contracted as benchmark sales prices decreased more than the benchmark weighted average cost of ethylene production. Polyolefins markets were weaker in 2009 compared to 2008 with the notable exception of U.S. PE markets, which benefited from strong export demand during 2009.

The O&P—Americas segment operating results for 2009 primarily reflected the strong PE export markets in 2009, lower olefins product margins and lower fixed costs. As a result of weak ethylene demand during late 2008 and the first half of 2009, LyondellBasell AF idled and subsequently shut down the Chocolate Bayou olefins plant, near Alvin, Texas. LyondellBasell AF also idled and subsequently restarted the La Porte, Texas olefins plant in January 2009. Polyolefins product results for 2009 reflected strong PE export markets in 2009, which benefited PE product margins and sales volumes. However, other polyolefins product markets were weaker and resulted in net lower sales volumes compared to 2008. As a result of LyondellBasell AF’s cost reduction program, fixed costs were significantly lower in 2009 compared to 2008.

In the third quarter 2008, operating results were negatively impacted by lost production at certain U.S. Gulf Coast plants due to the effects of a hurricane.

2008 Versus 2007—In 2008, LyondellBasell AF’s O&P—Americas segment included the olefins and polyolefins businesses of Lyondell Chemical, which were acquired on December 20, 2007.

During 2008, U.S. ethylene producers using crude oil-based raw materials experienced pressure on product margins as increases in average benchmark ethylene and co-product sales prices failed to keep pace with increases in average raw material costs. Benchmark prices of crude oil-based liquid raw materials averaged higher in 2008, despite the significant decline in crude oil prices in the latter part of 2008 from the record levels reached in mid-2008. Polyolefins markets experienced weakened demand during 2008 compared to 2007. The slowdown of the global economy, the crises in financial markets and the third quarter 2008 U.S. Gulf Coast hurricanes had the most significant negative effects on demand.

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The O&P—Americas segment’s underlying operating results declined in 2008 compared to 2007, despite the acquisition of the Lyondell Chemical business, due to the significant volatility in raw material costs. Higher raw material costs and declines in polyolefin sales prices during 2008 compared to 2007 put pressure on polyolefin product margins. Furthermore, the rapid decline in crude oil prices, particularly in the fourth quarter 2008, resulted in adjustments of the inventory values to reflect their lower market value. Operating results were also negatively affected by Hurricane Ike, which resulted in lost production and additional costs in 2008.

Ethylene Raw Materials—Benchmark crude oil and natural gas prices generally have been indicators of the level and direction of the movement of raw material and energy costs for ethylene and its co-products in the O&P—Americas segment. Ethylene and its co-products are produced from two major raw material groups:

• crude oil-based liquids, or heavy liquids, including naphthas, condensates, and gas oils, the prices of which are generally related to crude oil prices; and

• NGLs, principally ethane and propane, the prices of which are generally affected by natural gas prices.

Although the prices of these raw materials are generally related to crude oil and natural gas prices, from time to time the relationships among these materials and their applicable benchmarks may vary significantly due to the influence of other market factors.

In the U.S., LyondellBasell AF has the ability to shift the ratio of raw materials it uses in the production of ethylene and its co-products to take advantage of the relative costs of heavy liquids and NGLs.

During 2009, production economics favored NGLs. As a result, LyondellBasell AF increased its use of NGLs and minimized liquids consumption at its U.S. plants. This included the above-noted permanent shutdown of LyondellBasell AF’s liquids-based Chocolate Bayou facility. During 2009, approximately 70% of LyondellBasell AF’s U.S. ethylene production was produced from NGLs.

The following table shows the average U.S. benchmark prices for crude oil and natural gas for the applicable periods, as well as benchmark U.S. sales prices for ethylene and propylene, which LyondellBasell AF produces and sells or consumes internally, and certain PE and polypropylene products. The benchmark weighted average cost of ethylene production, which is reduced by co-product revenues, is based on CMAI’s estimated ratio of heavy liquid raw materials and NGLs used in U.S. ethylene production and is subject to revision.

	Average Benchmark Price and Percent Change Versus Prior Year Period Average
	For the twelve months  ended December 31,				For the twelve months  ended December 31,
	2009	2008	Change		2008	2007	Change
Crude oil—dollars per barrel	61.58	99.51	(38.1	)%	99.51	72.23	37.8	%
Natural gas—dollars per million BTUs	3.78	8.86	(57.3	)%	8.86	6.81	30.1	%
Weighted average cost of ethylene production—cents per pound	26.21	45.39	(42.0	)%	45.39	37.93	19.0	%
United States—cents per pound
Polyethylene—(high density)	66.50	86.42	(23.1	)%	86.42	73.25	18.0	%
Ethylene	33.94	58.50	(42.0	)%	58.50	48.75	20.0	%
Polypropylene	64.42	87.63	(26.5	)%	87.63	77.08	13.7	%
Propylene—polymer grade	37.92	59.96	(36.8	)%	59.96	50.41	18.9	%

As indicated in the table above, 2009 average natural gas and crude oil prices decreased significantly compared to 2008. NGLs have been the favored raw material in ethylene production in the U.S. during much of 2009 as NGL prices have been lower relative to crude oil, and prices for heavy liquid ethylene co-products such as propylene have generally not been high enough to economically justify heavy liquid cracking.

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The following table sets forth the O&P—Americas segment’s sales and other operating revenues, operating income, income from equity investments and selected product sales volumes. The 2007 period includes the acquired Lyondell Chemical olefins and polyolefins business from December 21, 2007.

	For the twelve months ended December 31,
Millions of dollars	2009		2008			2007
Sales and other operating revenues	$	10,530	$	16,412		$	2,817
Operating income		169		(1,355	)		61
Income (loss) from equity investments		7		6			12
Production volumes, in millions of pounds
Ethylene		8,129		7,990			9,012
Propylene		2,913		3,975			5,049
Sales volumes, in millions of pounds
Polypropylene		2,509		2,928			3,300
Polyethylene		5,593		5,256			377

Revenues—Revenues were $10,530 million in 2009 compared to $16,412 million in 2008 and $2,817 million in 2007. The decrease in 2009 revenues reflected the effect of lower product sales prices and net lower sale volumes. Net lower 2009 sales volumes reflected the effect of lower sales volumes for polypropylene and ethylene and co-products, partly offset by higher sales volumes for PE which benefited from the strong U.S. export markets. The 2007 period includes the revenues of the acquired Lyondell Chemical olefins and polyolefins business from December 21, 2007.

Operating Income—The O&P—Americas segment had operating income of $169 million in 2009 compared to an operating loss of $1,355 million in 2008 and operating income of $61 million in 2007. The underlying operations of the O&P—Americas segment in 2009 reflected the benefit of lower fixed costs, resulting from LyondellBasell AF’s cost reduction program, partially offset by net lower product margins and the effect of net lower sales volumes. Operating results for 2008 were negatively affected by the $120 million estimated impact of lost production due to Hurricane Ike, and related costs of $39 million, including a $7 million pretax charge for impairment of the carrying value of assets. Operating results for 2008 also included inventory valuation adjustments of $619 million and goodwill impairment charges of $624 million.

The 2007 period includes the operating results for the acquired Lyondell Chemical olefins and polyolefins business from December 21, 2007.

Fourth Quarter 2009 versus Third Quarter 2009—The O&P—Americas segment had operating income of $69 million in the fourth quarter 2009 compared to $132 million in the third quarter 2009. The decline in fourth quarter 2009 operating results was primarily due to lower product margins and, to a lesser extent, lower sales volumes. The lower product margins were primarily due to seasonally lower PE product margins, which were only partly offset by higher product margins for olefins. PE product margins were particularly strong in the third quarter 2009. The lower sales volumes were primarily due to olefins and reflected the effects of a maintenance turnaround at an ethylene facility in the fourth quarter 2009. In addition, fourth quarter 2009 results reflected a $29 million after-tax charge for impairment of the carrying value of certain emission allowances.

Olefins and Polyolefins—Europe, Asia, International Segment

Overview—In its O&P—EAI segment, LyondellBasell AF manufactures and markets olefins, including ethylene and propylene, primarily for its internal consumption and butadiene; and polyolefins, which include PE, comprising HDPE and LDPE and polypropylene, as well as PP compounds, Catalloy process resins and PB-1 polymers. The manufacturing and marketing is generally in Europe, Asia and other regions outside of the Americas with the exception of PP compounds and PB-1, which are manufactured and marketed globally by the O&P—EAI segment.

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2009 Versus 2008—While improving during the course of 2009, ethylene market demand in Europe remained weak, resulting in lower industry operating rates in the range of 75% to 80% compared to rates in the 85% to 90% range prior to the fourth quarter downturn in 2008. Ethylene margins contracted as benchmark sales prices decreased more than the benchmark weighted average cost of ethylene production. Global polyolefin markets were considerably weaker in 2009 compared to 2008. The general weakness in global polyolefin markets resulted in lower sales volumes, due to weaker demand, and lower product margins, as selling prices decreased significantly.

The O&P—EAI segment operating results for 2009 reflected the negative effects of significantly lower product margins compared to 2008 for olefins products, while polyolefin product results for 2009 reflected generally weaker global polyolefin markets, which resulted in lower sales volumes across all polyolefins product lines and net lower product margins compared to 2008. As a result of LyondellBasell AF’s cost reduction program, fixed costs were significantly lower in 2009, partly offsetting the negative effects of the weak markets.

2008 Versus 2007—During 2008 compared to 2007, European producers using crude oil-based raw materials experienced lower profitability as increases in average benchmark product sales prices failed to keep pace with increases in average raw material costs. Despite the significant decline in crude oil prices in the latter part of 2008 from the record levels reached in mid-2008, benchmark prices of crude oil-based liquid raw materials averaged higher in 2008. Polyolefins markets experienced weakened demand during 2008 compared to 2007. The slowdown of the global economy and the crises in financial markets were the most significant contributing factors to the decrease in demand.

The O&P—EAI segment’s underlying operating results declined in 2008 compared to 2007 due to the significant volatility in raw material costs and the decline in polyolefin demand. Higher average raw material costs and declines in average polyolefin sales prices during 2008 compared to 2007, and especially in the fourth quarter of 2008, put pressure on polyolefin product margins, which were only partially offset by higher olefins margins. Furthermore, the rapid decline in crude oil prices, particularly in the fourth quarter 2008, resulted in adjustments of the inventory values to reflect their lower market value.

Ethylene Raw Materials—In Europe, heavy liquids are the primary raw materials for LyondellBasell AF’s ethylene production.

The following table shows the average West Europe benchmark prices for Brent crude oil, a heavy liquid raw material, for the applicable periods, as well as benchmark West Europe prices for ethylene and propylene, which LyondellBasell AF produces and consumes internally or purchases from unrelated suppliers, and certain PE and polypropylene products. During 2009, contract benchmark prices for ethylene and propylene were set on a monthly basis compared to prior years when they were set on a quarterly basis.

	Average Benchmark Price and Percent Change Versus Prior Year Period Average
	For the twelve months ended December 31,				For the twelve months ended December 31,
	2009	2008	Change		2008	2007	Change
Brent crude oil—dollars per barrel	68.30	101.83	(32.9	)%	101.83	71.56	42.3	%
Weighted average cost of ethylene production—€0.01 per pound	18.74	31.01	(39.6	)%	31.01	27.47	12.9	%
Western Europe—€0.01 per pound
Polyethylene (high density)	42.90	58.51	(26.7	)%	58.51	57.30	2.1	%
Ethylene	33.41	50.00	(33.2	)%	50.00	40.99	22.0	%
Polypropylene (homopolymer)	39.92	54.15	(26.3	)%	54.15	55.28	(2.0	)%
Propylene	27.66	43.55	(36.5	)%	43.55	38.96	11.8	%
Average Exchange Rate—€ to $US	1.3972	1.4739	(5.2	)%	1.4739	1.3808	6.7	%

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The following table sets forth the O&P—EAI segment’s sales and other operating revenues, operating income, income from equity investments and selected product sales volumes.

	For the twelve months ended December 31,
Millions of dollars	2009			2008		2007
Sales and other operating revenues	$	7,437		$	13,489	$	13,145
Operating income		(13	)		220		934
Income (loss) from equity investments		(172	)		34		150
Production Volumes, in millions of pounds
Ethylene		3,503			3,615		3,953
Propylene		2,149			2,135		2,477
Sales volumes, in millions of pounds
Polypropylene		6,858			7,023		8,131
Polyethylene		4,943			4,821		4,669

Revenues—Revenues were $7,437 million in 2009 compared to $13,489 million in 2008 and $13,145 million in 2007. The decrease in 2009 revenues compared to 2008 reflected the effect of lower product sales prices and net lower sale volumes as well as the unfavorable effects of changes in currency exchange rates as the U.S. dollar averaged higher in relation to the euro in 2009 compared to 2008. Lower 2009 polypropylene and ethylene co-product sales volumes were partly offset by higher sales volumes for PE and ethylene products. In 2008, compared to 2007, product prices were essentially flat or slightly higher across the segment, and were offset by the effect of significantly lower polypropylene volumes compared to 2007.

Operating Income—The O&P—EAI segment had an operating loss of $13 million in 2009 compared to income of $220 million in 2008 and $934 million in 2007. In 2009, the underlying operations of the O&P—EAI segment reflected significantly lower net product margins and lower sales volumes, primarily in Europe, offset by the benefit of lower fixed costs compared to 2008. The lower fixed costs were primarily a result of LyondellBasell AF’s cost reduction program. In 2008, operating income primarily reflected the negative effect of higher raw material costs on olefin and polyolefin margins as well as the effect of lower sales volumes compared to 2007.

Income (loss) from equity investments—The O&P—EAI segment recognized a $172 million loss in 2009 and income of $34 million and $150 million in 2008 and 2007, respectively, from its equity investments. The 2009 loss was primarily due to recognition of a $228 million after-tax impairment of the carrying value of LyondellBasell AF’s investment in certain joint ventures as a result of weak current and projected market conditions. This loss was based on estimates of fair values developed in connection with LyondellBasell AF’s estimation of its reorganization enterprise value. The decrease in 2008 compared to 2007 reflected the weaker global markets for polyolefins.

Fourth Quarter 2009 versus Third Quarter 2009—The O&P—EAI segment had an operating loss of $43 million in the fourth quarter 2009 compared to operating income of $118 million in the third quarter 2009. The decline in fourth quarter 2009 operating results was primarily due to lower product margins, higher fixed costs and, to a lesser extent, the unfavorable effects of changes in currency exchange rates as the U.S. dollar strengthened in the fourth quarter compared to the third quarter 2009.

Intermediates and Derivatives Segment

Overview—In its I&D segment, LyondellBasell AF manufactures and markets PO; PO co-products, including SM and TBA; TBA derivative, isobutylene; and PO derivatives, including PG, PGE and BDO; ethylene derivatives, including EG, EO and other EO derivatives; acetyls, including VAM, acetic acid and methanol; and flavors and fragrances.

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2009 Versus 2008—While improving during the course of 2009, markets for PO and PO derivatives, ethylene derivatives and other intermediate chemical products generally experienced weaker demand in 2009 compared to 2008 particularly in durable goods markets.

The I&D segment operating results in 2009 primarily reflected the negative effects of lower sales volumes compared to 2008. As a result of LyondellBasell AF’s cost reduction program, fixed costs were significantly lower in 2009, partly offsetting the negative effects of the weak markets. Product margins were relatively stable. In response to lower PO demand, LyondellBasell AF temporarily idled two PO facilities in late 2008. In mid-May 2009, LyondellBasell AF restarted one of the idled PO facilities, which is located in Europe and is part of LyondellBasell AF’s joint venture with Bayer (see Note 10 to the Consolidated Financial Statements). The second PO facility restarted in September 2009.

In the third quarter 2008, operating results were negatively impacted by lost production at certain U.S. Gulf Coast plants due to the effects of a hurricane.

2008 Versus 2007—In 2008, LyondellBasell AF’s I&D segment included the intermediates and derivatives businesses of Lyondell Chemical, which were acquired on December 20, 2007.

As noted previously, during 2008 compared to 2007, U.S. and European chemical producers experienced significantly higher raw material costs, which put pressure on product margins.

The operating results for the I&D segment declined in 2008 compared to 2007 due to the significant volatility in raw material costs. Furthermore, the rapid decline in crude oil prices, particularly in the fourth quarter 2008, resulted in adjustments of the inventory values to reflect their lower market value. Operating results were also negatively affected by Hurricane Ike, which resulted in lost production and additional costs in 2008.

The following table sets forth the I&D segment’s sales and other operating revenues, operating income, income from equity investments and selected product sales volumes. The 2007 period includes the acquired Lyondell Chemical intermediate & derivatives business from December 21, 2007.

	For the twelve months ended December 31,
Millions of dollars	2009			2008			2007
Sales and other operating revenues	$	3,778		$	6,218		$	429
Operating income		250			(1,915	)		(42	)
Loss from equity investments		(16	)		(2	)		—
Sales volumes, in millions of pounds
PO and derivatives		2,695			2,997			103
EO and & derivatives		1,231			1,387			72
Styrene		2,291			3,183			126
Acetyls		1,213			1,197			34
C4 chemicals		1,401			1,597			45

Revenues—Revenues were $3,778 million in 2009 compared to $6,218 million in 2008 and $429 million in 2007. The decrease in 2009 revenues compared to 2008 reflected the effect of lower product sales prices and net lower sale volumes, a trend which began in the latter part of 2008. In addition, the unfavorable effects of changes in currency exchange rates as the U.S. dollar averaged higher in relation to the euro in 2009 compared to 2008 contributed to the decrease in revenue. The 2007 period includes the revenues of the acquired Lyondell Chemical intermediates and derivatives segment business from December 21, 2007.

Operating Income—The I&D segment had operating income of $250 million in 2009 compared to operating losses of $1,915 million in 2008 and $42 million in 2007. Results in 2009 reflected lower fixed compared to 2008 as a result of LyondellBasell AF’s cost reduction program, and lower utility costs compared to

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2008 due to lower natural gas prices. Product margins in 2009 were flat compared to 2008, as lower product prices were offset by lower raw material costs. Results in 2008 were impacted by charges of $1,992 million for impairment of goodwill related to the December 20, 2007 acquisition of Lyondell Chemical and inventory valuation adjustments of $65 million. The 2007 period includes the operating results of the acquired Lyondell Chemical intermediates & derivatives business from December 21, 2007.

Fourth Quarter 2009 versus Third Quarter 2009—The I&D segment had operating income of $59 million in the fourth quarter 2009 compared to $72 million in the third quarter 2009. The decline in fourth quarter 2009 operating results was primarily due to lower product margins and the effect of lower sales volumes, partially offset by the benefit of lower fixed costs. The lower product margins primarily reflected higher raw material and utility costs.

Technology Segment

Overview—LyondellBasell AF’s Technology segment primarily develops and licenses polyolefin process technologies and develops, manufactures and sells polyolefin catalysts. LyondellBasell AF’s Technology segment, which is largely based in Europe, sells licenses denominated in U.S. dollars and euros. The mix of U.S. dollar and euro contracts and the resulting effect of changes in currency exchange rates can have a significant effect on segment results.

2009 Versus 2008—Technology segment results for 2009 were primarily affected by lower license revenue, reflecting weaker global markets compared to 2008. The segment results also reflected the negative effects of changes in currency exchange rates as the U.S. dollar strengthened versus the euro. The 2009 results benefited from lower research and development expense, reflecting LyondellBasell AF’s cost reduction program and a government subsidy, and the effects of higher catalyst sales volumes.

2008 Versus 2007—During 2008 compared to 2007, the Technology business segment benefited from recognizing more licenses in revenue. The unfavorable effect of lower sales volumes and prices on catalyst sales in 2008 was substantially offset by the favorable effects of changes in currency exchange rates as the euro averaged 7% higher versus the U.S. dollar in 2008 compared to 2007.

The following table sets forth the Technology segment’s sales and other operating revenues and operating income.

Millions of dollars	2009		2008		2007
Sales and other operating revenues	$	523	$	583	$	497
Operating income		210		202		152

Revenues—The Technology segment had revenues of $523 million in 2009 compared to $583 million in 2008 and $497 million in 2007. The 10% decrease in 2009 compared to 2008 reflected lower license revenues, offset by the effect of higher catalyst sales. Currency exchange rates had an unfavorable effect on operating income of non-U.S. operations as the U.S. dollar strengthened versus the euro in 2009 compared to 2008. In 2008, Technology segment revenues increased 17% compared to 2007. The increase was primarily due to the effects of the weaker U.S. dollar, partly offset by lower sales volumes and prices on catalyst sales. Currency exchange rates had a favorable effect on non-U.S. operations as the U.S. dollar weakened versus the euro in 2008 compared to 2007.

Operating Income—The Technology segment had operating income of $210 million in 2009, $202 million in 2008 and $152 million in 2007. The increase in operating income in 2009 was primarily the result of higher catalysts sales volumes, partly offset by an unfavorable effect from changes in currency exchange rates. Currency exchange rates had an unfavorable effect on operating income as the U.S. dollar strengthened versus the euro in 2009 compared to 2008. The increase in operating income in 2008 compared to 2007 was primarily the result of

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higher licensing activity, particularly in the first quarter of 2008, and the favorable effect of currency exchange rates, partially offset by lower product margins and the effect of lower sales volumes for catalysts.

Fourth Quarter 2009 versus Third Quarter 2009—The Technology segment had operating income of $62 million in the fourth quarter 2009 compared to $31 million in the third quarter 2009. The increase was primarily due to higher licensing income, partly offset by the effect of lower sales volumes for catalysts.

Financial Condition

The following table summarizes LyondellBasell AF’s operating, investing and financing activities, and reflects the consolidation of Lyondell Chemical from December 21, 2007.

Millions of dollars	2009			2008			2007
Source (use) of cash:
Operating cash flow	$	(787	)	$	1,090		$	1,180
Investing cash flow		(611	)		(1,884	)		(11,899	)
Financing cash flow		1,101			1,083			10,416

Operating Activities—Operating activities used cash of $787 million in 2009, and provided cash of $1,090 million in 2008 and $1,180 million in 2007. The use of cash in 2009 primarily reflected a $573 million increase in cash used by the main components of working capital—accounts receivable and inventory, net of accounts payable – and cash used for vendor prepayments. The cash disbursements in 2009 included vendor prepayments of $329 million due to prepayments required by certain third parties as a result of LyondellBasell AF’s Chapter 11 filing.

Changes in the main components of working capital used cash of $573 million in 2009 and provided cash of $747 million in 2008. The increase in cash used by the main components of working capital in 2009 primarily reflected a $503 million required repayment to terminate the accounts receivable securitization program in early 2009. Operationally, cash used by the main components of working capital increased a minimal $70 million, despite the effect of rising prices during 2009, as LyondellBasell AF focused on reducing working capital levels.

In 2008, the main components of working capital provided cash of $747 million compared to $216 million in 2007. The increase in 2008 primarily reflected the effects of declining crude oil prices on sales prices and the value of inventory, the disruptive effects of Hurricane Ike on LyondellBasell AF’s U.S Gulf Coast operations and the planned and unplanned outages related to the Houston Refinery turnaround. Other factors impacting the main components of working capital included a general tightening of trade credit in the industry and the delay, in December 2008, of certain payments.

Cash from operating activities decreased $90 million in 2008 compared to 2007. The main components of working capital provided an additional $531 million of cash in 2008 that was more than offset by the effects of lower 2008 earnings and certain one-time payments in 2008 related to the acquired Lyondell Chemical operations.

Investing Activities—Investing activities used cash of $611 million in 2009, $1,884 million in 2008, and $11,899 million in 2007. The cash used in 2009 primarily included $779 million of capital expenditures, partially offset by proceeds from insurance claims and sales of assets of $120 million and $20 million, respectively, and $23 million from a net reduction of short-term investments. The cash provided by insurance claims related to damages sustained in 2005 at the polymers plant in Münchsmünster, Germany.

The cash used in 2008 was primarily related to business acquisitions and capital expenditures, partially offset by proceeds from the sales of assets and from insurance claims related to the polymers plant in Münchsmünster, Germany. Acquisitions in 2008 included the April 2008 acquisition of the Shell oil refinery,

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inventory and associated infrastructure and businesses at the Berre Refinery for a preliminary purchase price of $766 million and the February 2008 acquisition of Solvay Engineered Polymers, Inc., a leading supplier of polypropylene compounds in North America, for $134 million (see Note 7 to the Consolidated Financial Statements). Cash payments related to the purchase of the Berre Refinery totaling $927 million included $536 million paid at closing and $373 million paid for final adjustment of working capital. Asset sales included the September 2008 sale of the toluene diisocyanate business for proceeds of €77 million ($113 million) and the July 2008 sale of a Canadian plant for proceeds of $18 million. The cash used in 2007 was primarily related to the acquisition of Lyondell Chemical.

As a result of financial difficulties experienced by major financial institutions beginning in the latter part of 2008, LyondellBasell AF received notice that rights of redemption had been suspended with respect to a money market fund in which LyondellBasell AF had invested approximately $174 million. LyondellBasell AF had been advised that additional redemptions were forthcoming, and has received redemptions totaling $160 million through December 31, 2009, including $23 million in 2009 and $137 million in 2008, and an additional $12 million in January 2010.

The following table summarizes capital expenditures for 2009, 2008 and 2007 as well as 2010 planned capital spending. The 2010 planned capital spending reflects permitted spending per the DIP Financing arrangement, which is described in “—Liquidity and Capital Resources” below.

Millions of dollars	Plan 2010		2009		2008		2007
Capital expenditures by segment:
Refining and Oxyfuels	$	157	$	167	$	196	$	4
O&P—Americas		170		142		201		42
O&P—EAI		285		411		509		333
I&D		49		23		66		6
Technology		53		32		33		26
Other		11		6		24		—
Total capital expenditures by segment		725		781		1,029		411
Less:
Contributions to PO Joint Ventures		7		2		29		—
Consolidated capital expenditures of LyondellBasell AF’s continuing operations	$	718	$	779	$	1,000	$	411

The above capital expenditures excludes costs of major periodic turnarounds of $154 million for the 2010 Plan, $39 million in 2009 and $164 million in 2008. The turnarounds excluded from the 2007 period were immaterial.

The 2009 and 2008 capital expenditures include expenditures to rebuild the polymers plant in Münchmünster, Germany, which are partially offset by insurance proceeds. The capital spending of Lyondell Chemical is included prospectively from December 21, 2007.

Financing Activities—Financing activities provided cash of $1,101 million in 2009, $1,083 million in 2008 and $10,416 million in 2007. In 2009, LyondellBasell AF borrowed $2,167 million under the DIP Term Loan Facility portion of the DIP Financing arrangement, receiving net proceeds of $2,089 million and subsequently paid additional bank fees of $97 million. In addition, LyondellBasell AF paid fees of $93 million related to the issuance of the DIP ABL Facility, and at December 31, 2009 had $325 million of net borrowings outstanding under this facility.

The Chapter 11 filing constituted a termination event under the asset-based credit facilities in the U.S., and LyondellBasell AF used $880 million of the net proceeds under the DIP Financing arrangement to repay

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$766 million and $114 million outstanding under the previous inventory-based credit facility and the North American accounts receivable securitization program, respectively, and, as noted above under “—Operating Activities,” used $503 million to repurchase outstanding accounts receivable sold under LyondellBasell AF’s previous $1,150 million receivables securitization facility. In addition, LyondellBasell AF repaid a $100 million demand note related to emergency post-petition funding.

In 2009, LyondellBasell AF made net repayments totaling $201 million under its European receivables securitization program, which was amended and restated in March 2009. Also in 2009, LyondellBasell AF repaid $45 million (70 million Australian dollars) outstanding under an Australian term loan and $11 million of other loans, including $6 million outstanding under an Argentinean bank loan, and also made mandatory quarterly amortization payments of the Dutch Tranche A Dollar Term Loan totaling $24 million, $6 million of which was related to the DIP roll-up loans.

A non-debtor subsidiary of LyondellBasell AF entered into an accounts receivable factoring agreement in 2009 and received $24 million of proceeds. See “—Liquidity and Capital Resources—Chapter 11 Proceedings—Overview of Capital Structure—Accounts Receivable Factoring Agreement” below. Also in 2009, LyondellBasell AF received $18 million of proceeds from an Argentinean bank loan and borrowed $17 million related to a letter of credit presented for payment under the prepetition senior secured revolving credit facility.

LyondellBasell AF also had other cash used by financing activities of $21 million, which primarily reflected the effects of bank overdrafts.

The cash provided in 2008 primarily reflected a net $1,510 million borrowed under the credit facilities offset by $384 million of long-term debt repayments. The borrowings were used to fund the business acquisitions described in “—Financial Condition—Investing Activities” above.

The $10,416 million of cash provided in 2007 primarily reflected issuance of long-term debt to finance the purchase of Lyondell Chemical, offset by repayments of related long-term debt and restricted cash of $1,371 million. See Note 16 to the Consolidated Financial Statements. LyondellBasell AF also paid dividends of $522 million in 2007. For a discussion of amounts borrowed and balances outstanding on the DIP Financing, see “—Liquidity and Capital Resources—Chapter 11 Proceedings—Overview of Capital Structure—DIP Financing” below.

Liquidity and Capital Resources

Chapter 11 Proceedings—During our Chapter 11 proceedings, we satisfied our liquidity and capital requirements primarily with cash from operations, our DIP Facilities and our European Securitization arrangements. The Chapter 11 proceedings caused uncertainty in our relationships with customers, suppliers, hedging counterparties, vendors and others with whom we conduct business.

At December 31, 2009, LyondellBasell AF had cash and cash equivalents of $558 million. In addition, LyondellBasell AF had availability of $1,946 million under its credit facilities, including $1,083 million under the DIP Term Loan Facility and $863 million under the DIP ABL Facility. At December 31, 2009, borrowings outstanding under the DIP ABL Facility totaled $325 million and outstanding letters of credit totaled $424 million, which includes a $200 million letter of credit issued to secure appeal bonds posted in connection with the BASF lawsuit (see Note 25 to the Consolidated Financial Statements). The borrowing base was $1,620 million after giving effect to a $100 million minimum unused availability requirement.

In order to emerge from the Bankruptcy Cases, the Bankruptcy Court must find that the Debtors’ Plan of Reorganization complies with the requirements of the U.S. Bankruptcy Code. In addition, the Debtors must repay certain of their obligations under the DIP Financing and must raise additional debt and equity capital. The Debtors believe that their current and forecasted level of activity through the Emergence Date will be sufficient

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to maintain compliance with the DIP Financing and related forbearance agreements and to allow the Debtors to seek approval of a plan of reorganization and related restructuring of their debt. However, should business activity levels be below expectations or should margin volatility require more liquidity than the amount to which the Debtors have access through the DIP Financing or should any non-Debtor legal entity be subjected to an involuntary bankruptcy proceeding, the Debtors could default on their DIP Financing obligations. Upon an event of default, the DIP Financing lenders could seek to impose onerous credit and other terms as a condition for waiving the default or demand other concessions. Ultimately, the lenders could declare all the funds borrowed under the DIP Financing, together with accrued and unpaid interest, due and payable and could exercise remedies against their collateral and seek other relief. The outcome of these events and, in general, the Bankruptcy Cases is uncertain, which raises substantial doubt about the ability of LyondellBasell AF to continue as a going concern. For additional information on the Chapter 11 filing, see “—Chapter 11 Filing” above and Note 3 to the Consolidated Financial Statements.

Total short-term and long-term debt, including current maturities of debt not subject to compromise, was $6,984 million as of December 31, 2009.

In early 2009, after certain of LyondellBasell AF’s subsidiaries filed voluntary petitions for protection under Chapter 11 on January 6, 2009, LyondellBasell AF received notices of termination for all of its interest rate swap agreements, including notional amounts of $2,350 million under which LyondellBasell AF’s variable rate, long-term debt would effectively have been converted to fixed rate debt and $365 million of cross-currency swaps.

Overview of Capital Structure

In connection with the January 6, 2009 Chapter 11 cases, on January 7, 2009, LyondellBasell AF received Bankruptcy Court authorization to obtain emergency post-petition financing in an aggregate amount of up to $100 million, which matured on January 9, 2009. After obtaining forbearance agreements from the required number of secured lenders under the then current senior secured and other secured loans, the Debtors received Bankruptcy Court approval of the DIP Financing.

The amended DIP Financing described below matures on, and requires the Debtors to emerge from the Bankruptcy Cases by, April 6, 2010, unless extended by the Debtors to June 3, 2010 pursuant to the Debtor’s one-time extension option, provided that if the confirmation hearing of the Plan of Reorganization is extended due to the lack of the Bankruptcy Court’s availability, the maturity date of the DIP Financing will be extended by up to twenty-one days. The capital structure of the Debtors on emergence from Chapter 11 will be set in the Plan of Reorganization that must be confirmed by the Bankruptcy Court.

DIP Financing—On January 8, 2009, the Debtors received interim Bankruptcy Court authorization to obtain certain senior secured super priority debtor-in-possession financing and on March 1, 2009, the Debtors received the final Bankruptcy Court approval to obtain debtor-in possession financings that provided for facilities in an aggregate amount up to $8,500 million, as follows, comprising: (i) a $6,500 million term loan facility (“DIP Term Loan Facility”) consisting of: (a) $3,250 million of new funding (the “New Money Loans”) and (b) $3,250 million of a dollar-for-dollar “roll up” of previously outstanding senior secured loans (the “Roll-up Loans”) and (ii) an asset-based facility with a revolving credit line initially in an amount up to $1,540 million (“DIP ABL Facility” and together with the DIP Term Loan Facility, the “DIP Financing”) subject to a borrowing base, with an option to increase this facility through the addition of new lenders by an amount up to $460 million so that the aggregate DIP ABL Facility equaled an amount up to $2,000 million. On March 12, 2009 and July 15, 2009, new lenders were added increasing the DIP Financing by $30 million and $50 million, respectively, to $8,120 million.

The initial proceeds of the DIP Financing were used: (i) to refinance, in full, (A) the Senior Secured Inventory-Based Facility, (B) the $1,150 million Accounts Receivable Securitization Facility (see Note 12 to the Consolidated Financial Statements), (C) the $200 million North American accounts receivable securitization

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program, and (D) the $100 million super emergency interim DIP Financing; (ii) to pay related transaction costs, fees and expenses; (iii) to provide working capital; and (iv) for other general corporate purposes of the Debtors as well as the non-U.S. subsidiaries of LyondellBasell AF. Not more than €700 million of the proceeds under the DIP Financing may be used to fund LyondellBasell AF’s non-U.S. subsidiaries. Net advances of $115 million (€80 million) were made to LyondellBasell AF’s non-U.S. subsidiaries during 2009. Total cash held by LyondellBasell AF’s foreign operations may not exceed €200 million, after excluding certain items, including restricted cash, which is defined as cash that is not immediately available due to settlement procedures under the European receivables securitization program, tax and legal considerations in certain countries and pursuant to letters of credit and guarantees. On a weekly basis, cash in excess of the €200 million limit must be transferred to Lyondell Chemical, provided that the excess is at least €5 million.

The required prepetition secured lenders entered into forbearance agreements, as applicable, with respect to the exercise of certain remedies under the amended and restated prepetition senior secured credit agreement and bridge loan, each originally dated as of December 20, 2007.

DIP Term Loan Facility—On January 9, 2009, the Debtors borrowed $2,167 million under the DIP Term Loan Facility and received proceeds, net of related fees, of $2,089 million. Of the $2,089 million in proceeds: (i) $672 million was used, together with borrowings under the DIP ABL Facility, to refinance, in full, the pre-existing asset-based facilities; (ii) $507 million was used to fund the operations of non-U.S. subsidiaries; and (iii) $100 million was used to repay a demand note related to emergency post-petition funding. On March 1, 2009, the Debtors received final Bankruptcy Court approval of the DIP Financing arrangement. As a result, LyondellBasell AF had access to an additional $1,083 million under the DIP Term Loan Facility, and could use an additional €260 million to fund its non-U.S. subsidiaries. In the year ended December 31, 2009, the Debtors paid fees of $97 million, primarily related to the DIP Facilities.

Upon completion of the syndication of the DIP Facilities on March 5, 2009, the roll up of previously outstanding senior secured loans in an aggregate amount equal to $3,250 million into the DIP Term Loan Facility became effective. This roll up was comprised of: (i) $385 million of the U.S. Tranche A Dollar Term Loan; (ii) $2,015 million of the U.S. Tranche B Dollar Term Loan; (iii) $465 million of the German Tranche B Euro Term Loan; (iv) $202 million of the U.S. Revolving Credit Facility, all of which was held by the Debtors; and (v) $128 million of the Dutch Tranche A Dollar Term Loan, of which $122 million was outstanding at December 31, 2009; and (vi) $54 million of the Dutch Revolving credit facility.

Loans under the DIP Term Loan Facility bear interest at either the Base Rate or the Eurodollar Rate, (both as defined in the DIP Term Loan Facility), plus, in either case, an applicable margin. The Eurodollar Rate cannot decrease below 3% for New Money Loans, and for 62% of the roll-up loans cannot decrease below 3.25%. In the case of New Money Loans, the applicable margin per annum is 9% for Base Rate Loans and 10% for Eurocurrency Loans. The applicable margin per annum for roll-up loans is 2.69% for Base Rate Loans and 3.69% for Eurocurrency Loans, subject to adjustment. In the event of default, interest will increase by 200 basis points. Interest on Eurocurrency Loans is payable on the last day of the applicable interest period and on the maturity date and for Base Rate Loans, on the last day of each calendar month and on the maturity date. Additional fees under the DIP Term Loan Facility include a 1.5% per annum fee on the daily unused portion of the New Money Loan commitments and a 3% exit fee due upon repayment of the New Money and roll-up loans. An exit fee is also applicable to any voluntary reduction of the New Money Loan commitments. To the extent a New Money Loan commitment is voluntarily reduced or an outstanding New Money Loan is prepaid, such amounts cannot be borrowed or re-borrowed. LyondellBasell AF has recorded a $195 million liability related to the 3% exit fee and a corresponding deferred asset, which is being amortized to interest expense over the term of the DIP Term Loan Facility.

Subject to certain limitations, net proceeds arising from the disposition of assets, or the settlement of casualty claims relating to collateral on which DIP Term Facility lenders have a first priority security interest, or from the incurrence of debt, must first be used to repay outstanding New Money Loans under the DIP Term Loan

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Facility and then used to reduce undrawn commitments, next used to pay down the DIP ABL Facility loans and, finally, to repay the roll-up loans.

DIP ABL Facility—Pursuant to the DIP ABL Facility, the Debtors may currently, subject to a borrowing base, borrow up to $1,620 million. The borrowing base is determined using formulae applied to accounts receivable and inventory balances, and is reduced to the extent of outstanding letters of credit under the facility, which are limited to $700 million. Under the terms of the DIP ABL Facility, the asset-based facility may be increased up to an aggregate maximum commitment amount of $2,000 million, in increments of at least $25 million. On March 12, 2009 and July 15, 2009, the Debtors exercised their option to increase the DIP ABL Facility by designating a New Lender, increasing the commitments under the DIP ABL Facility from $1,540 million to $1,620 million.

On January 9, 2009, the Debtors borrowed $810 million under the DIP ABL Facility, paying $93 million of fees related to the new facility and, together with proceeds from the DIP Term Loan Facility, refinanced the pre-existing asset-based facilities. The Debtors subsequently repaid the $810 million principal amount outstanding under the DIP ABL Facility on January 23, 2009. At December 31, 2009, $325 million was outstanding under the DIP ABL Facility.

Subject to certain limitations in the DIP ABL Facility agreement and provisions in the DIP Term Loan Facility agreement, net proceeds arising from the disposition of assets, the incurrence of debt or casualty claims related to collateral of the U.S. ABL Facility must be used to repay outstanding loans under the DIP ABL Facility. In addition, if on any day the total amount of loans outstanding under the DIP ABL Facility, including the amount of outstanding letters of credit, exceed the maximum available amount under the DIP ABL Facility, a payment equal to or greater than the excess borrowings must be made on the following business day.

DIP Financing Amendments—The DIP Financing agreements have been amended as follows:

• Effective as of July 24, 2009, the DIP Financing agreements were amended to, among other things, address certain changes in specific reporting requirements, to increase certain investment and indebtedness limitations for the purpose of permitting certain business operations and opportunities, and to provide for the confidentiality of certain proprietary business information.

• On August 14, 2009, the DIP Financing agreements were amended further to modify the delivery terms for the Plan of Reorganization and Disclosure Statement.

• Effective October 5, 2009, the DIP Financing agreements were amended to extend the milestone related to the approval of the Disclosure Statement for the Plan of Reorganization from October 15 to November 13, 2009 and the plan confirmation milestone from December 1 to December 15, 2009.

• In October 2009 and December 2009, the DIP Financing agreements were further amended to, among other things, extend the milestone related to the approval of the Disclosure Statement for the Plan of Reorganization to April 6, 2010 and the plan confirmation milestone to May 20, 2010, subject to further extension based on the Bankruptcy Court’s availability. These amendments extended the maturity of the DIP Financing agreements from December 15, 2009 to April 6, 2010, with a one-time option to further extend the maturity to June 3, 2010. The maturity date of the DIP Financing agreements will be adjusted with the plan confirmation milestone, as may be extended based on the Bankruptcy Court’s availability.

Covenants—Subject to certain exceptions, the DIP Financing agreements contain covenants that restrict, among other things, debt incurrence, lien incurrence, investments, certain payments on indebtedness, sales of assets and mergers, amendment of terms of certain indebtedness and material obligations, alterations in the conduct of LyondellBasell AF’s business, and affiliate transactions and distributions by LyondellBasell AF and its subsidiaries.

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In addition, the DIP Financing agreements contain covenants that establish or require the Debtors to maintain quarterly capital expenditures at levels below the maximum defined in the DIP Financing agreements, daily minimum levels of liquidity and monthly minimum levels of cumulative consolidated earnings before interest, taxes, depreciation, amortization and restructuring costs (“EBITDAR”).

The amended DIP Financing agreements also contain a covenant establishing certain milestones related to the Plan of Reorganization, including obtaining the Bankruptcy Court’s confirmation of the plan by May 20, 2010, subject to the extension described in “—Chapter 11 Filing” above, and the Bankruptcy Court’s availability.

Security and Guarantees—Loans under the DIP Financing agreements are secured by priming first priority interests in and liens on substantially all prepetition and post-petition property of the borrowers and U.S. guarantors under the DIP Financing agreements, including, but not limited to, material fee-owned property and equipment, general intangibles, investment and intellectual property, and proceeds of the foregoing, as well as share capital of certain subsidiaries. The collateral provided by Germany Holdings is limited to the share capital of its direct subsidiaries.

Guarantors include each borrower, certain Debtors, any Additional Debtor, (as defined in the DIP Financing agreements), LyondellBasell AF and each LyondellBasell AF subsidiary that is a guarantor of the prepetition senior secured credit facility and bridge loan. The guarantees are joint and several and full and unconditional.

Accounts Receivable Securitization Programs—LyondellBasell AF has a European accounts receivable securitization program, which provides additional funding up to €450 million to certain European subsidiaries. Transfers of accounts receivable under this program do not qualify as sales; therefore, the transferred accounts receivable and the proceeds received through such transfers are included in trade receivables, net, and short-term debt in the consolidated balance sheets.

The European accounts receivable securitization program provides that a certain termination event occurs in connection with the standstill period related to our Senior Notes due 2015 (“2015 Senior Notes”). On January 26, 2010, LyondellBasell AF obtained an amendment to the European accounts receivable securitization program to, among other things, extend the program to April 6, 2010, with an option to further extend the program to June 3, 2010, provided that the DIP Financing agreements are also extended to June 3, 2010. The parties to the securitization program have generally agreed to postpone such termination event until April 6, 2010. Absent a deferral of the expiration of the standstill period related to the 2015 Senior Notes, the purchaser may require a change in the settlement process that may reduce available liquidity during certain periods. LyondellBasell AF had $377 million of borrowings outstanding under the European securitization program at December 31, 2009.

The Debtors had an accounts receivable securitization program, which was entered into in 2005, to provide funding up to $200 million to North American subsidiaries of LyondellBasell AF. In connection with the commencement of the Bankruptcy Cases, this facility was terminated and repaid with proceeds from the DIP Financing.

Accounts Receivable Factoring Agreement—On October 8, 2009, a non-debtor subsidiary of LyondellBasell AF entered into an accounts receivable factoring facility for up to €100 million. The factoring facility is for an indefinite period, non-recourse, unsecured and terminable by either party subject to notice. At December 31, 2009, $24 million was outstanding under the accounts receivable factoring agreement.

Prepetition Indebtedness

Immediately prior to the Debtors’ filing for relief under Chapter 11, LyondellBasell AF’s debt primarily consisted of outstanding amounts under debt instruments that are referenced in Notes 16, 19 and 21 to the Consolidated Financial Statements. The treatment of such existing prepetition debt is discussed in Notes 3, 4, 16, 19 and 21 to the Consolidated Financial Statements.

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Off-Balance Sheet Arrangements—LyondellBasell AF was a party to a $1,150 million accounts receivable securitization facility that was scheduled to mature in December 2012 and that had some characteristics of an off-balance sheet arrangement. The accounts receivable securitization facility terminated as a result of the Chapter 11 filing and was repaid, in full, on January 9, 2009, using proceeds from the DIP Financing. See Note 13 to the Consolidated Financial Statements for additional accounts receivable information.

Other obligations that do not give rise to liabilities that would be reflected in LyondellBasell AF’s balance sheet are described under “—Contractual and Other Obligations—Purchase Obligations” and “—Operating Leases” below.

Contractual and Other Obligations—The following table summarizes, as of December 31, 2009, LyondellBasell AF’s minimum payments for long-term debt, including current maturities, short-term debt, and contractual and other obligations for the next five years and thereafter. With certain noted exceptions, liabilities subject to compromise are excluded. As further discussed below, the ultimate settlement of the following obligations and the liabilities subject to compromise is dependent upon approval of LyondellBasell AF’s Plan of Reorganization and its emergence from bankruptcy.

				Payments Due By Period
Millions of dollars	Total			2010		2011		2012		2013		2014		Thereafter
Total debt	$	6,984		$	6,679	$	—	$	—	$	—	$	—	$	305
Interest on total debt		693			299		24		24		24		24		297
Pension benefits:
PBO		2,778			212		151		159		209		165		1,882
Assets		(1,638	)		—		—		—		—		—		(1,638	)
Funded status		1,140
Other post-retirement benefits		353			24		24		24		26		26		229
Advances from customers		323			145		19		12		67		43		37
Other		509			21		11		16		15		8		438
Deferred income taxes		2,081			26		79		95		175		167		1,539
Other obligations:
Purchase obligations:
Take-or-pay contracts		16,599			1,998		1,994		1,994		1,932		1,927		6,754
Other contracts		34,944			9,695		6,375		4,092		3,934		3,751		7,097
Operating leases		1,992			267		227		189		168		148		993
Total	$	65,618		$	19,366	$	8,904	$	6,605	$	6,550	$	6,259	$	17,933

Total Debt—Total debt includes the DIP Financing agreements and long- and short-term credit facilities and debt obligations of LyondellBasell AF’s non-Debtor subsidiaries, and excludes $18,370 million of debt classified as “Liabilities subject to compromise.” See Notes 16, 19 and 21 to the Consolidated Financial Statements for a discussion of covenant requirements under the credit facilities and indentures and additional information regarding debt and liabilities subject to compromise. LyondellBasell AF’s future capital structure, including debt, will depend upon approval of its Plan of Reorganization and its emergence from bankruptcy.

Interest—LyondellBasell AF’s debt and related party debt agreements contain provisions for the payment of monthly, quarterly or semi-annual interest at a stated rate of interest over the term of the debt. As a result of the Bankruptcy Cases, a substantial portion of the Debtor’s prepetition debt was classified as “Liabilities subject to compromise.” The Debtors are obligated to pay interest, at the non-default rate, on the outstanding amounts under the prepetition senior secured credit facility not designated as roll-up loans, subject to a minimum liquidity test and to the extent “liquidity,” as defined in the final order approving the DIP Financing, is greater than, $1,015 million after giving effect to the payment. The interest payments in the above table do not include projected interest payments for that portion of the prepetition senior secured credit facility included in

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“Liabilities subject to compromise.” Payment obligations on debt and related party debt agreements not classified as “Liabilities subject to compromise” are reflected in the table above. As noted above, LyondellBasell AF’s future capital structure, including debt and related interest, will depend upon approval of the its Plan of Reorganization and its emergence from bankruptcy.

Pension Benefits—LyondellBasell AF maintains several defined benefit pension plans, as described in Note 23 to the Consolidated Financial Statements. At December 31, 2009, the projected benefit obligation for LyondellBasell AF’s pension plans, including Equistar and Millennium plans, exceeded the fair value of plan assets by $1,140 million. Subject to future actuarial gains and losses, as well as actual asset earnings, LyondellBasell AF, together with its consolidated subsidiaries, will be required to fund the $1,140 million, with interest, in future years. LyondellBasell AF’s pension contributions were $52 million in 2009, $80 million in 2008 and $63 million in 2007. Required contributions are expected to be approximately $96 million in 2010. Estimates of pension benefit payments through 2014 are included in the table above. At December 31, 2009, these obligations are classified as “Liabilities subject to compromise.” Their ultimate settlement depends upon approval of LyondellBasell AF’s Plan of Reorganization and LyondellBasell AF’s emergence from bankruptcy.

Other Post-Retirement Benefits—LyondellBasell AF provides other post-retirement benefits, primarily medical benefits to eligible participants, as described in Note 23 to the Consolidated Financial Statements. Other post-retirement benefits are unfunded and are paid by LyondellBasell AF as incurred. Estimates of other post-retirement benefit payments through 2014 are included in the table above.

Advances from Customers—LyondellBasell AF received advances from customers in prior years in connection with long-term sales agreements under which LyondellBasell AF is obligated to deliver product primarily at cost-based prices. These advances are treated as deferred revenue and will be amortized to earnings as product is delivered over the remaining terms of the respective contracts, which primarily range from 4 to 13 years. The unamortized long-term portion of such advances totaled $287 million as of December 31, 2009.

Other—Other primarily consists of accruals for environmental remediation costs, obligations under deferred compensation arrangements, and anticipated asset retirement obligations. See “—Critical Accounting Policies” below for a discussion of obligations for environmental remediation costs.

Deferred Income Taxes—The scheduled settlement of the deferred tax liabilities shown in the table is based on the scheduled reversal of the underlying temporary differences. Actual cash tax payments will vary dependent upon future taxable income.

Purchase Obligations—LyondellBasell AF is party to various obligations to purchase products and services, principally for raw materials, utilities and industrial gases. These commitments are designed to assure sources of supply and are not expected to be in excess of normal requirements. The commitments are segregated into take-or-pay contracts and other contracts. Under the take-or-pay contracts, LyondellBasell AF is obligated to make minimum payments whether or not it takes the product or service. Other contracts include contracts that specify minimum quantities; however, in the event that LyondellBasell AF does not take the contractual minimum, it is only obligated for any resulting economic loss suffered by the vendor. The payments shown for the other contracts assume that minimum quantities are purchased. For contracts with variable pricing terms, the minimum payments reflect the contract price at December 31, 2009. The table excludes contracts which have been rejected as part of the bankruptcy process. Claims related to such rejected contracts are included in “Liabilities subject to compromise.”

Operating Leases—LyondellBasell AF leases various facilities and equipment under noncancelable lease arrangements for various periods. See Note 20 to the Consolidated Financial Statements for related lease disclosures. The table excluded leases which have been rejected as part of the bankruptcy process. Claims related to such rejected leases are included in “Liabilities subject to compromise.”

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Liquidity and Capital Resources—Emergence

On April 8, 2010, in connection with the anticipated emergence from Chapter 11 proceedings,

• LBI Escrow Corporation, a wholly-owned subsidiary of LyondellBasell Industries N.V.

• issued $2,250,000,000 of 8% Senior Secured Notes due 2017 and €375,000,000 of Senior Secured Notes due 2017, the proceeds of which were placed in escrow pending release on the Emergence Date,

• entered into a $500,000,000 Senior Term Loan Facility and borrowed $500,000,000 thereunder, which was placed in escrow pending release on the Emergence Date, and

• LyondellBasell Industries N.V. entered into the $1,750,000,000 U.S. ABL Facility, none of which has been drawn.

On the Emergence Date, LBI Escrow Corporation will merge with and into Lyondell Chemical, and Lyondell Chemical will replace LBI Escrow Corporation as the issuer of the Senior Secured Notes and the borrower under the $500,000,000 Senior Term Loan Facility.

The consummation of the Plan of Reorganization will significantly de-lever our capital structure. Assuming an April 30, 2010 Emergence Date, we expect LyondellBasell Industries N.V. to have approximately $7.2 billion of total consolidated debt, approximately $5.2 billion of net consolidated debt and approximately $2.0 billion of cash and cash equivalents. Following the Emergence Date, LyondellBasell Industries N.V. will fund ongoing liquidity requirements through a combination of cash flows from operations, borrowings under the U.S. ABL Facility, the European Securitization and other receivables securitization and financing arrangements. We believe that our cash and cash equivalents, together with the U.S. ABL Facility, European Securitization and other receivables securitizations and cash from operations, will provide LyondellBasell Industries N.V. with sufficient financing to meet capital expenditures, working capital, debt service, contractual obligations and other funding requirements. Since LyondellBasell Industries N.V. is subject to risks that working capital requirements can spike with high oil prices, LyondellBasell Industries N.V. may seek to put in place an Oil-Indexed Credit Facility of up to $750 million following emergence from Chapter 11, which will provide for working capital funding when oil prices rise above a certain level. There can be no assurance that this facility will be available on commercially acceptable terms or that we will be successful in maintaining our current liquidity arrangements on satisfactory terms or otherwise. In any event, LyondellBasell Industries N.V.’s ability to meet funding requirements will depend upon many factors outside of its control, including prevailing economic conditions, the costs of raw materials, energy prices and financial and economic conditions and the other factors described under “Item 1A. Risk Factors” herein.

Debt and Interest

The following table summarizes, on a pro forma basis after giving effect to the Pro Forma Adjustments, LyondellBasell Industries N.V.’s minimum payments for long-term debt, including current maturities, and short-term debt for the next five years and thereafter.

			Payments Due By Period
Millions of dollars	Total		2010		2011		2012		2013		2014		Thereafter
Total debt	$	7,191	$	390	$	5	$	5	$	5	$	5	$	6,781
Interest on total debt		4,835		618		602		602		602		602		1,809

Total Debt—Total debt will include the Senior Secured Notes, the Senior Term Loan Facility, the Plan Roll-up Notes, the European Securitization and the 2027 Notes.

Interest—LyondellBasell Industries N.V.’s debt agreements will contain provisions for the payment of monthly, quarterly or semi-annual interest at a stated rate of interest over the term of the debt. LyondellBasell

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Industries N.V. will pay interest on the Senior Secured Notes, the Senior Term Loan Facility, the Plan Roll-up Notes and the 2027 Notes. The table above uses a blended rate of 7.62% for the Senior Secured Notes and the Senior Term Loan Facility, 11% for the Plan Roll-up Notes, 3.2% for the European Securitization and 8.1% for the 2027 Notes.

Related Party Transactions

LyondellBasell AF has related party transactions with LyondellBasell AF’s equity investees and its affiliates (see Notes 9 and 26 to the Consolidated Financial Statements). LyondellBasell AF believes that such transactions are effected on terms substantially no more or less favorable than those that would have been agreed upon by unrelated parties on an arm’s length basis.

In addition, LyondellBasell AF has related party transactions with Access Industries.

Critical Accounting Policies

LyondellBasell AF applies those accounting policies that management believes best reflect the underlying business and economic events, consistent with accounting principles generally accepted in the U.S. LyondellBasell AF’s more critical accounting policies include those related to operating as a going concern , long-lived assets, the valuation of goodwill, accruals for long-term employee benefit costs such as pension and other post-retirement costs, liabilities for anticipated expenditures to comply with environmental regulations, and accruals for taxes based on income. Inherent in such policies are certain key assumptions and estimates made by management. Management periodically updates its estimates used in the preparation of the financial statements based on its latest assessment of the current and projected business and general economic environment. These critical accounting policies have been discussed with LyondellBasell AF’s Supervisory Board. LyondellBasell AF’s significant accounting policies are summarized in Note 2 to the Consolidated Financial Statements.

Going Concern—The 2008 global financial crisis and ongoing recession have created substantial uncertainty for the global economy and the markets in which LyondellBasell AF operates. During the fourth quarter of 2008 and the year ending December 31, 2009, demand and product margins for LyondellBasell AF’s products declined significantly. These conditions are likely to continue and are expected to negatively impact LyondellBasell AF’s operating cash flow and liquidity. LyondellBasell AF has taken steps to reduce costs, working capital and discretionary capital spending. LyondellBasell AF expects that these actions will be sufficient to allow it to continue to operate until such time as it emerges from bankruptcy and beyond. However, as noted below, there are a number of factors that are beyond LyondellBasell AF’s control that create doubt about its ability to continue as a going concern.

On January 6, 2009, certain of LyondellBasell AF’s subsidiaries filed voluntary petitions for reorganization under Chapter 11 in the Bankruptcy Court. On April 24, 2009, to protect against claims by certain financial and U.S. trade creditors, LyondellBasell AF and its general partner, LyondellBasell AF GP S.a.r.l., also filed voluntary petitions for relief under Chapter 11. On May 8, 2009, thirteen additional U.S. subsidiaries also filed voluntary petitions for relief under Chapter 11. All 94 of these cases are being jointly administered under the jurisdiction of the Bankruptcy Court under the caption “In re Lyondell Chemical Company, et al.”

In connection with the Bankruptcy Cases, and after obtaining forbearance agreements from the required number of secured lenders under certain senior secured loans, the Debtors received Bankruptcy Court approval of the DIP Financing, as defined under “—Liquidity and Capital Resources—Chapter 11 Proceedings—Overview of Capital Structure” above.

The DIP Financing contains, among others, affirmative covenants and financial maintenance covenants. The DIP Financing matures on April 6, 2010, subject to the one-time extension option. The capitalization of LyondellBasell AF upon emergence of the Debtors from Chapter 11 is subject to Bankruptcy Court confirmation of a plan of reorganization.

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The ability of LyondellBasell AF and the Debtors to continue as going concerns is dependent upon, among other things, LyondellBasell AF’s ability (i) to comply with the loan covenants in the DIP financing and to meet its post-petition obligations as they become due; (ii) to comply with the other terms and conditions of the DIP Financing; and (iii) to obtain confirmation of a plan of reorganization under the U.S. Bankruptcy Code in a timely manner to exit Chapter 11 as of the applicable maturity date, which in turn requires LyondellBasell AF to raise additional debt and equity capital.

Liabilities Subject to Compromise—Liabilities subject to compromise include the Debtors’ long-term debt that is considered undersecured; amounts due from the Debtors to vendors and employees for goods and services received prior to the January 6, 2009, April 24, 2009 and May 8, 2009 petition dates; and damage claims, including environmental claims, created by the Debtors’ rejection of certain executory contracts.

As part of its ongoing claims resolution process, LyondellBasell AF is investigating differences between claim amounts filed by creditors and LyondellBasell AF’s estimates of the probable allowed amount of its liabilities subject to compromise. Adjustments to its liabilities subject to compromise are reasonably possible as additional information becomes available with respect to these claims.

Long-Lived Assets—With respect to long-lived assets, key assumptions included the estimates of the asset fair values and useful lives at the acquisition date and the recoverability of carrying values of fixed assets and other intangible assets, as well as the existence of any obligations associated with the retirement of fixed assets. Such estimates could be significantly modified and/or the carrying values of the assets could be impaired by such factors as new technological developments, new chemical industry entrants with significant raw material or other cost advantages, uncertainties associated with the European, U.S. and world economies, the cyclical nature of the chemical and refining industries, and uncertainties associated with governmental actions, whether regulatory or, in the case of Houston Refining LP, with respect to its crude oil contract.

The current recession and continuing weakness in financial markets have created substantial uncertainty for the global economy and the markets in which LyondellBasell AF operates.

Earnings for 2009 included pretax impairment charges of $17 million, primarily related to the impairment of LyondellBasell AF’s emissions allowances that are subject to reallocation to other industry participants under a proposed regulation by the Texas Commission on Environmental Quality. As part of its reorganization, LyondellBasell AF also recognized charges totaling $680 million, including $624 million for the write-off of the carrying value and related assets of its Chocolate Bayou olefins facility near Alvin, Texas and $55 million for the write-off of its EG facility in Beaumont, Texas.

Earnings for 2008 included a $218 million pretax charge for impairment of the carrying value of the assets related to LyondellBasell AF’s Berre Refinery. Also in 2008, LyondellBasell AF recognized a $7 million charge for impairment of its EG facility in Beaumont, Texas.

Earnings for 2007 included a $12 million pretax charge for impairment of the net book value of LyondellBasell AF’s Canadian facility in Varennes, Québec and $8 million for capitalized engineering costs for a new polymers plant in Germany.

For purposes of recognition and measurement of the above-noted impairments, long-lived assets were grouped with other assets and liabilities at the lowest level for which identifiable cash flows were largely independent of the cash flows of other assets and liabilities.

The estimated useful lives of long-lived assets range from 3 to 30 years. Depreciation and amortization of these assets, including amortization of deferred turnaround costs, under the straight-line method over their estimated useful lives totaled $1,774 million in 2009. If the useful lives of the assets were found to be shorter than originally estimated, depreciation and amortization charges would be accelerated over the revised useful life.

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Long-Term Employee Benefit Costs—The costs to LyondellBasell AF of long-term employee benefits, particularly pension and other post-retirement medical and life insurance benefits, are incurred over long periods of time, and involve many uncertainties over those periods. The net periodic benefit cost attributable to current periods is based on several assumptions about such future uncertainties, and is sensitive to changes in those assumptions. It is management’s responsibility, often with the assistance of independent experts, to select assumptions that in its judgment represent its best estimates of the future effects of those uncertainties. It also is management’s responsibility to review those assumptions periodically to reflect changes in economic or other factors that affect those assumptions.

The current benefit service costs, as well as the existing liabilities, for pensions and other post-retirement benefits are measured on a discounted present value basis. The discount rate is a current rate, related to the rate at which the liabilities could be settled. LyondellBasell AF’s assumed discount rate is based on published average rates for high-quality (Aa rating) ten-year fixed income securities. For the purpose of measuring the benefit obligations at December 31, 2009, LyondellBasell AF decreased its average assumed discount rates from 6.00% to 5.75% for U.S. plans and from 5.73% to 5.51% for non-U.S. plans, reflecting market interest rates at December 31, 2009. The December 31, 2009 rate also will be used to measure net periodic benefit cost during 2010.

The benefit obligation and the periodic cost of other post-retirement medical benefits also are measured based on assumed rates of future increase in the per capita cost of covered health care benefits. As of December 31, 2009, the assumed rate of increase was 8% for 2010, decreasing 0.5% per year to 5% in 2016 and thereafter. A one percentage point change in the health care cost trend rate assumption would have no significant effect on either the benefit liability or the net periodic cost, due to limits on LyondellBasell AF’s maximum contribution level under the medical plan.

The net periodic cost of pension benefits included in expense also is affected by the expected long-term rate of return on plan assets assumption. Investment returns that are recognized currently in net income represent the expected long-term rate of return on plan assets applied to a market-related value of plan assets which, for LyondellBasell AF, is defined as the market value of assets. The expected rate of return on plan assets is a longer term rate, and is expected to change less frequently than the current assumed discount rate, reflecting long-term market expectations, rather than current fluctuations in market conditions.

LyondellBasell AF’s weighted average expected long-term rate of return on U.S. and non-U.S. plan assets of 8.0% and 5.78%, respectively, is based on the average level of earnings that its independent pension investment advisor had advised could be expected to be earned over time. The expectation is based on an asset allocation that varies by region. The asset allocations are summarized in Note 23 to the Consolidated Financial Statements. The actual returns in 2009 for U.S. and non-U.S. plan assets were 23% and 6%, respectively.

The actual rate of return on plan assets may differ from the expected rate due to the volatility normally experienced in capital markets. Management’s goal is to manage the investments over the long term to achieve optimal returns with an acceptable level of risk and volatility.

Net periodic pension cost recognized each year includes the expected asset earnings, rather than the actual earnings or loss. This unrecognized amount, to the extent it exceeds 10% of the projected benefit obligation for the respective plan, is recognized as additional net periodic benefit cost over the average remaining service period of the participants in each plan.

LyondellBasell AF temporarily suspended its matching contributions under its defined contribution plans (Employee Savings Plans) beginning in March 2009 as a result of the bankruptcy.

Additional information on the key assumptions underlying these benefit costs appears in Note 23 to the Consolidated Financial Statements.

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Liabilities for Environmental Remediation Costs—Anticipated expenditures related to investigation and remediation of contaminated sites, which include current and former plant sites and other remediation sites, are accrued when it is probable a liability has been incurred and the amount of the liability can be reasonably estimated. Only ongoing operating and monitoring costs, the timing of which can be determined with reasonable certainty, are discounted to present value. Future legal costs associated with such matters, which generally are not estimable, are not included in these liabilities.

As a result of the Bankruptcy Cases, the Debtors have discontinued funding and/or ceased performing cleanups at various third-party sites (including sites where the Debtors were subject to a CERCLA or similar state order to fund or perform such cleanup, such as the river and the other portions of the Kalamazoo River Superfund Site that the Debtors do not own). The Debtors are seeking a determination from the Bankruptcy Court that any claims or fines asserted against a Debtor with respect to such sites would be prepetition claims, the collection of which is stayed by the applicable provisions of the U.S. Bankruptcy Code and that will ultimately be discharged as a general unsecured claim under the Debtors’ Plan of Reorganization.

Accordingly, in 2009, environmental remediation liabilities related to third-party sites were reclassified from “Other liabilities” to “Liabilities subject to compromise.” In 2009, in accordance with the bankruptcy claims process, the basis for certain accrued liabilities was adjusted to reflect the Debtors’ estimated claims to be allowed, including executory contracts and environmental liabilities that are classified as “Reorganization items.” As a result the total amount of the accrued liability included in “Liabilities subject to compromise” reflects the current expected amount of the allowed claims.

As of December 31, 2009, LyondellBasell AF’s accrued liability for future environmental remediation costs at current and former plant sites and other remediation sites, except those classified as “Liabilities subject to compromise” totaled $89 million. The liabilities for individual sites range from less than $1 million to $20 million, and remediation expenditures are expected to occur over a number of years, and not to be concentrated in any single year. In the opinion of management, there is no material estimable range of reasonably possible loss in excess of the liabilities recorded for environmental remediation. However, it is possible that new information about the sites for which the accrual has been established, new technology or future developments such as involvement in investigations by regulatory agencies, could require LyondellBasell AF to reassess its potential exposure related to environmental matters. See Note 25 to the Consolidated Financial Statements for further discussion of environmental remediation matters.

Accruals for Taxes Based on Income—Uncertainties exist with respect to interpretation of complex U.S. federal and non-U.S. tax regulations. Management expects that LyondellBasell AF’s interpretations will prevail. Also, LyondellBasell AF has recognized deferred tax benefits relating to its future utilization of past operating losses. LyondellBasell AF believes it is more likely than not that the amounts of deferred tax assets in excess of the related valuation reserves will be realized. Further details on LyondellBasell AF’s income taxes appear in Note 24 to the Consolidated Financial Statements.

Accounting and Reporting Changes

For a discussion of the potential impact of new accounting pronouncements on LyondellBasell AF’s consolidated financial statements, see Note 2 to the Consolidated Financial Statements.

Quantitative and Qualitative Disclosures About Market Risk

See Note 22 to the Consolidated Financial Statements for discussion of LyondellBasell AF’s management of commodity price risk, foreign currency exposure and interest rate risk through its use of derivative instruments and hedging activities.

As a result of the voluntary filings of petitions for relief under Chapter 11 and the associated perceived credit risk, LyondellBasell AF is limited in its ability to further engage in derivative transactions. LyondellBasell

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AF is not participating in interest rate transactions at this time due to a lack of willing counterparties and its foreign currency transactions are restricted to a few currencies and primarily to spot or near spot transactions. LyondellBasell AF continues to enter into commodity derivative contracts in the ordinary course of business on a limited basis, and only through exchange traded futures contracts, which are supported by cash deposits.

Commodity Price Risk

A substantial portion of LyondellBasell AF’s products and raw materials are commodities whose prices fluctuate as market supply and demand fundamentals change. Accordingly, product margins and the level of LyondellBasell AF’s profitability tend to fluctuate with changes in the business cycle. LyondellBasell AF tries to protect against such instability through various business strategies. These include provisions in sales contracts allowing LyondellBasell AF to pass on higher raw material costs through timely price increases, formula price contracts to transfer or share commodity price risk, and increasing the depth and breadth of LyondellBasell AF’s product portfolio.

In addition, LyondellBasell AF selectively uses commodity swap, option, and futures contracts with various terms to manage the volatility related to purchases of natural gas and raw materials, as well as product sales. Such contracts are generally limited to durations of one year or less. Cash-flow hedge accounting is normally elected for these derivative transactions; however, in some cases, when the duration of a derivative is short, hedge accounting is not elected. When hedge accounting is not elected, the changes in fair value of these instruments are recorded in earnings. When hedge accounting is elected, gains and losses on these instruments are deferred in accumulated other comprehensive income (“AOCI”), to the extent that the hedge remains effective, until the underlying transaction is recognized in earnings. Market risks created by these derivative instruments and the mark-to-market valuations of open positions are monitored by management.

LyondellBasell AF uses value at risk (“VAR”), stress testing and scenario analysis for risk measurement and control purposes. VAR estimates the maximum potential loss in fair market values, given a certain move in prices over a certain period of time, using specified confidence levels. Using sensitivity analysis and hypothetical unfavorable changes in market prices ranging from 13% to 15% from those in effect at December 31, 2009, the effect would be to reduce net income by approximately $1 million. The quantitative information about market risk is necessarily limited because it does not take into account the effects of the underlying operating transactions.

Foreign Exchange Risk

LyondellBasell AF manufactures and markets its products in a number of countries throughout the world and, as a result, is exposed to changes in foreign currency exchange rates. Costs in some countries are incurred, in part, in currencies other than the applicable functional currency. Since January 6, 2009 when certain subsidiaries of LyondellBasell AF filed voluntary petitions for reorganization under Chapter 11, LyondellBasell AF and its subsidiaries have not been able to enter into new foreign currency forward contracts to reduce the effects of their net currency exchange exposures. All foreign currency forward contracts outstanding at the time of filing have since expired and been settled. Current foreign currency transactions of LyondellBasell AF foreign currency transactions are restricted to a few currencies and primarily to spot or near spot transactions.

Interest Rate Risk

LyondellBasell AF is exposed to interest rate risk with respect to variable rate debt. Using sensitivity analysis and a hypothetical 1% increase in interest rates from those in effect at year end, the increase in annual interest expense on the variable-rate debt of $6.3 billion, not classified as “Liabilities subject to compromise,” would reduce net income by approximately $62 million.

During 2008, LyondellBasell AF entered into interest rate swap agreements, maturing in 2013, in the notional amount of $2,350 million. These interest rate swaps were designated as cash-flow hedges of the interest

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cash flows for the period between April 2009 and June 2013 and effectively convert a portion of LyondellBasell AF’s variable rate, long-term debt to fixed rate debt for the period of the hedge. The variable portion of the interest rate would have converted to a fixed rate ranging from 3.6% to 4.6%.

In January 2009, LyondellBasell AF received notice of termination for these interest rate swap agreements after certain of its subsidiaries filed voluntary petitions for protection under Chapter 11. At December 31, 2009 and 2008, the fair value of these interest rate swap agreements resulted in payables of $201 million and $196 million, respectively, which were classified as “Liabilities subject to compromise” and “Accrued liabilities,” respectively.

LyondellBasell AF entered into a cross-currency interest rate swap for a principal amount of $365 million in conjunction with the issuance of the $615 million 2015 Senior Notes. The swap involved the payment of fixed interest and, upon maturity, principal amounts in euro in exchange for corresponding receipts in U.S. dollars. This swap was designated as a cash-flow hedge. Accordingly, in 2008, a $22 million loss was reclassified from AOCI to “Other income, net” in the Consolidated Statements of Operations related to the changes in fair value.

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ITEM 3. PROPERTIES

Properties

Our principal manufacturing facilities as of December 31, 2009 are set forth below, and are identified by the principal segment or segments using the facility. The facilities are wholly owned, except as otherwise noted below.

Location	Segment	Principal Products
Americas
Bayport (Pasadena), Texas*	I&D	Ethylene Oxide (EO), EG and other EO derivatives
Bayport (Pasadena), Texas(1)*	I&D	Propylene Oxide (PO), Propylene Glycol (PG), Propylene Glycol Ethers (PGE), Tertiary-Butyl-Alcohol (TBA) and Isobutylene
Bayport (Pasadena), Texas*	O&P—Americas	Polypropylene and Catalloy process resins
Brunswick, Georgia	I&D	Flavor and fragrance chemicals
Channelview, Texas(2)*	O&P—Americas	Ethylene, Propylene, Butadiene, Benzene and Toluene
	Refining and Oxyfuels	Alkylate and MTBE
Channelview, Texas(1)(3)*	I&D	PO, BDO, SM and Isobutylene
	Refining and Oxyfuels	ETBE
Chocolate Bayou, Texas*	O&P—Americas	Polyethylene (HDPE)
Clinton, Iowa*	O&P—Americas	Ethylene and Propylene
		Polyethylene (LDPE and HDPE)
Corpus Christi, Texas*	O&P—Americas	Ethylene, Propylene, Butadiene and Benzene
Edison, New Jersey	Technology	Polyolefin catalysts
Ensenada, Argentina	O&P—Americas	Polypropylene
Ensenada, Argentina	O&P—EAI	PP compounds
Fairport Harbor, Ohio	O&P—Americas	Performance polymers
Houston, Texas*	Refining and Oxyfuels	Gasoline, Diesel, Jet Fuel and Lube Oils
Jackson, Tennessee	O&P—EAI	PP compounds
Jacksonville, Florida*	I&D	Flavor and fragrance chemicals
La Porte, Texas(4)*	O&P—Americas	Ethylene and Propylene
		Polyethylene (LDPE and LLDPE)
La Porte, Texas(4)(5)*	I&D	VAM, acetic acid and methanol
Lake Charles, Louisiana*	O&P—Americas	Polypropylene and Catalloy process resins
Mansfield, Texas	O&P—EAI	PP compounds
Matagorda, Texas*	O&P—Americas	Polyethylene (HDPE)
Morris, Illinois*	O&P—Americas	Ethylene and Propylene
		Polyethylene (LDPE and LLDPE)
Newark, New Jersey	O&P—Americas	Denatured Alcohol
Pindamonhangaba, Brazil	O&P—EAI	PP compounds
Tampico, Mexico(6)	O&P—Americas	Polypropylene
Tampico, Mexico(6)	O&P—EAI	PP compounds
Tuscola, Illinois*	O&P—Americas	Ethanol and Polyethylene (powders)
Victoria, Texas *†	O&P—Americas	Polyethylene (HDPE)
Europe
Aubette, France	O&P—EAI	Ethylene, Propylene and Butadiene
		Polypropylene and Polyethylene (LDPE)
Bayreuth, Germany	O&P—EAI	PP compounds
Berre l’Etang, France	Refining and Oxyfuels	Naphtha, vacuum gas oil (VGO), liquefied petroleum gas (LPG), gasoline, diesel, jet fuel, bitumen and heating oil

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Location	Segment	Principal Products
Botlek, Rotterdam, The Netherlands†	I&D Refining and Oxyfuels	PO, PG, PGE, TBA, Isobutylene and BDO MTBE and ETBE
Brindisi, Italy	O&P—EAI	Polypropylene
Carrington, U.K.	O&P—EAI	Polypropylene
Ferrara, Italy	O&P—EAI	Polypropylene and Catalloy process resins
	Technology	Polyolefin catalysts
Fos-sur-Mer, France†	I&D	PO, PG and TBA
	Refining and Oxyfuels	MTBE and ETBE
Frankfurt, Germany†	O&P—EAI	Polyethylene (HDPE)
	Technology	Polyolefin catalysts
Knapsack, Germany†	O&P—EAI	Polypropylene and PP compounds
Ludwigshafen, Germany†	Technology	Polyolefin catalysts
Maasvlakte (near Rotterdam), The Netherlands(7)	I&D	PO and SM
Milton Keynes, U.K.	O&P—EAI	PP compounds
Moerdijk, The Netherlands†	O&P—EAI	Catalloy process resins and PB-1
Münchsmünster, Germany†(8)	O&P—EAI	Ethylene, Propylene
		Polyethylene (HDPE)
Plock, Poland(9)	O&P—EAI	Polypropylene and Polyethylene (HDPE and LDPE)
Tarragona, Spain(10)	O&P—EAI	Polypropylene and PP compounds
Terni, Italy(11)	O&P—EAI	Polypropylene
Wesseling, Germany(12)*	O&P—EAI	Ethylene, Propylene and Butadiene
		Polypropylene and Polyethylene (HDPE and LDPE)
Asia Pacific
Chiba, Japan(13)	I&D	PO, PG and SM
Clyde, Australia	O&P—EAI	Polypropylene
Geelong, Australia	O&P—EAI	Polypropylene
Guangzhou, China(14)	O&P—EAI	PP compounds
Kawasaki, Japan(15)	O&P—EAI	Polypropylene
Map Ta Phut, Thailand(16)	O&P—EAI	Polypropylene
Ningbo, China(17)	I&D	PO and SM
Oita, Japan(15)	O&P—EAI	Polypropylene and PP compounds
Port Klang, Malaysia(18)	O&P—EAI	PP compounds
Rayong, Thailand(19)	O&P—EAI	PP compounds
Suzhou, China	O&P—EAI	PP compounds
Victoria, Australia(18)	O&P—EAI	PP compounds
Yeochan, Korea(20)	O&P—EAI	Polypropylene
Middle East
Jubail, Saudi Arabia(21)	O&P—EAI	Propylene and Polypropylene
Jubail, Saudi Arabia(22)	O&P—EAI	Propylene and Polypropylene
Jubail, Saudi Arabia(23)	O&P—EAI	Ethylene and Polyethylene (LDPE and HDPE)

* The facility, or portions of the facility, as applicable, owned by us will be mortgaged as collateral for indebtedness.

† The facility is located on leased land.

(1) The Bayport PO/TBA plants and the Channelview PO/SM I plant are held by the U.S. PO Joint Venture between Bayer and Lyondell Chemical. These plants are located on land leased by the U.S. PO Joint Venture.

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(2) The Channelview facility has two ethylene processing units. Equistar Chemicals LP also operates a styrene maleic anhydride unit and a polybutadiene unit, which are owned by an unrelated party and are located within the Channelview facility on property leased from Equistar Chemicals LP.

(3) Unrelated equity investors hold a minority interest in the PO/SM II plant at the Channelview facility.

(4) The La Porte facilities are on contiguous property.

(5) The La Porte I&D facility is owned by La Porte Methanol Company, a partnership owned 15% by an unrelated party.

(6) The Tampico polypropylene facility is owned by Indelpro, a joint venture owned 51% by an unrelated party. The Tampico PP compounding plant is wholly owned by us.

(7) The Maasvlakte plant is owned by the European PO Joint Venture and is located on land leased by the European PO Joint Venture.

(8) The Münchsmünster facility is currently being rebuilt following a fire in 2005.

(9) The Plock facility is owned by Basell Orlen Polyolefins and is located on land owned by PKN/Orlen.

(10) The Tarragona polypropylene facility is located on leased land; the compounds facility is located on co-owned land.

(11) In February 2010, we announced our intentions to cease production at the Terni, Italy site.

(12) There are two steam crackers at the Wesseling, Germany site.

(13) The PO/SM plant and the PG plant located in Chiba, Japan are owned by Nihon Oxirane, a joint venture owned 60% by an unrelated party.

(14) The Guangzhou facility commenced production in 2008.

(15) The Kawasaki and Oita plants are owned by SunAllomer, a joint venture owned 50% by an unrelated party.

(16) The Map Ta Phut plant is owned by HMC, a joint venture owned 71% by unrelated parties.

(17) The Ningbo facility is currently under construction and is owned by a joint venture with ZRCC. The facility is scheduled to commence production in 2010. We have contributed a license right to our proprietary PO/SM technology in exchange for approximately 28% of the PO profitability from the facility.

(18) The Port Klang and Victoria plants are owned by PolyPacific Pty., a joint venture owned 50% by an unrelated party.

(19) The Rayong plant is owned by Basell Asia Pacific Thailand, which is owned 95% by us and 5% by our joint venture HMC.

(20) The Yeochan plant is owned by PolyMirae, a joint venture owned 57% by Daelim Industrial Co., Ltd, 14.8% by Sunallomer and the remainder by us.

(21) The Jubail and polypropylene and PDH manufacturing plant is owned by SPC, a joint venture owned 50% by an unrelated party.

(22) The Jubail Spherizone polypropylene and PDH manufacturing plant is owned by Al-Waha, a joint venture owned 79% by unrelated parties. The plant has commenced initial production in the third quarter of 2009.

(23) The Jubail integrated PE manufacturing complex is owned by SEPC, a joint venture 75% owned by unrelated parties.

Other Locations and Properties

Our corporate seat is located in Rotterdam, The Netherlands. We have administrative offices in Rotterdam, The Netherlands and Houston, Texas. We maintain research facilities in Newtown Square, Pennsylvania; Lansing, Michigan; Cincinnati, Ohio; Ferrara, Italy and Frankfurt, Germany. Our Asia Pacific headquarters are located in Hong Kong. We also have technical support centers in Bayreuth, Germany; Geelong, Australia; Lansing, Michigan and Tarragona, Spain. We have various sales facilities worldwide.

Depending on location and market needs, our production facilities can receive primary raw materials by pipeline, rail car, truck, barge or ocean going vessel and can deliver finished products by pipeline, rail car, truck, barge, isotank, ocean going vessel or in drums. We charter ocean going vessels, own and charter barges, and lease isotanks and own and lease rail cars for the dedicated movement of products between plants, products to customers or terminals, or raw materials to plants, as necessary. We also have barge docking facilities and related terminal equipment for loading and unloading raw materials and products. We use an extensive pipeline system in Texas and Louisiana, some of which we own and some of which we lease, that connects to our manufacturing and storage facilities. We lease liquid and bulk storage and warehouse facilities at terminals in the Americas, Europe and the Asia Pacific region. We own storage capacity for NGLs, ethylene, propylene and other hydrocarbons within a salt dome in Mont Belvieu, Texas, and operate additional ethylene and propylene storage facilities with related brine facilities on leased property in Markham, Texas.

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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Ownership of Existing Equity Securities

As of the Emergence Date, after giving effect to the issuance and distribution of all of our class A ordinary shares and our class B ordinary shares as provided in the Plan of Reorganization, we expect to have 300,000,000 of our class A ordinary shares and 263,901,979 of our class B ordinary shares issued and outstanding not including any equity-based compensation issued under our equity compensation plan. Each ordinary share will carry one vote in LyondellBasell Industries N.V.’s general meeting of shareholders and will be entitled to any dividends declared on a record date on or after the issue date of the new common stock, except that the class B ordinary shares will, however, rank senior in liquidation to the class A ordinary shares and other classes of LyondellBasell Industries N.V. capital stock for a period of time. All class A ordinary shares and class B ordinary shares will vote as one class except that the class B ordinary shares will have the right to vote as a separate class with respect to certain material strategic transactions in which the class B ordinary shares would receive less than $10.61 per share, with such transactions requiring the approval of 85% of the class B ordinary shares and each class will have the right to vote as a separate class on certain charter amendments affecting its class of ordinary shares. The class B ordinary shares will be convertible into class A ordinary shares at the option of the holders thereof and will automatically convert in certain circumstances. Our class A ordinary shares and class B ordinary shares are identical in all other respects.

As of the Emergence Date, after giving effect to the issuance and distribution of all of our warrants to purchase class A ordinary shares as provided in the Plan of Reorganization, we expect to have warrants to purchase 11,278,040 class A ordinary shares issued and outstanding. The warrants will have an exercise price of $15.90 per class A ordinary share. The warrants will have anti-dilution protection for in-kind stock dividends, stock splits, stock combinations and similar transactions and may be exercised at any time during the period beginning on the Emergence Date and ending at the close of business on the seventh anniversary of the issue date. Upon an affiliate change of control, the holders of the warrants may sell to LyondellBasell Industries N.V. the warrants at a price equal to, as applicable, the in-the-money value of the warrants or the Black Scholes value of the warrants.

As of the Emergence Date, we expect that each of the Rights Offering Sponsors and at least one prepetition creditor will beneficially own more than 5% of our ordinary shares. It is possible that other creditors could own more than 5% of our ordinary shares immediately after the Emergence Date. Information with respect to the Rights Offering Sponsors is set forth in the table below under the heading “Expected 5% Beneficial Owners.”

As part of the Plan of Reorganization, certain equity-based awards to certain senior management of LyondellBasell Industries N.V. and its subsidiaries will be effective as of the effective date of the Plan of Reorganization. See “Item 9. Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters—Equity Compensation Plan Information.”

In addition, after the Emergence Date, members of our Supervisory Board may receive grants of class A ordinary shares.

The following table indicates information, to our knowledge, as of April 15, 2010 regarding the expected beneficial ownership of our class A ordinary shares and class B ordinary shares on the Emergence Date by:

• Each holder of greater than 5% of our ordinary shares;

• Each nominee as a member of our Supervisory Board and Management Board;

• Each of our executive officers; and

• All of our current board members and executive officers as a group.

Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of the security, or “investment

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power,” which includes the power to dispose of or to direct the disposition of the security. The rules also treat as outstanding all shares of capital stock that a person would receive upon exercise of stock options or warrants held by that person, which are immediately exercisable or exercisable within 60 days of the determination date. Under these rules, more than one person may be deemed a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which that person has no economic interest.

Name and Address of Beneficial Owner	Percent of All  Ordinary Shares(1)
Expected 5% Beneficial Owners:(2)
Apollo Management Holdings, L.P.(3) 9 West 57th Street New York, NY 10019	25	%
The Royal Bank of Scotland N.V. Gustev Mahlerlaan 10, 1082 PP Amsterdam, The Netherlands		%
Certain affiliates of Ares Management LLC(4) 2000 Avenue of the Stars, 12th Floor Los Angeles, CA 90067	7	%
AI International Chemicals S.à.r.l.(5) c/o Access Industries 730 Fifth Ave., 20th Floor New York, NY 10019	7	%
Known nominees as members of Supervisory Board and named executive officers:
Joshua J. Harris(6)	*
Philip Kassin(7)	*
Scott M. Kleinman(8)	*
Marvin O. Schlanger(9)	*
Jeffrey S. Serota(10)	*
James L. Gallogy	1	%
C. Kent Potter	*
Craig Glidden	*
Kevin Brown	*
Anton deVries	*

 * Less than 1% of issued and outstanding ordinary shares.

(1) All percentages are approximate based on current information available to us concerning claim amounts in the Bankruptcy Cases and holders of those claims and assuming that no warrants to purchase ordinary shares are exercised. The information available to us may be incomplete. Acquisition or disposition of interests could materially change the number of ordinary shares to be owned and percentage ownership.

(2) One or more additional creditors of the Debtors may be greater than 5% shareholders.

(3) Apollo Management Holdings, L.P. is the general partner or manager of various Apollo investment managers that manage Apollo investment funds which may hold or acquire shares on the Emergence Date. Apollo Management Holdings GP, LLC is the general partner of Apollo Management Holdings, L.P. Leon Black, Joshua Harris and Marc Rowan are the principal executive officers and managers of Apollo Management Holdings GP, LLC. Apollo Management Holdings, L.P., Apollo Management Holdings GP, LLC. and each of Messrs. Black, Harris and Rowan disclaims beneficial ownership of any ordinary shares that may be held or acquired by any of the Apollo investment funds, except to the extent of any pecuniary interest therein.

(4) Ares Management LLC is a private investment management firm that indirectly controls Ares and certain other entities that may become recordholders of our outstanding ordinary shares upon the Emergence Date

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(together with Ares, the “Ares Recordholders”). Ares Management LLC and each of its affiliated entities and the officers, partners, members and managers thereof, other than the Ares Recordholders, disclaim beneficial ownership of any ordinary shares owned by the Ares Recordholders, except to the extent of any pecuniary interest therein.

(5) AI International Chemicals S.à.r.l. is an affiliate of Access Industries, a privately-held U.S. industrial group with holdings primarily in natural resources and chemicals, media and telecommunications and real estate. The beneficial ownership percentage for Access Industries includes ordinary shares owned as of the Emergence Date and ordinary shares to be transferred to Access Industries within the next 60 days.

(6) Mr. Harris is associated with Apollo. Mr. Harris disclaims beneficial ownership of ordinary shares to be owned by Apollo and any other shareholder, except to the extent of any pecuniary interest therein. The business address for Mr. Harris is 9 West 57th street, New York, New York 10019.

(7) Mr. Kassin is associated with Access Industries. Mr. Kassin disclaims beneficial ownership of ordinary shares to be owned by Access Industries and any other shareholder, except to the extent of any pecuniary interest therein. The business address for Mr. Kassin is 730 Fifth Avenue, New York, New York 10019.

(8) Mr. Kleinman is associated with Apollo. Mr. Kleinman disclaims beneficial ownership of ordinary shares to be owned by Apollo and any other shareholder, except to the extent of any pecuniary interest therein. The business address for Mr. Kleinman is 9 West 57th Street, New York, New York 10019.

(9) The address of Mr. Schlanger is 15 Southwood Drive, Cherry Hill, New Jersey 08008.

(10) Does not include ordinary shares owned by the Ares Recordholders. Mr. Serota is a Senior Partner in the Private Equity Group of Ares Management. Mr. Serota disclaims beneficial ownership of ordinary shares to be owned by the Ares Recordholders and any other shareholder, except to the extent of any pecuniary interest therein. The business address for Mr. Serota is 2000 Avenue of the Stars, 12th Floor, Los Angeles, California 90067.