1081158--2/28/2007--EQUISTAR_CHEMICALS

related topics

{customer, product, revenue}

{debt, indebtedness, cash}

{cost, regulation, environmental}

{gas, price, oil}

{condition, economic, financial}

{cost, operation, labor}

{competitive, industry, competition}

{operation, international, foreign}

Risks Relating to the Businesses Costs of raw materials and energy, as well as reliability of supply, may result in increased operating expenses and reduced results of operations. The cyclicality and volatility of the chemical industry may cause significant fluctuations in Equistar s operating results External factors beyond Equistar s control can cause fluctuations in demand for its products and in its prices and margins, which may result in lower operating results. Equistar sells commodity products in highly competitive global markets and faces significant price pressures. Equistar obtains a portion of its raw materials from sources outside the U.S., which subjects it to exchange controls, political risks and other risks. Equistar s operations and assets are subject to extensive environmental, health and safety and other laws and regulations, which could result in material costs or liabilities. Legislative and other actions have substantially eliminated all U.S. demand for MTBE. Therefore, Equistar has been selling its MTBE for use outside of the U.S. and may produce alternative gasoline blending components that may be less profitable than MTBE. Interruptions of operations at Equistar s facilities may result in liabilities or lower operating results. Conflicts of interest between Equistar and its owners could be resolved in a manner that may be perceived to be adverse to Equistar. Equistar depends to a significant degree on its owners for the administration of its business and has product supply arrangements with its owners and other related parties. If those parties do not fulfill their obligations under the arrangements, Equistar s revenues, margins and cash flow could be adversely affected. Equistar pursues acquisitions, dispositions and joint ventures, which may not yield the expected benefits. Equistar s consolidated balance sheet is highly levered, and Equistar s business and future prospects could be limited by its significant amount of debt and other financial obligations. Equistar requires a significant amount of cash to service its indebtedness, and its ability to generate cash depends on many factors beyond its control. Debt and other agreements restrict Equistar s ability to take certain actions; failure to comply with these requirements could result in acceleration of debt. Debt covenants limit the ability of Lyondell and Millennium to contribute cash to Equistar and Equistar s partnership agreement requires it to distribute cash.

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1081158--2/28/2007--EQUISTAR_CHEMICALS_LP