Eastman and Sinopec-Qilu Sign LOI to                Build World Scale Plants

For Latex Paint Additive and Specialty Plasticizer in ChinaBy Wang RenEastman Chemical Company on Dec. 21, 2000 signed  a  Letter
  of  Intent  ( LOI)   with  Sinopec   Qilu   Petrochemical Corporation to build world-scale derivative plants for the production of Texanol ester alcohol and  TXIB  plasticizer in Zibo, Shandong Province. The investment is Eastman's second major project  in  China in the specialty chemical markets -  the  first,   a  Sino-foreign joint venture,  Nanjing  Yangzi  Eastman  Chemical
  Company  Limited  with  Yangzi  Petrochemical  Industrial Corporation to manufacture Eastotac hydrocarbon tackifying resins for adhesives. Texanol ester alcohol is the leading coalescing aid used in premium quality architectural  paints  around  the  world, while TXIB plasticizer is a primary  modifier  for  vinyl,
  urethanes  and  other  polymers  for  the  production  of consumer goods such as flooring,   wallpaper,   artificial leather and disposable medical examination gloves."The architectural paint market in China  has  become  more sophisticated,   driven  by  consumer  demand  for  higher quality  products.   Addition  of  Texanol  ester  alcohol
  capacity  in  this  growth  market  is  a  key  step   to
  maintaining  our  leadership  position  in  the  coatings additives market while meeting the need for growing demand from China and export markets" said  Jeff  Nodland,   vice president and general manager of Eastman's Coatings, Inks, Textiles, And Composites Business.  Keith Gockenbach,   vice  president  and  general  manager, Performance Chemicals & Intermediates Business,  described the joint venture as an excellent springboard for  further investment in specialty oxo derivatives in China."Our partner in this venture, Qilu Petrochemical,  is  well known in the China petrochemicals business  as  a  leading producer with a strong raw material position and excellent site management for  large  scale  operations.   Combining Qilu's strong position on  oxo  chemicals  with  Eastman's leading derivative technology will give  the  venture  the most competitive position on products that  are  currently being imported to China," said Gockenbach.Norman Wong, managing director of Eastman's  Greater  China operations said the parties will work closely to  complete a joint feasibility  study,   negotiate  a  joint  venture
  contract    and  obtain  government  approval   so   that construction can move forward as quickly as possible. "The joint venture will enhance Eastman's global  capacity  for Texanol ester alcohol and TXIB  plasticizer  by  about  20 percent," he added.  Eastman  currently  produces  Texanol ester alcohol and TXIB plasticizer in Longview, Texas  and at its oxo chemicals complex on Jurong Island, Singapore. The signing of the LOI,  a  major  milestone  for  the  two companies - was achieved after extensive discussions.   "B ecause of the time invested upfront and our very  positive experience working with Sinopec  in  the  past,   we  feel confident that this project will be a commercial success." added Wong.Mr. Meng Xiang De, Deputy Director of Qilu's Planning Dept., described the venture as significant step  toward  moving Sinopec Qilu Petrochemical downstream into the manufacture
  of  higher  value,   more  specialized  derivatives. "The cooperation between Eastman and  Qilu  Petrochemical  will bring together the core strengths of  the  two  major  oxo players - derivative technology and marketing from Eastman with the operational management expertise and raw material integration from Qilu," Mr Meng added. Eastman is a pioneer in oxo chemicals, starting  production at its Longview, Texas, U.S.A., plant in 1952. Today,  the
  Longview  plant  is   the   largest   single-  site   oxo manufacturing facility in the world, with annual  capacity of  more  than  725, 000  tonnes.   Eastman's  proprietary technology is also being used at its 150, 000  tonnes  per annum oxo chemicals complex in Singapore.