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SDK Secures Guaranteed Supply From BPPA's Acetic Acid Plant

April 19, 2001

Showa Denko K.K. (SDK) and BP PETRONAS Acetyls Sdn. Bhd. (BPPA) have agreed that SDK will secure a long term guaranteed supply of acetic acid from BPPA's newly built acetic acid plant in Kertih, Malaysia. BPPA is a joint venture company owned 70% by BP and 30% by Malaysia's national oil company PETRONAS. BPPA's new 400,000-ton-a-year methanol-process acetic acid plant in Kertih started commercial production in November 2000.

Through the agreement with BPPA, a member of the BP Group, SDK will secure guaranteed supply from the modern, large methanol-process acetic acid plant in Malaysia that uses highly effective catalyst developed by BP. This will give SDK greater production flexibility that will enable it to more effectively cope with fluctuations in ethylene/methanol feedstock prices. In addition, by securing a foothold in the fast-growing market, SDK will be able to expedite deliveries and provide greater customer satisfaction. For BPPA, the agreement will result in stable and high capacity utilization.

Last year SDK took the lead in the Japanese chemical industry in streamlining ethylene production. With the acetic acid agreement with BPPA, SDK will be able to further strengthen the foundation of its petrochemicals operations.

Under the agreement, SDK will purchase approximately 30% (around 120,000 tons a year) of product from the plant for sale to customers in Asia and for use as raw material at SDK's ethyl acetate manufacturing subsidiary and other plants. SDK will start taking the product in July 2001.

Under its medium-term consolidated business plan, SDK is taking measures to strengthen the competitive position of its acetyls business (acetic acid, vinyl acetate and ethyl acetate) as the core of its organic chemicals operations. In 1997, SDK built a new acetic acid plant in Oita Complex based on its proprietary, world-first direct-ethylene-oxidation process. Furthermore, SDK has recently studied the feasibility of acquiring new acetic acid production capability to meet growing demand in Asia.

Profile of BP PETRONAS Acetyls Sdn. Bhd. (BPPA)

Shareholders BP Holdings International BV (a Netherlands company): 70%
Petroliam Nasional Bhd.: 30%
Board members Jean-Baptiste Renard (Chairman)
William Robertson Mitchell (CEO)
Peter Michael Wentworth
Dato' Abdul Rahim Abu Bakar
Mohd Nor Abu Bakar
Number of employees 98 (As at the end of 2001)
Location Head office: Kuala Lumpur, Malaysia
Plant: Kertih, Malaysia
Production capacity 400,000 metric tons per year