Excellence in Petrochemicals

Dr. Albert Heuser President January 20, 2010

1/20/2010 INTERN 2

Agricultural Solutions

18%

14%

14%

23%8%

Functional Solutions

Performance ProductsPlastics

Chemicals

Oil & Gas

Petrochemicals €3.3 billion 8.7%

Sales to third parties Q1-Q3 2009: €37.5 billionFY 2008: €62.3 billion, thereof €7.3 billion Petrochemicals (including Acrylics)

14%

9%

Petrochemicals – part of BASF’s balanced portfolio

“Other“

1/20/2010 INTERN 3

GlycolsEthylene Glycols…

Alkylene oxides Ethylene oxides…

Cracker ProductsEthylenePropylene ButadieneRaffinateBenzene …

Industrial Gases…

Value chains of the BASF

Verbund

PlasticizersDEHPDINP, DINCHDPHP...

Alcohols &Solvents

Butanols2-EthylhexanolIsononanol2-Propylheptanol...

Acrylic acid

Acrylates

Market drivenSupply drivenBasic Petrochemicals Industrial Petrochemicals

Petrochemicals – the enabler for BASF’s value chains

1/20/2010 INTERN 4* Availability of volumes ex JV’s for BASF depending on contractual situation

AntwerpLudwigshafen

Port Arthur/ Freeport/ Geismar/ Pasadena

Nanjing

Kuantan

Capacities of Verbund sites 2009 in million Nm³/a (Industrial gases)in kt/a (all other)

Ludwigshafen• Cracker products: 1,500• EO: 350• Industrial gases: 4,200

Antwerp• Cracker products: 2,400• EO (MEG): 500• Industrial gases: -

Basic Petrochemicals

Nanjing* 2012• Cracker products: 1,200 1,600• EO (MEG): 250 350• Industrial gases: 450

Port Arthur*/Freeport/Geismar/Pasadena• Cracker products: 2,400• EO: 200• Industrial gases: 550

Kuantan*• Cracker products: -• EO: -• Industrial gases: 450

Basic Petrochemicals are the global integrator at all BASF Verbund sites

1/20/2010 INTERN 5* Availability of volumes ex JV’s for BASF depending on contractual situation

Capacities of Verbund sites 2009in kt/a

AntwerpLudwigshafen

Port Arthur/ Freeport/ Pasadena/Cornwall (CAN)

Nanjing

Kuantan

Industrial Petrochemicals

Ludwigshafen• Oxo-alcohols: 850• Plasticizers: 400• Acrylic Acid: 300

Port Arthur*/Freeport/Pasadena/Cornwall• Oxo-alcohols: 500• Plasticizers: 200• Acrylic Acid: 230

Kuantan*• Oxo-alcohols: 300• Plasticizers: 100• Acrylic Acid: 160

Nanjing* 2012• Oxo-alcohols: 300 400• Plasticizers: -• Acrylic Acid: 160

Antwerp• Oxo-alcohols: -• Plasticizers: -• Acrylic Acid: 320

Industrial Petrochemicals are close to the major customers

1/20/2010 INTERN 6

Market Position 2009 (Installed Capacity share in %)

Source: BASF, CMAI 2009

Acrylics

Cracker Products

Alkylenoxides & Glycols

Alcohols & Solvents

Plasticizers

Basic Petrochemicals

Industrial Petrochemicals

North America Europe Asia

# 13 (~3%)

# 11 (~5%)

# 4 (~18%)

# 3 (~12%)

# 3 (~18%)

# 6 (~7%)

# 2 (~25%)

# 1 (~30%)

# 2 (~22%)

# 1 (~50%)

# 23 (~2%)

# 10 (~4%)

# 1 (~13%)

# 11 (~2%)

# 3 (~13%)

BASF is a global leading player for alcohols, acrylics and plasticizers

1/20/2010 INTERN 7

0

2

4

6

8

10

12

2001 2002 2003 2004 2005 2006 2007 2008

in billion € CAGR 2001 – 2008:GDP growth: 3.1%

Chemical production growth**: 3.0%

Petrochemicals BASF: 14%***

** without Pharma

*** CAGR without Acrylics in 2008

6.98.2

9.6 9.8

5.44.94.0

Sales to third parties

Internal Sales

11.5

* 2008 including Acrylics

*

Petrochemicals grow with internal and external customers

7

1/20/2010 INTERN 8

10%

11%

59%

7%

1%

12%

Alcohols & Solvents

Alkylene Oxides& Glycols

59%

Industrial Gases

Plasticizers

2008 Sales to third parties

€ 7.3 billion

Sales to third partiesWorld scale capacities for cracker products and sales of excess volumes to third parties enable economy of scale

AcrylicsCrackerProducts

2008 Sales to third parties€ 7.3 billion

Cracker Products dominate third party sales in Petrochemicals

8

1/20/2010 INTERN 9

Chemicals

Petroleum & Coal

Plastics & Rubber

Agriculture

ConstructionMotor Vehicles & Parts

Food & Beverage

Others

by industryby region

2008 Sales to third parties€ 7.3 billion

42%

1%13%

44%

Rest of World

Europe

Asia

NAFTA 23%

4%15%

22%

6%

8%

11%11%

Petrochemicals supply a broad spectrum of industries

10

C2 Capacity Middle East [million metric tons]

0

5

10

15

20

25

30

35

40

45

Other ME

Iran

Saudi Arabia

2007 2011 20182013

Source: BASF, Tecnon, CMAI 2009

Forecast 2007

Middle East ~7,5 mio t/a new ethylene capacity 2010/2011

Some olefin projects with delays, but in the end most will come

Asia~10 mio t/a new ethylenecapacity 2010/2011

China still net importer

Middle East will massively increase its capacity – despite the current downturn

2009

10

1/20/2010 INTERN 11

020406080

100120140160180

2007

2008

2009

2010

2011

2012

2013

2014

Ethylene capacity [million t/a]

Source: CMAI

EthyleneMaximum surplus capacity in 2010 (~ 28 Mio t/a nameplate)

Capacity closures in US and Europe (~ 5 Mio t/a)

PropyleneBalance depends on

Utilization / closures of naphtha cracker

Cracker feedstock slate

Utilization of refineries

America + Europe

Asia

ME + Africa Global demand

Temporarily global ethylene overcapacities will result in margin reduction

11

1/20/2010 INTERN 12

25

54

462

Source: CMAI, BASF

Middle East Derivatives [%]

Ethylene

Propylene

* planned divestiture will reduce to less than half

BASF Derivatives [%]

Acrylic acid

EO (PEO)

PE

PVC

MEG

Others Styrene

53

1

91

AcrylonitrileOthers

Alcohols

PP

28

20

31

1211

32

31

14

24

PE

Others

MEG

Acrylo- nitrile

Alcohols

2008

Styrene*

PO

BASF’s derivatives are different to Middle East olefins downstream portfolio

1/20/2010 INTERN 13

Naphtha cracker matches BASF’s broad demand for cracker products much better than an ethane-based cracker

Middle East ethyleneproduction dominatedby ethane (> 70%), only~ 15% based on naphtha

to/to Ethylene Typical cracker output

Feedstock Ethane (1.3)

Naphtha (3.0)

Ethylene 1.0 1.0

Propylene 0.02 0.55

Butadiene <0.01 0.15

Butenes <0.01 0.15

Benzene 0.01 0.25

Naphtha-based cracker provide full slate of cracker products for BASF

13

1/20/2010 INTERN 14

StrengthsMeasures to mitigate challenges

Verbund synergies

World scale assets with excellent to best in class benchmark position

Strong partnerships (Asia, North America)

Strive for operational excellence

Active portfolio optimization

Accelerate innovation

Mission„Make“ to cover optimum of captive use, and

„Trade“ to balance surplus and deficit volumes

Petrochemicals ensure reliable and competitive supply for internal demand

1/20/2010 INTERN 15

0

25

50

75

100

Total manufacturing costs Unplanned production losses

Best quartile world

Average world

Cost leadership through consequent process innovation (incl. catalyst)

Enhanced technology: Increased selectivity by optimized feed gas

Best in class in specific EO yield

Significant ethylene savings

New catalysts with superior performance in pilot phase

Results of last Townsend benchmarking – BASF plants

Total manufacturing

costs

Unplanned production losses

Operational excellence is based on industry leading production know-how Example: Ethylene oxide

15

1/20/2010 INTERN 16

0

100

200

300

400

500

600

2001 2002 2003 2004 2005 2006 2007 2008

Petrochemicals [Index 2001 = 100] Petrochemicals “asset right” strategy:

Integration into Verbund

High capacity utilization

Consistent fixed cost management

Continuous improvement of state-of-the-art technologies Fixed costs*

Sales to third parties

EBITDA

* including depreciation and amortization

Operational excellence drives profitability

16

1/20/2010 INTERN 17

Capacity expansion of - ethylene oxide- propionic acid and aldehyde

New plant for- non-ionic surfactants- butylglycolether- amines- DMA3

BASF and Sinopec will jointly invest $1.4 billion to produce downstream chemicals for the Chinese market

Expansion of existing steam cracker to 740,000 tons ethylene

Development of integrated ethylene oxide value chain

Extension of acrylics value chain

Development of integrated C4 complex

New plant for- superabsorbents

Capacity expansion of - oxo-C4

New plant for- butadiene- isobutene- polyisobutene- 2-propylheptanol

Cracker expansion enables extension and development of new value chains in Nanjing

1/20/2010 INTERN 18

Oxidation Glacial Acid

Crude Acid

Propylene

AirPurification

Step 1

BASF

Competitors (NSC, R+H ...)

Oxidation Glacial-Plant Glacial Acid

Crude Acid

Propylene

AirAbsorption,Extraction

Destillation

PurificationStep 2

Glacial-Plant

⇒ Simplification of process – one step less⇒ ~20% lower production and investment costs

Petrochemicals strive for technology and cost leadership by innovation Example: Acrylic acid

1/20/2010 INTERN 19

Active portfolio optimization

Accelerate innovation

Strengthen position in growth markets

Strongly grow business with innovative products (Oxo-C5 alcohols and DINCH)

Divestiture of non-strategic businesses

Restructure outdated facilities in core businesses (plasticizers)

New technologies based on alternative raw materials

New dedicated technologies to match captive demand

Improvement of core technologies through new catalysts and processes

New applications for alcohols and plasticizers

Develop strong C4-value chain in Asia

Continuously improve operational excellence for a sustainable and competitive supply

Grow cracker profitability by increased feedstock flexibility and improved logistics(pipelines)

Strategy is built on technology leadership and active portfolio management

1/20/2010 INTERN 20

Essentials Petrochemicals

At the heart of the Verbund

Agility, flexibility and deep knowledge of markets

Continuously develop new processes and optimize existing ones

Positioned to manage upcoming capacity increases

Relentless focus on operational excellence Dedicated, creative and global team

20

1/20/2010 INTERN 21

1/20/2010 INTERN 22

This presentation includes forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. This presentation contains a number of forward-looking statements including, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand. BASF has based these forward-looking statements on its views with respect to future events and financial performance. Actual financial performance of the entities described herein could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements.

Forward-looking statements represent estimates and assumptions only as of the date that they were made. The information contained in this presentation is subject to change without notice and BASF does not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations.

Forward-looking statements