The company also has leading positions in a diverse portfolio of less cyclical specialty business lines including: elastomers, synthetic lubricant basestocks, oriented polypropylene film, solvents, plasticizers, process fluids, oxo alcohols, and adhesive polymers. Strong competitive advantages are derived from a unique combination of feedstocks, proprietary technology, and application expertise. ExxonMobil continues to grow and improve these businesses, which in general contribute earnings that are less cyclical than the large-volume olefins, polyolefins, ethylene glycol, and aromatics businesses.

The company continues to actively manage the business portfolio to improve overall performance. Key highlights in 1999 include: The formation of Infineum International Limited, a worldwide petroleum additives joint venture. ExxonMobil Chemical and Mitsubishi Chemical announced the extension of their Mytex Polymers joint venture (ExxonMobil interest 50 percent) into the Asia-Pacific region. Mytex Polymers Asia-Pacific will market polypropylene resins and compounds to the automotive and appliance industries. The extension enhances Mytex's ability to supply its products and services to an increasingly global customer base. The specialty polyethylene film business, including manufacturing facilities in Lake Zurich, Illinois, and Pottsville, Pennsylvania, was sold.

CAPTURE FULL BENEFITS OF INTEGRATION WITH EXXONMOBIL'S OPERATIONS

ExxonMobil's long-standing emphasis on petroleum integration is a key component of our strong competitive standing. Much of our manufacturing capacity is located at large integrated refining and chemical complexes, which are designed and managed to maximize total earnings. Molecule management to optimize the production of high-value products, and the sharing of common systems and support functions are examples of the manufacturing synergies.

Facilities for cogeneration of steam and electricity have been installed at many ExxonMobil complexes, capturing synergies from complementary refining and chemical utility demands to reduce overall site costs. New cogeneration capacity, under construction at the Singapore Chemical Complex, will be one of the advantages resulting from that site's petroleum integration.

Coordinated facilities planning and technology development are designed to ensure all opportunities for integration with upstream and downstream petroleum operations are fully captured.

CONTINUALLY REDUCE COSTS TO ACHIEVE BEST-IN-CLASS PERFORMANCE

• The company maintains a constant focus on improving efficiency and reducing unit costs of manufacturing, selling, and distributing its products. Chemical's unit operating costs, adjusted for currency effects, declined 4 percent versus 1998 as focused cost management programs and volume growth more than offset the impacts of growth and inflation. Merger synergies and major growth projects provide opportunities for further improvement.

• Increasing the contribution of existing assets by focusing on productivity, reliability, and safety is a demonstrated strength of the company. The cumulative effect of reliability and process improvement steps has reduced unit costs by substantially increasing production capacity at much less than grass-roots cost.

• The company has an ongoing effort to redesign and improve its business processes. Substantial savings have been realized in manufacturing, marketing, project execution, logistics, purchasing, and financial services. These focused efforts provide the structure to effectively integrate the chemical operations of Exxon and Mobil.

• The pilot demonstration of a worldwide energy management system was completed at our integrated Port Jerome/Notre Dame de Gravenchon, France, refinery and chemical complex in 1999. Application of a uniform set of best practices and technologies in both the operation and design of our facilities will result in continued energy efficiency improvements. Implementation at our remaining sites worldwide will begin with the Baton Rouge, Louisiana, integrated complex in early 2000.

SELECTIVELY INVEST IN INTERNATIONALLY ADVANTAGED PROJECTS

Investment discipline is a cornerstone of ExxonMobil Chemical's growth strategy. Each investment requires unique competitive advantages to enhance returns above those generally available to industry. A highly structured project development and execution approach contributes to successful project implementation.

Strengthening Position in the Established Markets

• A major expansion of the Beaumont, Texas, petrochemical complex was completed during 1999. The project increased ethylene production by nearly 45 percent while enhancing operating efficiency and feedstock flexibility.

• A new facility was commissioned at Beaumont, Texas, to upgrade existing benzene and hydrogen streams to cyclohexane. Cyclohexane is an intermediate chemical used primarily in the manufacture of nylon fibers and resins.

• A 95-thousand-ton-per-year expansion of low-density polyethylene capacity at the Baton Rouge plastics plant was completed in 1999. The expansion utilizes proprietary high pressure polyethylene process technology and employs the largest tubular reaction line in the world.

• An expansion of the Escorez tackifying resin facility at Baton Rouge, Louisiana, was completed in 1999. The company is also progressing a 30-percent expansion of Escorez capacity at Notre Dame de Gravenchon, France, scheduled for start-up in 2000.

• A 150-thousand-ton-per-year expansion of high-density polyethylene (HDPE) capacity at Baton Rouge, Louisiana, was completed in 1999.

• A 275-thousand-ton-per-year polypropylene facility at the Baton Rouge, Louisiana, polyolefins plant is scheduled for completion in 2000.

• A joint venture (ExxonMobil interest 70 percent) with Enterprise Products Partners was announced to operate a propylene concentration unit under construction near the Baton Rouge, Louisiana, refinery and chemical complex. The unit will supply raw materials to the company's polypropylene plant currently under construction.

• An oriented polypropylene film expansion of more than 20 thousand tons per year is in progress at the Brindisi, Italy, plant. Installation of a new orienter line will provide capacity for continued growth of innovative products into the flexible packaging markets of Europe, Africa, and the Middle East.

• The company progressed a 125-thousand-ton-per-year expansion of the Baton Rouge steam cracking complex. The project is scheduled to be installed during 2001.

• ExxonMobil and Orica combined their Australian polyolefins assets to form a new joint venture, Qenos. Qenos has become Australia's leading producer of polyethylene and synthetic rubber.

Positioning for Growth in Emerging Markets

• A 350-thousand-ton-per-year paraxylene facility integrated with the ExxonMobil refinery at Sriracha, Thailand, was commissioned in 1999. Paraxylene from the plant will support the fast-growing PET resin and fiber markets. Paraxylene continues to be one of the world's highest growth petrochemicals.

• The company began commercial production of specialty hydrocarbon fluids from its new 32-thousand-ton-per-year plant at Paulinia, Brazil. The facility is the first alliance between Petrobras, the Brazilian government oil company, and a private company since the deregulation of the petroleum business in 1994.

• The company progressed construction on a hydrocarbon tackifying resin facility near Shanghai, China. The project, a joint venture with Shanghai Petrochemical Company, initiated commercial production in first quarter 2000.

• Construction is progressing on a major expansion of the company's Yanpet joint-venture (ExxonMobil interest 50 percent) petrochemical complex with the Saudi Basic Industries Corporation. The project includes construction of a second 800-thousand-ton-per-year ethylene steam cracker. Ethylene derivative capacity will be essentially doubled with the addition of 535 thousand tons per year of polyethylene and 410 thousand tons per year of ethylene glycol. A 260-thousand-ton-per-year polypropylene facility will also be added to the site. Start-up is scheduled for 2000.

• In Singapore, construction is over 60 percent complete on a world-scale petrochemical complex integrated with the ExxonMobil Singapore refinery. The complex will include an 800-thousand-ton-per-year steam cracker, employing proprietary technology to process a competitively advantaged slate of feedstocks. It will also include world-class polyethylene, polypropylene, and oxo alcohol facilities. Start-up is scheduled to begin in late 2000.

• Construction continued on a 40-thousand-ton-per-year plasticizer plant in Guangdong Province, China. Start-up is scheduled for mid-year 2000.

• ExxonMobil's Kemya joint venture (ExxonMobil interest 50 percent) with the Saudi Basic Industries Corporation is progressing a major petrochemical expansion. The site's linear low-density polyethylene capacity was expanded by 235 thousand tons per year in 1999. Work continues on construction of a world-scale steam cracker, that will use advantaged feedstock, and a low-density polyethylene plant. The projects are scheduled to increase the site's polyethylene capacity to over 1 million tons per year by 2000.

• The Singapore Aromatics Company joint venture was restructured in 1999 with ExxonMobil acquiring 100-percent interest. The operation, currently shut down, will be integrated with the adjacent chemical complex, currently under construction, and the existing refinery to improve long-term competitiveness.

Future Growth Potential

The company continues to explore opportunities for advantaged growth in both the established and developing markets of the world. World-scale petrochemical projects are under consideration in China, North America, Singapore, and Venezuela. The addition of major complexes, combined with expansions and productivity improvements at our existing sites, will provide the vehicle for profitable growth.

BUILD PROPRIETARY TECHNOLOGY POSITIONS

Fundamental to ExxonMobil's continued success is its commitment to maintaining a leadership position in technology. The company has a broad portfolio of proprietary process, product, and product applications expertise.

New Products Enhance Customer Value

• ExxonMobil continues to build on its strength in metallocene catalyst systems. The combination of Exxon's Exxpol technology with Mobil's metallocene capability will expand the reach of Exxpol polymers to meet the growing needs of our global customer base. This technology is used in the manufacture of Exceed linear low-density polyethylene, Exact plastomers, and Achieve polypropylene. Exceed and Exact polymers are commercially produced in the United States and Europe. Achieve polypropylene is commercially produced in the United States.

• A new photographic paper jointly developed by ExxonMobil and Eastman Kodak Company delivers brighter, sharper images. The paper is five times stronger than other photographic paper, making it more resistant to curling and tearing. The joint development is an extension of ExxonMobil's oriented polypropylene film technology and has been called the most significant photographic paper advancement since Kodak introduced the color print 50 years ago.

Process Technology Value Extended through Licensing

• Univation Technologies, LLC, an ExxonMobil joint venture with Union Carbide Corporation, is a leader in the research, development, and licensing of catalysts and processes for making polyethylene. In February 2000, Univation announced the sale of it sixth license since the formation of the venture in 1997.

• ExxonMobil's expertise in zeolite catalysts (shown magnified left) led to the development of a novel liquid phase process for producing ethyl benzene and cumene. EBMax was recently selected as the licensee for three plants from Europe to Japan. The cumene technology has been licensed for 60 percent of the global production of this chemical intermediate.