BASF to Expand Acetylene Capacity.

MOUNT OLIVE, N.J./GEISMAR, La.--(BUSINESS WIRE)--June 19, 1997-- BASF Corp. announced today that it will build a new acetylene plant with a capacity of more than 100 million pounds at its site in Geismar, Louisiana. Start-up is scheduled for the second half of 1999.

The plant is based on BASF's own new partial oxidation technology, which provides more efficient conversion of natural gas into acetylene and syngas. Both of these intermediates are increasingly required by BASF in its chemical value chains at Geismar.

The acetylene plant investment will be supported by additional related projects. These will be implemented at BASF's manufacturing site as well as at sites of other Geismar area companies. These other companies will supply or buy products synergistically associated with BASF's new unit. The total investments by all parties involved will amount to more than $300 million, including enhancements in BASF's infrastructure system as well as three additional companion projects.

Synergies Across Fences -- Three Companion Investment Projects

First, BASF and Borden Chemicals and Plastics Limited Partnership (BCP) have negotiated a letter of intent to restructure their long-standing acetylene partnership. BCP will acquire BASF's 50 percent interest in the current acetylene joint venture and plans to expand its vinyl chloride monomer production utilizing expanded hydrogen chloride (HC1) gas supplied from BASF's diphenylmethanediisocyanate (MDI) and toluenediisocyanate (TDI) plants, both of which are located at Geismar.

The second investment is associated with byproduct gases from BASF's new acetylene plant. These gases would be processed into hydrogen and carbon monoxide at a new synthesis gas separation unit that would be built, owned and operated by Air Products and Chemicals Inc. at BASF's Geismar site. BASF will use a substantial part of the hydrogen and carbon monoxide output in its Geismar operations.

Third, BASF and Air Liquide America Corp. have negotiated an agreement whereby Air Liquide will supply oxygen for the new BASF acetylene plant. As a consequence, Air Liquide will build an air separation unit that could also be located at BASF's Geismar site.

"This investment further secures the long-term competitiveness of our butanediol value chain and creates a win-win situation for all four local companies involved," said Carl A. Jennings, President, Chemicals Division, BASF Corp. "The new acetylene plant and the new partnership arrangements at Geismar will further enhance the manufacturing cost advantages of our acetylene-based butanediol process," he added.

BASF uses large amounts of acetylene to produce butanediol. With an annual capacity at Geismar of 280 million pounds, BASF is the largest merchant supplier of this product in the NAFTA region.

Butanediol is used as an intermediate in the production of various downstream chemicals, including gamma-butyrolactone, tetrahydrofuran (THF), polytetrahydrofuran (PolyTHF(R)) and N-methyl, N-vinyl, and polyvinylpyrrolidone. Butanediol and its derivatives are also used to produce plastics, fibers, plant protection products, pharmaceuticals, cosmetics coatings for floor coverings, roller-skate wheels and roofing materials. Other applications for these versatile products include specialty solvents that are used in computer chip and paper production, plastics recycling, industrial cleaning and as paint strippers.

"Our project demonstrates the strategic importance of manufacturing cooperation across fences to improve competitiveness in today's marketplace," said Jennings. "The project is also proof of our joint and strong commitment to the Ascension Parish Community." The total local area investment will create approximately 100 permanent jobs and will require several hundred employees during construction.

"We are pleased that the decision has been made to invest at our site," said Phil C. Greeson, Vice President and Site General Manager at Geismar. "Large projects such as this give us further encouragement and momentum in pursuing our goal of continuously improving the competitiveness of the Geismar site."

BASF Corp., headquartered in Mount Olive, N.J., is the NAFTA region member of the BASF Group. With sales of $6.3 billion in 1996, BASF Corp. is among the top 10 producers of chemicals in the United States. The company has approximately 15,000 employees in the United States, Canada and Mexico. Its diversified product mix includes chemicals, nylon fibers, polymers, automotive coatings, colorants, pharmaceuticals, vitamins and agricultural products.

CONTACT: BASF Corp.

Felix Gress, 201/426-2305

201/426-2318 (fax)

[e-mail]

http://www.basf.com