June 15, 2006

Joint Development of Propylene Production System Utilizing
C4-Fraction By-products at Chiba Complex

Idemitsu Kosan Co., Ltd. (Idemitsu), Sumitomo Chemical Co., Ltd.
(Sumitomo) and Mitsui Chemicals, Inc. (MCI) have commenced the joint
development of a high-efficiency system for the production of propylene
utilizing C4-fraction by-products at a complex in the Chiba region.
1. Background and Concept
Domestic refining and petrochemical businesses are strengthening
cooperative ties within the industry to cope with the fierce international
competition from emerging large-scale oil and petrochemical plants in theMiddle East and China amid soaring crude oil prices. In addition, theseindustries are expected to further intensify their competitiveness through theintegration of the production systems in their complexes.
Chiba is a major production base where Idemitsu, Sumitomo and MCI eachhave facilities for the production of petrochemical products and derivatives
from olefins and aromatics. The companies operate closely located ethylene
crackers and a fluid catalytic cracker (FCC). In addition, the complex isequipped with a pipeline network. The three companies decided that
capitalizing on the advantages of their close location to develop ahigh-efficiency production system for clean fuel and propylene utilizing
C4-fraction by-products from the refinery and petrochemical plants andethylene as raw materials would strengthen their competitiveness. Thecompanies have therefore embarked on a joint development project that
includes a propylene conversion process as part of their Research
Association of Refinery Integration for Group Operation (RING III) project.

2. Purpose of Joint Development
The joint development by the three companies focuses on the following threeprocesses; (1) collecting ethylene and C4 fraction produced in refineries
and petrochemical plants, (2) separating and concentrating normal butene
from accumulated C4 fraction, and (3) converting concentrated normal
butene to propylene. In this development, the companies will aim to achievea high level of efficiency for each process, and will also design and build acomprehensive system by integrating each of the above processes.
Ethylene and propylene are generally produced in a 1-to-0.6 ratio in aconventional ethylene cracker. When the system in Chiba is completed, theratio will be raised to over 0.9 and will boast the highest efficiency of any
complex in Asia, thereby accelerating a shift to higher value-added propylene
products.
3. Overview of High-Efficiency Propylene Production Systeml Propylene production capacity: targeting 150,000 m.t./year
l R&D expenditure:
Approx. ¥10 billion(Investment ratio: Idemitsu 50%, Sumitomo 25%, and MCI 25%)l Start of construction on R&D Center:
FY2007l Launch of trial verification: middle of FY2009
4. Overview of Process (please refer to attached materials)
The processes will collect C4-fraction by-products from the FCC of therefinery and the petrochemical plants producing ethylene. Isobutene will beseparated from the C4 fraction through selective polymerization andconverted into clean fuel. The concentrated normal butene obtained from theabove process will undergo a catalyzed reaction with the ethylene collectedfrom the production facilities of the three companies to produce propylene.
The attachment shows a diagram of the processes described above.

Attachment (reference)
MCI, Sumitomo and Idemitsu（Petrochemical）

Idemitsu (Refining）

NaphthaCrackerunitエチチレレンンセセンンタターーエEthylene Center

AtomosphericDistillation

Crude Oil

Refineryunit

Propylene

Ethylene

Targeted for
new development
Catalytic
Cracking
C4

Thermal Cracking
C4

Isobutene
Polymerization

Clean Fuel

NormalButene

Conversion
toPropylene

Propylene1