Phillips Signs Three Letters of Intent with Chinese Petrochemical Companies.

BARTLESVILLE, Okla.--(BUSINESS WIRE)--Oct. 13, 1997--Phillips Petroleum Company [NYSE:P] announced today it has signed three letters of intent with major petrochemical manufacturers in the People's Republic of China.

The signing ceremony was held Oct. 10 in Beijing, during a visit by the Phillips board of directors.

Said Wayne Allen, Phillips' chairman and chief executive officer, "Today's occasion marks an important milestone in the cooperative relationship between Phillips and China. These projects not only demonstrate our company's commitment to meet growing worldwide demand for plastics and petrochemicals, but also our commitment to China and its efforts to build a world-class petrochemical industry."

A summary of each project follows:

Ethylene Cracker in Gansu Province

Phillips signed a letter of intent with Lanzhou Chemical Industry Corporation (LCIC) to conduct a joint feasibility study of an ethylene complex, which would include a 1.3 billion pounds-per-year ethylene cracker, polyethylene and polypropylene plants, and related facilities. The estimated $2.4 billion complex would be built at Lanzhou, Gansu Province. Phillips and LCIC each would hold a 50 percent interest, subject to approval by Chinese authorities. Ethylene is a basic chemical used in manufacturing plastics, including polyethylene.

K-Resin facility in Jinshanwei

Phillips signed a letter of intent with Shanghai Petrochemical Company Limited (SPC) to conduct a joint feasibility study and to form a joint venture to construct a 100 million pounds-per-year K-Resin styrene-butadiene copolymer plant. Located in Jinshanwei, the facility would be based on Phillips' proprietary technology.

Phillips developed K-Resin in 1967. The clear, tough resin is used in a variety of products, including medical components, toys, candy wrap, food packaging, cups and clothes hangers. Phillips' current capacity is more than 270 million pounds a year from its Houston Chemical Complex.

Polyethylene Expansion at Jinshanwei

Phillips signed a second letter of intent with SPC to conduct preliminary studies for the expansion of a polyethylene plant currently under construction in Jinshanwei. In 1996, Phillips and SPC formed a joint venture to build the 220 million pounds-per-year plant, which is scheduled to come onstream in 1998.

Phillips is a leader in high-density polyethylene, with its process accounting for approximately one-half of all U.S. capacity and more than one-third of worldwide capacity. High-density polyethylene is used to make trash bags, milk jugs, plastic pipe and tubing, and other consumer products.

SINOPEC, China's state-owned petrochemical company, owns controlling interest in LCIC and SPC. LCIC, which operates the first petrochemical complex ever built in China, is located in central China, in an area the government is moving aggressively to develop. SPC, a globally listed company, is one of China's largest petrochemical processors. It is located along the eastern coast, in one of China's most economically developed areas.

Phillips is an integrated petroleum company with 17,300 employees worldwide. Founded in Bartlesville in 1917, the company has $13.8 billion of assets and $16 billion of annual revenues.

CONTACT: Phillips Petroleum Co., Bartlesville

Patricia A. Marshall, 918/661-5139