<PAGE>   1
                                                                   EXHIBIT 10.24






                                  CONFIDENTIAL











                        LIMITED PARTNERSHIP AGREEMENT OF

                           LYONDELL-CITGO REFINING LP











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                               UNDER THE DELAWARE
                    REVISED UNIFORM LIMITED PARTNERSHIP ACT

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                            DATED DECEMBER 31, 1998



<PAGE>   2

                               TABLE OF CONTENTS

<TABLE>
<S>  <C>                                                                    <C>
1.   DEFINITIONS.............................................................1

2.   ORGANIZATION MATTERS....................................................1
         2.1.     Name.......................................................1
         2.2.     Conversion to Partnership and Partners.....................1
         2.3.     Purpose and Business.......................................2
         2.4.     Principal Office...........................................3
         2.5.     Term.......................................................3
         2.6.     Filings....................................................3
         2.7.     Power of Attorney..........................................3

3.   MANAGEMENT..............................................................4
          3.1.     Partnership Governance Committee..........................4
          3.2.     Partnership Governance Committee Composition. ............4
          3.3.     Partnership Governance Committee:  Duties, Powers and 
                   Authority.................................................4
          3.4.     Partnership Governance Committee:  Meetings...............6
          3.5.     Compensation of Representatives...........................8
          3.6.     Partnership Governance Committee Action...................8
          3.7.     Partnership Governance Committee:  Quorum and Voting......8
          3.8.     Partnership Governance Committee Actions for Which 
                   Unanimous Consent Necessary...............................9
          3.9.     Majority Approval........................................11
          3.10.    Auxiliary Committees.....................................11

4.   OFFICERS AND EMPLOYEES.................................................12
          4.1.     Partnership Officers.....................................12
          4.2.     Selection; Term; Qualification...........................12
          4.3.     Removal and Vacancies....................................12
          4.4.     Duties...................................................13
          4.5.     CEO......................................................14
          4.6.     Vice Presidents..........................................14
          4.7.     Secretary................................................14
          4.8.     Assistant Officers.......................................14
          4.9.     Other Officers...........................................15
          4.10.    Salaries.................................................15
          4.11.    Bonds of Officers........................................15
          4.12.    Delegation...............................................15
          4.13.    Loaned Employees.........................................15
          4.14.    Employee Transfers.......................................16

5.   RIGHTS, DUTIES AND COVENANTS OF PARTNERS...............................16
          5.1.     Delegation...............................................16
          5.2.     General Authority........................................16
          5.3.     Nature of Partner Obligations............................17
          5.4.     Limited Partners.........................................17
</TABLE>


                                     (ii)
<PAGE>   3

<TABLE>
<S>       <C>      <C>                                                      <C>
          5.5.     Partner Not Agent of Other Partners......................17
          5.6.     Transactions with the Partnership........................17
          5.7.     Control of Certain Claims and Certain Transactions.......18
          5.8.     Partnership Interest.....................................19
          5.9.     Access to and Copies of Records and Documents............19
          5.10.    Partner Covenants........................................19
          5.11.    Indemnification..........................................20

6.   CAPITAL CONTRIBUTIONS AND PARTICIPATION PERCENTAGE.....................22
          6.1.     Prior Capital Contributions..............................22
          6.2.     Capital Contributions....................................22
          6.3.     Partner Loans............................................23
          6.4.     Participation Percentages................................23
          6.5.     Capital Expenditure Funding..............................24
          6.6.     CITGO Partners' Option to Increase Their Collective
                   Participation Percentage.................................24
          6.7.     Return of Capital Contributions..........................26
          6.8.     Administration and Investment of Funds...................26

7.   ALLOCATIONS AND DISTRIBUTIONS..........................................26
          7.1.     Capital Accounts.........................................26
          7.2.     Income and Distribution Determinations; Restriction on 
                   Distributions and Advances...............................27
          7.3.     Distributable Cash.......................................28
          7.4.     Distributions............................................29
          7.5.     Interim Loans............................................29
          7.6.     Internal Revenue Code Section 704(b) Book Allocations 
                   for Tax Purposes.........................................30
          7.7.     Tax Allocations..........................................31
          7.8.     Transfers of Interest....................................33

8.   BOOKS OF ACCOUNT AND TAX MATTERS.......................................33
          8.1.     Books of Account.........................................33
          8.2.     Tax Treatment............................................34
          8.3.     Tax Returns..............................................34
          8.4.     Tax Controversies........................................35
          8.5.     Tax Rulings..............................................36

9.   ANNUAL BUDGETS, FIVE YEAR PLAN AND COMMERCIAL LOANS....................36
          9.1.     Fiscal Year..............................................36
          9.2.     Annual Budgets...........................................36
          9.3.     Approval of Budgets......................................37
          9.4.     Funding of Budgets.......................................37
          9.5.     Implementation of Budgets and Discretionary Expenditures 
                   by CEO...................................................37
          9.7.     Commercial Loans.........................................38
          9.8.     Insurance and Risk Management............................38
</TABLE>


                                     (iii)
<PAGE>   4

<TABLE>
<S>       <C>      <C>                                                     <C>
10.  TRANSFERS AND PLEDGES..................................................38
          10.1.    Prohibition of Transfer..................................38
          10.2.    Transfers Prior to the Option Date.......................39
          10.3.    Transfers After the Option Date..........................39
          10.4.    Transferees..............................................41
          10.5.    Pledge of Interest.......................................41

11.  REMEDIES AND DISSOLUTION...............................................42
          11.1.    Security for Performance.................................42
          11.2.    Default..................................................43
          11.3.    Remedies for Default.....................................45
          11.4.    Consequences of Default..................................46
          11.5.    Purchase of Defaulting Partners' Interest................46
          11.6.    Liquidation..............................................47
          11.7.    Closing of Purchase Rights...............................47
          11.8.    Recision.  ..............................................47
          11.9.    Dissolution..............................................48
          11.10.   Reconstitution of Partnership............................48
          11.11.   Liquidation; Winding Up and Distributions upon 
                   Dissolution..............................................48
          11.12.   Enforcement..............................................49

12.  MISCELLANEOUS..........................................................49
          12.1.    Confidentiality and Use of Information...................49
          12.2.    Auditors.................................................50
          12.3.    Indemnification of Officers..............................50
          12.4.    Waivers, Modifications and Amendments....................52
          12.5.    Further Assurances.......................................52
          12.6.    Successors and Assigns...................................52
          12.7.    Benefits of Agreement Restricted to the Parties..........52
          12.8.    Expenses.  ..............................................52
          12.9.    Currency Conversions.....................................52
          12.10.   Payment Terms and Interest Calculations..................52
          12.11.   Usury Savings Clause.....................................53
          12.12.   Notices..................................................53
          12.13.   Waiver of Immunity.......................................54
          12.14.   Governing Law............................................55
          12.15.   Jurisdiction; Consent to Service of Process; Waiver......55
          12.16.   Entire Agreement.........................................56
          12.17.   Severability.............................................56
          12.18.   Construction.............................................56
          12.19.   Counterparts.............................................57
</TABLE>


                                     (iv)
<PAGE>   5

<TABLE>
<CAPTION>
EXHIBITS.
<S>                   <C>
Exhibit 1             Definition of Terms in Agreement
Exhibit 1A            Related Agreements
Exhibit 6.1(B)        Working Capital Valuation
Exhibit 6.4           Qualified Capital Contributions; Participation Percentages
Exhibit 6.6(E)        Form of Note for Portion of Option Date Payment
</TABLE>


                                      (v)
<PAGE>   6

                        LIMITED PARTNERSHIP AGREEMENT OF
                           LYONDELL-CITGO REFINING LP
                              (THE "PARTNERSHIP")

1.       DEFINITIONS

         The definitions of the capitalized defined terms used in this Limited
         Partnership Agreement (the "Agreement"), including the Exhibits hereto
         other than Exhibit 1, and not elsewhere defined herein or therein, as
         well as cross-references to all capitalized defined terms, are set
         forth in Exhibit 1 to this Agreement.

2.       ORGANIZATION MATTERS

         2.1.   Name. The name of the limited partnership is "LYONDELL-CITGO
                Refining LP" (the "Partnership"). The Partnership Business may
                be conducted under such name or any other name or names deemed
                advisable by the Partnership Governance Committee. The General
                Partners will comply or cause the Partnership to comply with all
                applicable laws and other requirements relating to fictitious or
                assumed names.

         2.2.   Conversion to Partnership and Partners. The Partnership
                converted from LYONDELL-CITGO Refining Company Ltd., a limited
                liability company formed under the laws of the State of Texas
                (the "Company"), effective as of the date of this Agreement (the
                "Conversion Date"), pursuant to Articles of Conversion filed
                pursuant to the Texas Limited Liability Company Act, and a
                Certificate of Conversion and a Certificate of Limited
                Partnership, each filed pursuant to the Delaware Revised Uniform
                Limited Partnership Act (the "Act"). In connection with such
                conversion, the Amended and Restated Regulations of the Company
                dated July 1, 1993 (the "Closing Date"), as amended (the
                "Regulations"), were superseded by this Agreement. On the
                Conversion Date, the limited liability company interests in the
                Company were converted into partnership interests in the
                Partnership held by (i) Lyondell Refining LP, LLC, a Delaware
                limited liability company ("Lyondell LP"), a Wholly Owned
                Subsidiary of Lyondell Chemical Company (formerly known as
                Lyondell Petrochemical Company), a Delaware corporation
                ("LParent"), (ii) CITGO Refining Investment Company, an Oklahoma
                corporation ("CITGO LP"), a Wholly Owned Subsidiary of CITGO
                Petroleum Corporation, a Delaware corporation ("CParent"), (iii)
                Lyondell Refining Company, a Delaware corporation ("Lyondell
                GP"), a Wholly Owned Subsidiary of LParent, and (iv) CITGO Gulf
                Coast Refining, Inc., a Delaware corporation ("CITGO GP"), a
                Wholly Owned Subsidiary of CParent.

                Upon the Conversion Date, the percentage ownership of the
                Partnership was as follows:

<TABLE>
                                  <S>                        <C>
                                  Lyondell GP                10.10%
                                  CITGO GP                    1.00%
</TABLE>


                                       1
<PAGE>   7

<TABLE>
<S>                               <C>                        <C>
                                  Lyondell LP                48.65%
                                  CITGO LP                   40.25%
</TABLE>

                Upon the Conversion Date, Lyondell GP's 10.10% interest consists
                of a 1.00% general partnership interest and a 9.10% limited
                partnership interest; provided, however, that for all other
                purposes under this Agreement, Lyondell GP shall be considered
                only a General Partner (as defined herein) and not a Limited
                Partner (as defined herein).

                Except as expressly provided herein to the contrary, the rights
                and obligations of the Partners and the administration and
                termination of the Partnership shall be governed by the Act.
                Without the need for the consent of any other Person, upon the
                execution of this Agreement: (i) each of Lyondell GP and CITGO
                GP is hereby admitted to the Partnership as a general partner of
                the Partnership (together, the "General Partners"), and (ii)
                each of Lyondell LP and CITGO LP is hereby admitted to the
                Partnership as a limited partner of the Partnership (together,
                the "Limited Partners"). Subject to the restrictions set forth
                in this Agreement, the Partnership shall have the power to
                exercise all the powers and privileges granted by this Agreement
                and by the Act, together with any powers incidental thereto, so
                far as such powers and privileges are necessary, appropriate,
                convenient or incidental for the conduct, promotion or
                attainment of the purposes of the Partnership. As of the
                Conversion Date, the Regulations (i) are superseded by this
                Agreement except to the extent of their ongoing relevance in
                governing matters relating to the Company and (ii) shall no
                longer have any force or effect except to the extent of their
                ongoing relevance in governing matters relating to the Company,
                provided, however, that all prior acts of Lyondell Refining
                Company, a Delaware corporation, and CITGO Refining Investment
                Company, an Oklahoma corporation, as members, or acts of or on
                behalf of the Company, under the Regulations shall remain in
                effect until modified or rescinded by Partnership Governance
                Committee Action.

         2.3.   Purpose and Business. The business of the Partnership (the
                "Partnership Business") shall be as follows: (i) to own and
                operate the Refinery Business, (ii) to carry out any Capital
                Enhancement Projects, (iii) to purchase, sell, exchange and
                refine crude oil and other feedstocks, (iv) to market the
                products produced by the Partnership, (v) to engage in the
                refining business generally, and (vi) to do all things necessary
                or incidental in connection with the foregoing as are permitted
                under the Act, all such business being managed, subject to then
                existing contractual obligations, with the objectives of (a)
                operating the Refinery, as modified by any Capital Enhancement
                Projects, and any other refinery or refining business owned or
                operated by the Partnership so as to maximize long-term
                Partnership value as measured by cash flow and earnings and (b)
                achieving the highest levels of efficiency, productivity and
                profitability consistent with good safety and environmental
                practices and performance. The Partnership shall be strictly
                limited to the Partnership Business, and the Partnership
                Business shall not be extended by implication or otherwise,
                except by express written amendment to this Agreement or by
                Unanimous Partnership Governance Committee Action pursuant to
                Section 3.8.(A).


                                       2
<PAGE>   8

         2.4.   Principal Office. The principal business office of the
                Partnership shall be at 12000 Lawndale, Houston, Texas 77017 or
                such other place as may be designated from time to time by the
                Partnership Governance Committee. The registered agent of the
                Partnership in the State of Delaware is The Corporation Trust
                Company, 1209 Orange Street, Wilmington, Delaware 19801.

         2.5.   Term. The Partnership shall continue until dissolved as
                described in Section 11.9.

         2.6.   Filings. The General Partners shall, or shall cause the
                Partnership to, execute, swear to, acknowledge, deliver, file or
                record in public offices and publish all such certificates,
                notices, statements or other instruments, and take all such
                other actions, as may be required by law for the formation,
                reformation, qualification, registration, operation or
                continuation of the Partnership in any jurisdiction, to maintain
                the limited liability of the Limited Partners, to preserve the
                Partnership's status as a partnership for tax purposes or
                otherwise to comply with applicable law. Upon request of the
                General Partners, the Limited Partners shall execute all such
                certificates and other documents as may be necessary, in the
                sole judgment of the General Partners, in order for the General
                Partners to accomplish all such executions, swearings,
                acknowledgments, deliveries, filings, recordings in public
                offices, publishings and other acts. Each General Partner hereby
                agrees and covenants that it will execute any appropriate
                amendment to the Certificate of Limited Partnership of the
                Partnership pursuant to Section 17-204 of the Act to reflect any
                admission of a Substitute General Partner in accordance with
                this Agreement.

         2.7.   Power of Attorney. Each Limited Partner hereby irrevocably
                makes, constitutes and appoints its Affiliated General Partner
                and any successor thereto permitted as provided herein, with
                full power of substitution and resubstitution, as the true and
                lawful agent and attorney-in-fact of such Limited Partner, with
                full power and authority in the name, place and stead of such
                Limited Partner to execute, swear, acknowledge, deliver, file or
                record in public offices and publish: (i) all certificates and
                other instruments (including counterparts thereof) which such
                General Partner deems appropriate to reflect any amendment,
                change or modification of or supplement to this Agreement in
                accordance with and as permitted by the terms of this Agreement;
                (ii) all certificates and other instruments and all amendments
                thereto which such General Partner deems appropriate or
                necessary to form, qualify or continue the Partnership in any
                jurisdiction, to maintain the limited liability of such Limited
                Partner, to preserve the Partnership's status as a partnership
                for tax purposes or otherwise to comply with applicable law; and
                (iii) all conveyances and other instruments or documents which
                such General Partner deems appropriate or necessary to reflect
                the transfers or assignments of interests in, to or under this
                Agreement, including the Interests, the dissolution, liquidation
                and termination of the Partnership, and the distribution of
                assets of the Partnership in connection therewith, in accordance
                with and as permitted by the terms of this Agreement.


                                       3
<PAGE>   9

                Each Limited Partner hereby agrees to execute and deliver to its
                Affiliated General Partner within five (5) Business Days after
                receipt of a written request therefor such other further
                statements of interest and holdings, designations, powers of
                attorney and other instruments as such General Partner deems
                necessary. The power of attorney granted herein is hereby
                declared irrevocable and a power coupled with an interest, shall
                survive the bankruptcy, dissolution or termination of such
                Limited Partner and shall extend to and be binding upon such
                Limited Partner's successors and permitted assigns. Each Limited
                Partner hereby (i) agrees to be bound by any representations
                made by the agent and attorney-in-fact acting in good faith
                pursuant to such power of attorney; and (ii) waives any and all
                defenses which may be available to contest, negate, or disaffirm
                any action of the agent and attorney-in-fact taken in accordance
                with such power of attorney.

3.       MANAGEMENT.

         3.1.   Partnership Governance Committee.

                (1)    To facilitate the management of the Partnership by the
                       General Partners, the General Partners hereby establish a
                       committee (the "Partnership Governance Committee") to
                       manage and control the business, property and affairs of
                       the Partnership, including the determination and
                       implementation of the Partnership's strategic direction.
                       Except to the extent expressly set forth in this
                       Agreement, each General Partner agrees to exercise its
                       authority to manage the affairs of the Partnership only
                       through Partnership Governance Committee Action. Further,
                       each General Partner agrees not to exercise, or purport
                       or attempt to exercise, its authority (notwithstanding
                       that each General Partner may have such authority
                       pursuant to the Act) (i) to act for or incur, create or
                       assume any obligation, liability or responsibility on
                       behalf of the Partnership or any other General Partner,
                       or (ii) to execute any documents on behalf of, or
                       otherwise bind, or purport or attempt to bind, the
                       Partnership, or (iii) to otherwise transact any business
                       in the Partnership's name, in each case except pursuant
                       to Partnership Governance Committee Action or except as
                       provided in Section 5.7.

                (2)    Except as expressly set forth in this Agreement, no
                       Person or Persons other than (i) the General Partners,
                       acting through the Partnership Governance Committee, and
                       (ii) the officers of the Partnership appointed in
                       accordance with this Agreement and acting as agents or
                       employees, as applicable, of the Partnership in
                       conformity with this Agreement and any applicable
                       Partnership Governance Committee Action, shall be
                       authorized (a) to exercise the powers of the Partnership,
                       (b) to manage the business, property and affairs of the
                       Partnership or (c) to contract for, or incur on behalf
                       of, the Partnership any debts, liabilities or other
                       obligations.

                                       4
<PAGE>   10

         3.2.   Partnership Governance Committee Composition.

                (1)    The Partnership Governance Committee shall consist of six
                       representatives (each a "Representative") and each
                       General Partner shall designate three Representatives.
                       All the Representatives of both General Partners shall
                       together constitute the Partnership Governance Committee.
                       Representatives shall not be employees of the Partnership
                       or otherwise serve the Partnership in any capacity except
                       that, as provided in Section 3.10., a Representative may
                       also serve as a member of an Auxiliary Committee.

                (2)    Each General Partner may designate one or more 
                       individuals (each an "Alternate") who (i) shall be
                       authorized, in the event a Representative is absent from
                       any meeting of the Partnership Governance Committee (and
                       in the order of succession designated by the General
                       Partner so designating the Alternates), to attend such
                       meeting in the place of, and as substitute for, such
                       Representative and (ii) shall be vested with all the
                       powers to cast votes on behalf of such General Partner
                       which the absent Representative could have exercised at
                       such meeting. Alternates shall not be employees of the
                       Partnership or otherwise serve the Partnership in any
                       capacity except that, as provided in Section 3.10., an
                       Alternate may also serve as a member of an Auxiliary
                       Committee. The term "Representative," when used herein
                       with reference to any Representative who is absent from a
                       meeting of the Partnership Governance Committee, shall
                       mean and refer to any Alternate attending such meeting in
                       place of such absent Representative.

                (3)    Each General Partner may, by written notice delivered
                       to the other General Partner and the CEO, at any time or
                       from time to time, remove or replace one or more of its
                       Representatives or Auxiliary Committee members or change
                       one or more of its Alternates. If a Representative,
                       Auxiliary Committee member or Alternate dies, resigns, or
                       becomes disabled or incapacitated, the General Partner
                       that designated such Representative, Auxiliary Committee
                       member or Alternate, as the case may be, shall promptly
                       designate a replacement. Each Representative, each
                       Auxiliary Committee member and each Alternate shall serve
                       until replaced by the General Partner that designated
                       such Representative, Auxiliary Committee member or
                       Alternate, as the case may be. The Owners Committee
                       Representatives, the Auxiliary Committee members and the
                       Alternates representing Lyondell GP and CITGO LP,
                       respectively (in their capacities as members of the
                       Company), who are serving in such capacities in respect
                       of the Company as of the Conversion Date will continue to
                       hold such positions representing 


                                       5
<PAGE>   11

                       Lyondell GP and CITGO GP, respectively (in their
                       capacities as General Partners), following the Conversion
                       Date until removed or replaced in accordance with the
                       terms of this Section 3.2.(C).

                (4)    Copies of all written notices designating
                       Representatives, Auxiliary Committee members and
                       Alternates shall be delivered to the Secretary and shall
                       be placed in the Partnership minute books, but the
                       failure to deliver a copy of any such notice to the
                       Secretary shall not affect the validity or effectiveness
                       of such notice or the designation described therein. (1)

                (5)    Each Representative, in his capacity as such, shall be
                       the agent of the General Partner that designated such
                       Representative. Accordingly, (i) each Representative, as
                       such, shall act (or refrain from acting) with respect to
                       the business, property and affairs of the Partnership
                       solely in accordance with the wishes of the General
                       Partner that designated such Representative and (ii) no
                       Representative, as such, shall owe (or be deemed to owe)
                       any duty (fiduciary or otherwise) to the Partnership, to
                       any General Partner (other than the General Partner that
                       designated such Representative), or to any Limited
                       Partner; provided, however, that nothing in this
                       Agreement is intended to or shall relieve or discharge
                       any Representative or General Partner from liability to
                       the Partnership or the Partners on account of any
                       fraudulent or intentional misconduct of such
                       Representative; and provided further, that each
                       Representative shall not disclose any material
                       information regarding the business of the Partnership and
                       shall not use any such information, in either case, in
                       any manner not related to the Partnership Business.

         3.3.   Partnership Governance Committee: Duties, Powers and Authority.

                (1)    Except as otherwise provided by this Agreement, the
                       Partnership Governance Committee (on behalf of the
                       General Partners) shall have (i) the full authority of
                       the General Partners to exercise all of the powers of the
                       Partnership and (ii) full control (on behalf of the
                       General Partners) over the business, property and affairs
                       of the Partnership.

                (2)    The Partnership Governance Committee shall adopt
                       policies and procedures, not inconsistent with this
                       Agreement (including Section 3.8.) or the Act, governing
                       financial controls and legal compliance, including
                       delegations of authority (and limitations thereon) to the
                       officers of the Partnership as described in Section 4.
                       Such policies and procedures may be revised or revoked
                       (in a manner consistent with this Agreement and the Act)
                       from time to time as determined by the Partnership
                       Governance Committee. Without 


                                       6
<PAGE>   12

                       limiting the generality of the foregoing, the General
                       Partners intend that the Partnership's policies and
                       procedures will address such matters as conflicts of
                       interest, political contributions, illegal or unethical
                       business practices, antitrust compliance, anti-boycott
                       compliance, Foreign Corrupt Practices Act compliance,
                       employee practices, agreements with employees relating to
                       inventions, contractual obligations, purchasing and
                       advertising. To the extent any authority is not delegated
                       to officers of the Partnership in this Agreement or in
                       accordance with Partnership Governance Committee Action,
                       it shall remain with the Partnership Governance
                       Committee.

         3.4.   Partnership Governance Committee:  Meetings.

                (1)    Regular meetings of the Partnership Governance Committee 
                       shall be held at such times (no less frequently than
                       quarterly) and at such places (within the States of Texas
                       or Oklahoma or any other state designated by the
                       Partnership Governance Committee) as shall from time to
                       time be determined by the Partnership Governance
                       Committee. The first regular meeting of the Partnership
                       Governance Committee during each fiscal year of the
                       Partnership shall be deemed to be the "Annual Meeting."
                       No notice need be given with respect to any regular
                       meeting of the Partnership Governance Committee; however,
                       the Secretary following receipt of comments thereto from
                       each General Partner shall deliver, by messenger or other
                       hand delivery or by facsimile transmission (with proof of
                       confirmation from the transmitting machine), an agenda
                       for such meeting to each of the Representatives at least
                       five (5) Business Days prior to such meeting. At any
                       regular meeting of the Partnership Governance Committee
                       at which a quorum is present, any and all business of the
                       Partnership may be transacted.

                (2)    Special meetings of the Partnership Governance Committee 
                       may be called by any Representative or the CEO by
                       delivering, via messenger or other hand delivery or by
                       facsimile transmission (with proof of confirmation from
                       the transmitting machine), written notice to each of the
                       other Representatives, or, in the case of a meeting
                       called by the CEO, each of the Representatives, at least
                       three (3) Business Days before such meeting. Each notice
                       of a special meeting shall specify, to a reasonable
                       degree, the business to be transacted at, or the purpose
                       of, such meeting; provided, however, that additional
                       business may be transacted at any special meeting as
                       agreed by all the Representatives present at such
                       meeting. Special meetings of the Partnership Governance
                       Committee shall be held at such times and at such places
                       within the State of Texas or Oklahoma as may be stated in
                       the notice of such meeting or in a duly executed waiver
                       of notice thereof. Any Representative may waive notice of
                       any special meeting (whether before or after the time of
                       such meeting) but only if the waiver is in 


                                       7
<PAGE>   13

                       writing. Attendance of any Representative at any special
                       meeting shall constitute a waiver of notice of such
                       meeting by such Representative, unless the Representative
                       states at the beginning of the meeting his objection to
                       the transaction of business because the meeting was not
                       lawfully called or convened.

                (3)    One Representative shall serve as chair of each
                       meeting (regular or special) of the Partnership
                       Governance Committee. The right to designate the chair of
                       meetings of the Partnership Governance Committee shall
                       rotate between the respective General Partners every
                       calendar year. The Representative who on the Conversion
                       Date is serving as chair of the meetings shall continue
                       to so serve until December 31, 1998, which is the next
                       rotation date.

                (4)    Following each meeting of the Partnership Governance
                       Committee, the Secretary shall promptly draft and
                       distribute minutes of such meeting to the Representatives
                       for approval at the next meeting, and after such approval
                       shall retain the minutes in the Partnership minute books.

                (5)    Representatives may participate in or hold regular or
                       special meetings of the Partnership Governance Committee
                       by means of a telephone conference or any comparable
                       device or technology by which all individuals
                       participating in the meeting can hear each other, and
                       participation in such a meeting shall constitute presence
                       in person at such meeting.

                (6)    Any action required or permitted to be taken at a meeting
                       of the Partnership Governance Committee may be taken
                       without a meeting if a consent in writing, setting forth
                       the action so taken, shall be signed by at least two (2)
                       Representatives (or their Alternates) of each General
                       Partner, and such consent shall have the same force and
                       effect as a duly conducted vote of the Partnership
                       Governance Committee. A counterpart of each such consent
                       to action shall be delivered to the Secretary for
                       placement in the minute books of the Partnership, but the
                       failure to deliver a counterpart of any such consent to
                       action to the Secretary shall not affect the validity or
                       effectiveness of such consent to action.

         3.5.   Compensation of Representatives. Representatives shall not
                receive from the Partnership any compensation for their service
                or any reimbursement for attendance at meetings of the
                Partnership Governance Committee.


                                       8
<PAGE>   14

         3.6.   Partnership Governance Committee Action.

                (1)    The Partnership Governance Committee shall act
                       exclusively by means of Partnership Governance Committee
                       Action. As used in this Agreement, "Partnership
                       Governance Committee Action" means any action which the
                       Partnership Governance Committee is authorized and
                       empowered to take in accordance with this Agreement and
                       the Act and which is taken by the Partnership Governance
                       Committee either (i) by votes cast at a meeting of the
                       Partnership Governance Committee duly called and held in
                       accordance with this Agreement or (ii) by a formal
                       written consent complying with the requirements of
                       Section 3.4.(F). In no event shall the Partnership
                       Governance Committee be authorized to act other than by
                       Partnership Governance Committee Action, and any action
                       or purported action by the Partnership Governance
                       Committee (including any authorization, consent,
                       approval, waiver, decision or vote) not constituting a
                       Partnership Governance Committee Action shall be null and
                       void and of no force and effect.

                (2)    Each Partnership Governance Committee Action shall be
                       binding on the Partnership.

         3.7.   Partnership Governance Committee:  Quorum and Voting.

                (1)    The presence of one Representative (including any
                       duly present Alternates) from each General Partner shall
                       constitute a quorum of the Partnership Governance
                       Committee for the transaction of business and the taking
                       of any Partnership Governance Committee Action at any
                       meeting, except that no quorum of the Partnership
                       Governance Committee will be deemed to exist (i) with
                       respect to any regular meeting of the Partnership
                       Governance Committee unless an agenda for such meeting is
                       delivered in accordance with Section 3.4.(A) or (ii) with
                       respect to any special meeting of the Partnership
                       Governance Committee unless a notice of such meeting is
                       given or waived in accordance with Section 3.4.(B). No
                       Partnership Governance Committee Action may be taken at
                       any meeting at which a quorum is not present.

                (2)    All actions of the Partnership Governance Committee
                       shall be determined by vote of the Representatives.
                       Collectively, the Representatives shall have 100 votes.
                       The Representatives of a General Partner shall have, in
                       the aggregate, such number of votes as is equal to the
                       product of 100 and the sum of the Participation
                       Percentages of such General Partner and its Affiliated
                       Limited Partner. The Representatives of each General
                       Partner present at the meeting 


                                       9
<PAGE>   15

                       shall together and by joint action cast all of the votes
                       held by all of the Representatives of such General
                       Partner.


         3.8.    Partnership Governance Committee Actions for Which
                 Unanimous Consent Necessary. Subject to Section 5.7., Section
                 11.4. and Section 11.11.(A), no Partnership Governance
                 Committee Action will be deemed for any purpose to have been
                 taken at any Partnership Governance Committee meeting unless
                 and until 100 votes (constituting all the outstanding votes)
                 are duly cast at such meeting in favor of such Partnership
                 Governance Committee Action which would cause or permit the
                 Partnership (or any Person acting in the name or on behalf of
                 the Partnership), directly or indirectly, to take (or commit to
                 take) any of the actions (each a "Unanimous Partnership
                 Governance Committee Action") described below in this Section
                 3.8. (whether in a single transaction or series of related
                 transactions):

                 (1)   to engage, participate or invest in any business
                       outside the scope of the Partnership Business;

                 (2)   to make any acquisition or divestiture of any other
                       entity or of any material line of business or business
                       unit, or to merge or consolidate the Partnership with any
                       other entity;

                 (3)   to amend or alter this Agreement or the Certificate
                       of Limited Partnership;

                 (4)   to issue, redeem or acquire any Interests (or rights
                       to acquire, or any securities convertible into,
                       Interests) in the Partnership;

                 (5)   to borrow money or to engage in other financing
                       activities, including the grant or use of credit and the
                       pledge of any assets or the granting of a security
                       interest in any asset; (1)

                 (6)   to file a petition in bankruptcy or seeking any
                       reorganization, liquidation or similar relief on behalf
                       of the Partnership; or to consent to the filing of a
                       petition in bankruptcy against the Partnership; or to
                       consent to the appointment of a receiver, custodian,
                       liquidator or trustee for the Partnership or for all or
                       any substantial portion of its property;

                 (7)   to approve the entry into of, amendments to, or
                       termination or modification of, any material permit,
                       government approval or other right;


                                       10
<PAGE>   16

                 (8)   to approve any Capital Enhancement Project or any
                       expenditures pursuant to a Capital Budget pursuant to
                       Section 9.2.(B), or to increase the amount below which a
                       capital expenditure would not require Partnership
                       Governance Committee Action regarding an "authority for
                       commitment" as contemplated by Section 9.5.(A);

                 (9)   to make distributions other than those expressly
                       provided for in Section 7.;

                 (10)  to enter into, amend, terminate or modify any
                       product sales agreement or any raw materials purchase
                       agreement pursuant to which the Partnership's commitments
                       can reasonably be expected to exceed $50 million annually
                       or that is for a term in excess of 18 months;

                 (11)  to enter into, amend, terminate or modify any
                       agreement other than as described in Section 3.8.(J)
                       pursuant to which the Partnership's commitments can
                       reasonably be expected to exceed $25 million;

                 (12)  to commence or settle any litigation or arbitration
                       proceeding by or on behalf of, or in the name or right
                       of, the Partnership involving any claims or payments in
                       excess of $1 million;

                 (13)  to make determinations with respect to the 
                       Partnership's commercial insurance program in accordance
                       with Section 9.8.;

                 (14)  to designate or disband Auxiliary Committees and to
                       establish the purposes thereof in all cases as described
                       in Section 3.10.;

                 (15)  to delegate to any Auxiliary Committee powers or
                       authority to take any action that would otherwise require
                       unanimous approval by the Partnership Governance
                       Committee, or to delegate to any officer powers or
                       authority to take any action that would otherwise require
                       approval by the Partnership Governance Committee;

                 (16)  to adopt or amend, as the Partnership Governance
                       Committee, the policies and procedures referred to in
                       Section 3.3.(B);

                 (17)  to enter into, materially amend or terminate any
                       employee benefit plan; (1)


                                       11
<PAGE>   17

                 (18)  to fix the salary and other compensation of Executive
                       Officers in accordance with Section 4.10.;

                 (19)  to consent to the loan of an employee to the Partnership
                       by a Partner as provided in Section 4.13. or to consent
                       to the hiring of employees of the Partnership by a
                       General Partner (or a General Partner's Affiliate) as
                       anticipated by Section 4.14.;

                 (20)  to make any determinations concerning indemnification of
                       officers pursuant to Section 12.3.;

                 (21)  to adopt or effect any change in the Partnership's
                       accounting policies or practices in regards to
                       Maintenance Capital;

                 (22)  to approve, amend or supplement either annual budget
                       referred to in Section 9.2., including any Financing Plan
                       thereunder;

                 (23)  to change at any time the Cash Balance Amount as provided
                       for in Section 7.5;

                 (24)  to appoint the CEO or to designate an officer as an
                       Executive Officer; or

                 (25)  to change the Partnership's method of accounting for
                       inventory as provided in Section 8.2.(C).

         3.9.    Majority Approval. Except as otherwise expressly provided in
                 this Agreement, the approval of Representatives representing a
                 majority of the total 100 votes will be sufficient for the
                 Partnership Governance Committee to take any Partnership
                 Governance Committee Action.

         3.10.   Auxiliary Committees.

                 (1)   The Partnership Governance Committee shall, by
                       Partnership Governance Committee Action, designate an (i)
                       Operating Committee, (ii) a Finance and Control Committee
                       and (iii) a Compensation Committee. Each such committee
                       shall be a standing committee.


                                       12
<PAGE>   18

                 (2)   From time to time, the Partnership Governance
                       Committee may, by resolution adopted by the Partnership
                       Governance Committee, designate one or more additional
                       committees or disband any committee.

                 (3)   Each committee designated by the Partnership Governance
                       Committee pursuant to this Section 3.10. (each an
                       "Auxiliary Committee") shall (i) operate under the
                       auspices of the Partnership Governance Committee for the
                       purpose of assisting the Partnership Governance Committee
                       in managing (on behalf of the General Partners) the
                       business and affairs of the Partnership and (ii) report
                       to the Partnership Governance Committee.

                 (4)   Each Auxiliary Committee shall consist of two or more
                       members and each General Partner shall have the right to
                       appoint one member. The remaining members, if any, of
                       each Auxiliary Committee shall be appointed by the
                       Partnership Governance Committee.

                 (5)   Auxiliary Committee members may (but need not) be
                       members of the Partnership Governance Committee or
                       employees of the Partnership. No Auxiliary Committee
                       member shall be compensated by the Partnership for
                       service as a member of such Auxiliary Committee.

                 (6)   Each resolution adopted by the Partnership Governance
                       Committee for the purpose of designating an Auxiliary
                       Committee shall set forth (i) the size, name and rotation
                       and designation of a chairman of such Auxiliary Committee
                       and (ii) in such detail as the Partnership Governance
                       Committee deems appropriate, the purposes, powers and
                       authorities of such Auxiliary Committee; provided,
                       however, that in no event shall any Auxiliary Committee
                       have any powers or authority not permitted by this
                       Agreement or the Act.


                                       13
<PAGE>   19

4.       OFFICERS AND EMPLOYEES

         4.1.    Partnership Officers. The officers of the Partnership
                 shall consist of a President and Chief Executive Officer
                 ("CEO"), one or more Vice Presidents, a Secretary and such
                 other officers and assistant officers and agents as may be
                 deemed necessary or desirable by the Partnership Governance
                 Committee. Officers shall be elected or appointed pursuant to
                 Partnership Governance Committee Action (subject to Section
                 3.8.(X)) and shall have such authority and shall perform such
                 duties in the management of the Partnership as may be provided
                 in this Agreement or as may be determined by resolution of the
                 Partnership Governance Committee (consistent with Section
                 3.8.(O)). In its discretion, the Partnership Governance
                 Committee may leave unfilled any office or offices, except
                 those of CEO and Secretary. Two or more offices may be held by
                 the same person. The officers of the Company on the Conversion
                 Date shall remain in office until such officers are changed by
                 Partnership Governance Committee Action.

         4.2.    Selection; Term; Qualification. All officers shall be
                 chosen by the Partnership Governance Committee annually at the
                 Annual Meeting of the Partnership Governance Committee. Prior
                 to each Annual Meeting the CEO shall present the Partnership
                 Governance Committee with a list of nominees, but the
                 Partnership Governance Committee shall not be bound to select
                 officers solely from such list. The CEO and each other officer
                 shall hold office until a successor has been chosen and
                 qualified, or until the officer's death, resignation, or
                 removal.

         4.3.    Removal and Vacancies. Any officer or agent may be removed by
                 Partnership Governance Committee Action, with or without cause,
                 whenever in the judgment of the Partnership Governance
                 Committee the best interests of the Partnership would be served
                 thereby. Any vacancy in any office may be filled by the
                 Partnership Governance Committee at any time. The CEO may, at
                 any time, recommend to the Partnership Governance Committee the
                 appointment or removal of any officer.

         4.4.    Duties.

                 (1)   Each officer or employee of the Partnership shall owe
                       to the Partnership, but not to any Partner, all such
                       duties (fiduciary or otherwise) as are imposed upon such
                       an officer or employee of a Delaware corporation. Without
                       limitation of the foregoing, each officer and employee in
                       any dealings with a Partner shall have a duty to act in
                       good faith and to deal fairly.

                 (2)   The policies and procedures of the Partnership adopted by
                       the Partnership Governance Committee may set forth the
                       powers and duties of the officers of the Partnership to
                       the extent not set forth in or 


                                       14
<PAGE>   20

                       inconsistent with this Agreement. The officers of the
                       Partnership shall have such powers and duties, except as
                       modified by the Partnership Governance Committee, as
                       generally pertain to their respective offices in the case
                       of a Delaware corporation, as well as such powers and
                       duties as from time to time may be conferred by the
                       Partnership Governance Committee and by this Agreement.
                       The CEO and the other officers and employees of the
                       Partnership shall develop and implement management and
                       other Partnership policies and procedures consistent with
                       this Agreement and the general policies and procedures
                       established by the Partnership Governance Committee. The
                       duties of each officer shall include the obligation to
                       notify the Partnership Governance Committee of any facts
                       or circumstances of which such officer becomes aware that
                       indicate a Partner or any of its Affiliates is or may be
                       in breach of its obligations under this Agreement or
                       under any of the Related Agreements.

                (3)    Notwithstanding any other provision of this
                       Agreement, no Partner, Representative, officer, employee
                       or agent of the Partnership shall have the power or
                       authority, without specific authorization from the
                       Partnership Governance Committee, to undertake any of the
                       following:

                              (i)      to do any act which contravenes (or
                                       otherwise is inconsistent with) this
                                       Agreement or which would make it
                                       impossible to carry on the Partnership
                                       Business;

                             (ii)      to confess a judgment against the
                                       Partnership;

                            (iii)      to possess Partnership property other
                                       than in the ordinary conduct of the
                                       Partnership Business; or

                             (iv)      to take, or cause to be taken, any of the
                                       actions described in Section 3.8.

         4.5.    CEO. The CEO shall be the chief executive and chief
                 operating officer of the Partnership, shall have general
                 authority for direction of the business and affairs of the
                 Partnership and general supervision over its several officers,
                 subject, however, to the control of the Partnership Governance
                 Committee and shall see that all orders and resolutions of the
                 Partnership Governance Committee or, as applicable, any
                 Auxiliary Committee(s) are carried into effect. The CEO shall
                 be authorized to execute and deliver, in the name and on behalf
                 of the Partnership, (i) contracts or other instruments
                 authorized by Partnership Governance Committee Action and (ii)
                 contracts or instruments in the usual and regular course of
                 business, except in cases when the execution and delivery
                 thereof shall be expressly delegated by the Partnership
                 Governance Committee to some other officer or agent of the
                 Partnership, and, in general, shall perform all duties incident
                 to the office of CEO and such other duties as from time to time
                 may be 


                                       15
<PAGE>   21

                 assigned to him or her by the Partnership Governance Committee
                 (consistent with Section 3.8.(O)) or as are prescribed by this
                 Agreement. Unless otherwise requested by a Representative, the
                 CEO shall attend all meetings of the Partnership Governance
                 Committee.

         4.6.    Vice Presidents. The Vice Presidents shall perform such
                 duties as may, from time to time, be assigned to them by the
                 Partnership Governance Committee (consistent with Section
                 3.8.(O)). In addition, at the request of the CEO, or in the
                 absence or disability of the CEO, the Vice Presidents, or any
                 of them, in the order of their election or in any other order
                 determined by the Partnership Governance Committee, temporarily
                 shall perform all (or if limited through the scope of the
                 delegation, some of) the duties of the CEO, and, when so
                 acting, shall have all the powers of, and be subject to all
                 restrictions upon, the CEO.

         4.7.    Secretary. The Secretary shall keep the minutes of all
                 meetings (and copies of written records of action taken without
                 a meeting) of the Partnership Governance Committee and the
                 Auxiliary Committees in minute books provided for such purpose
                 and shall see that all notices are duly given in accordance
                 with the provisions of this Agreement. The Secretary shall be
                 the custodian of the records. The Secretary shall have general
                 charge of books and papers of the Partnership as the
                 Partnership Governance Committee may direct and, in general,
                 shall perform all duties and exercise all powers incident to
                 the office of Secretary and such other duties and powers as the
                 Partnership Governance Committee (consistent with Section
                 3.8.(O)) or the CEO from time to time may assign to or confer
                 upon the Secretary.

         4.8.    Assistant Officers. Any assistant officer appointed by the
                 Partnership Governance Committee shall have power to perform,
                 and shall perform, all duties incumbent upon the officer he or
                 she is assisting, subject to the general direction of such
                 officer, and shall perform such other duties as this Agreement
                 may require or the Partnership Governance Committee (consistent
                 with Section 3.8.(O)) may prescribe.

         4.9.    Other Officers. The Partnership Governance Committee may
                 appoint such other officers and delegate (consistent with
                 Section 3.8.(O)) to them such duties as it sees fit.

         4.10.   Salaries. The salaries or other compensation of the
                 Executive Officers of the Partnership shall be fixed from time
                 to time by the Partnership Governance Committee. Except for
                 previously granted stock options, stock appreciation rights,
                 deferred compensation and other similar arrangements, the
                 benefits of which might be realized subsequent to the officer
                 becoming an employee of the Partnership, no officer or employee
                 (other than an employee of a Partner or an Affiliate of a
                 Partner) of the Partnership shall receive any fees or
                 compensation 


                                       16
<PAGE>   22

                 from any Partner or any Affiliate of any Partner. Further, all
                 fees and compensation of the officers and employees of the
                 Partnership with respect to their services as such officers and
                 employees shall be payable solely by the Partnership and no
                 Partner or its Affiliates shall pay (or offer to pay) any such
                 fees or compensation to any officer or employee, except to the
                 extent permitted by Section 4.13. in the case of loaned
                 employees or that the Partnership shall have agreed with a
                 Partner or one of its Affiliates pursuant to a separate
                 agreement that a portion of the compensation of such officer or
                 employee shall be paid by such Partner or Affiliate.

         4.11.   Bonds of Officers. The Partnership Governance Committee
                 may (but shall have no obligation to) secure the fidelity of
                 any officer of the Partnership by bond or otherwise, on such
                 terms and with such surety or sureties, conditions, penalties
                 or securities as shall be deemed proper by the Partnership
                 Governance Committee.

         4.12.   Delegation. The Partnership Governance Committee may
                 delegate temporarily the powers and duties of any officer of
                 the Partnership, in case of absence or for any other reason, to
                 any other officer of the Partnership, and may authorize the
                 delegation by any officer of the Partnership of any of such
                 officer's powers and duties to any other officer or employee of
                 the Partnership, subject to the general supervision of such
                 officer.

         4.13.   Loaned Employees. If there is a vacancy in a job position above
                 a certain grade (but below the level of the Executive Officers)
                 in the Partnership (such grade to be established by the
                 Partnership Governance Committee), either General Partner shall
                 be entitled to nominate one of its (or its Affiliate's) own
                 employees to fill such vacancy for a fixed period of up to
                 three years, subject to renewal or extension by the CEO with
                 the consent of each General Partner. The selection of a
                 nominating General Partner's (or its Affiliate's) employee to
                 fill a Partnership vacancy and all of the terms of such
                 selection and the nominated employee's service shall be subject
                 to the approval and control of the CEO; provided, however, that
                 the selection and appointment of a nominating General Partner's
                 (or its Affiliate's) employee to fill a vacancy shall be
                 confirmed by Partnership Governance Committee Action. A
                 nominating General Partner's (or its Affiliate's) employee who
                 fills a Partnership vacancy shall in all respects perform as an
                 employee of the Partnership and, as such, shall have the duties
                 to the Partnership and the General Partners set forth or
                 referred to in Section 4.4. (and each General Partner shall at
                 all times cause all of its (or its Affiliate's) employees on
                 loan to the Partnership to perform in a manner consistent with
                 the requirements of Section 4.4.); provided, however, that such
                 employees shall continue to participate in the compensation and
                 benefit plans of the nominating General Partner or its
                 Affiliate. Each General Partner shall at any one time have no
                 more than 10 of its (or its Affiliate's) employees filling
                 Partnership vacancies. The Partnership shall compensate the
                 nominating General Partner (or its Affiliate) for the services
                 of the employee in accordance with terms determined by the


                                       17
<PAGE>   23
                 nominating General Partner and the CEO prior to the employee's
                 commencing work for the Partnership.

         4.14.   Employee Transfers. With the prior approval of the
                 Partnership Governance Committee, which approval shall not be
                 unreasonably withheld, either General Partner (or its
                 Affiliates) shall be entitled to hire specific employees of the
                 Partnership to fill vacancies with such General Partner or its
                 Affiliate. With the prior approval of the relevant General
                 Partner, which approval shall not be unreasonably withheld, the
                 Partnership shall be entitled to hire specific employees of
                 either General Partner (or its Affiliates) to fill vacancies
                 with the Partnership. The granting of credit for past service
                 with the prior employer for purposes of the hired employee's
                 compensation and benefit plans shall be within the discretion
                 of the General Partner who is hiring such employee, or in the
                 case of the Partnership, shall be determined in accordance with
                 an appropriate Partnership policy or procedure.

         4.15.   General Authority. Persons dealing with the Partnership
                 are entitled to rely conclusively on the power and authority of
                 each of the officers as set forth in this Agreement. No Person
                 dealing with any officer with respect to any business or
                 property of the Partnership shall be obligated to ascertain
                 that the terms of this Agreement have been complied with. No
                 Person dealing with the Partnership shall be required to
                 investigate or inquire as to the authority of the officers of
                 the Partnership to execute contracts, agreements, deeds,
                 mortgages, security agreements, promissory notes or other
                 instruments or documents with respect to any business or
                 property of the Partnership or to take actions on behalf of the
                 Partnership.

5.       RIGHTS, DUTIES AND COVENANTS OF PARTNERS

         5.1.    Delegation. The Partners acknowledge that the General
                 Partners (acting through the Partnership Governance Committee)
                 are permitted to delegate responsibility for day-to-day
                 operations of the Partnership to officers and employees of the
                 Partnership.

         5.2.    General Authority. Persons dealing with the Partnership
                 are entitled to rely conclusively on the power and authority of
                 each of the General Partners as set forth in this Agreement or
                 as specifically authorized by Partnership Governance Committee
                 Action. No Person dealing with either General Partner or such
                 General Partner's agents or representatives with respect to any
                 business or property of the Partnership shall be obligated to
                 ascertain that the terms of this Agreement have been complied
                 with, or be obligated to inquire into the necessity or
                 expedience of any act or action of a General Partner or a
                 General Partner's representatives. Nothing in this Section 5.2.
                 shall be deemed to be a waiver or release of any General
                 Partner's obligations to the other Partners as set forth
                 elsewhere in this Agreement.


                                       18
<PAGE>   24

         5.3.    Nature of Partner Obligations. Each Partner (directly or
                 through its Affiliates) is a sophisticated party possessing
                 extensive knowledge of and experience relating to, and is
                 actively engaged in, significant businesses, in addition to the
                 Refinery Business, has been represented by legal counsel, is
                 capable of evaluating and has thoroughly considered the merits,
                 risks and consequences of the provisions of this Section 5.3.
                 and is agreeing to such provisions knowingly and advisedly. The
                 liability of each of the General Partners (including any
                 liability of its Affiliates or its and their respective
                 officers, directors, agents and employees), either to the
                 Partnership or to any other Partner, for any act or omission by
                 such Partner in its capacity as a partner of the Partnership
                 that is imposed by such Partner's status as a "general partner"
                 or "limited partner" (as such terms are used in the Act) of a
                 limited partnership is hereby eliminated, waived and limited to
                 the fullest extent permitted by law. Nothing in this subsection
                 shall relieve any Partner from liability for any breach of this
                 Agreement and each General Partner shall at all times owe to
                 the other General Partner a duty to act in good faith with
                 respect to all matters involving the Partnership; provided,
                 however, that the duty of a Nonconflicted General Partner in
                 exercising the authority described in Section 5.7. shall be as
                 set forth in Section 5.7.(B).

         5.4.    Limited Partners.

                 (1)   No Limited Partner shall take part in the management
                       or control of the Partnership Business, transact any
                       business in the Partnership's name or have the power to
                       sign documents for or otherwise to bind the Partnership.

                 (2)   Each Limited Partner shall have the rights with
                       respect to the Partnership's books and records as set
                       forth in Section 5.9.

         5.5.    Partner Not Agent of Other Partners. Except as expressly
                 provided in Section 2.7., Section 5.7., Section 10.5. or
                 Section 11.1., nothing in this Agreement shall be deemed to
                 constitute a Partner as an agent or legal representative of any
                 other Partner.

         5.6.    Transactions with the Partnership. Subject to any required
                 approval of the Nonconflicted General Partner in accordance
                 with Section 5.7., each Partner and its Affiliates shall be
                 entitled without restriction to enter into contracts and
                 transactions with the Partnership. Upon receipt of any required
                 approval by the Nonconflicted General Partner Representatives,
                 all contracts and transactions between the Partnership and a
                 Partner or its Affiliates shall be deemed to be entered into on
                 an arm's-length basis and to be subject to ordinary contract
                 and commercial law.


                                       19
<PAGE>   25

         5.7.    Control of Certain Claims and Certain Transactions.

                 (1)   With respect to each Conflict Circumstance, the
                       Nonconflicted General Partner (through its
                       Representatives) shall have the sole and exclusive power
                       and right for and on behalf, and at the sole expense, of
                       the Partnership (i) to control (including the right from
                       time to time, in its discretion, to make delegations to
                       officers or employees of the Partnership as to) all
                       decisions, elections, notifications, actions, exercises
                       or nonexercises and waivers of all rights, privileges and
                       remedies provided to, or possessed by, the Partnership
                       with respect to a Conflict Circumstance and (ii) in the
                       event of any potential, threatened or asserted claim,
                       dispute or action with respect to such Conflict
                       Circumstance, to retain and direct legal counsel and to
                       control, assert, enforce, defend, litigate, mediate,
                       arbitrate, settle, compromise or waive any and all such
                       claims, disputes and actions. Accordingly, Partnership
                       Governance Committee Action with respect to a Conflict
                       Circumstance shall require only the approval of the
                       Representatives of the Nonconflicted General Partner. As
                       used herein, the term "Conflict Circumstance" shall mean
                       any transaction, dealing or agreement between the
                       Partnership, on the one hand, and a General Partner (the
                       "Conflicted General Partner") or any of its Affiliates,
                       on the other hand, including each of the Related
                       Agreements to which the Partnership is a party and each
                       transaction thereunder; provided, however, that a
                       Conflict Circumstance shall cease to exist (i) upon the
                       Conflicted General Partner ceasing to be a Partner or
                       (ii) upon the third party with which the transaction,
                       dealing or agreement exists, ceasing to be an Affiliate
                       of a General Partner. As used herein the term
                       "Nonconflicted General Partner" shall mean the General
                       Partner that is not the Conflicted General Partner. Each
                       General Partner shall, and shall cause its Affiliates to,
                       take all such actions, execute all such documents and
                       enter into all such agreements as may be necessary or
                       appropriate to facilitate or further assure the
                       accomplishment of this Section 5.7.

                (2)    The Nonconflicted General Partner, in exercising its
                       control, power and rights pursuant to this Section 5.7.,
                       shall act in good faith and in a manner it reasonably
                       believes to be in the best interests of the Partnership.
                       The Conflicted General Partner (or its Affiliate) that is
                       the other party to such negotiation, contract,
                       transaction, claim, dispute or action shall have the
                       right to deal with the Partnership and with the
                       Nonconflicted General Partner on an arm's-length basis
                       and in its own best interests, but in any event in good
                       faith.


                                       20
<PAGE>   26

                (3)    This Section 5.7. shall not apply to: (i) any sale by the
                       Partnership of a product or service that the Partnership
                       also sells to unrelated third parties; provided, however,
                       that any agreement for such sales by the Partnership to a
                       Partner or one of its Affiliates shall, to the extent not
                       previously performed, be terminable without penalty upon
                       not more than sixty (60) days notice and such sales shall
                       be at market-based prices that are not less than the
                       prices the Partnership charges third parties for such
                       products or services; or (ii) any purchase by the
                       Partnership of a product or service that the Partnership
                       also purchases from unrelated third parties; provided,
                       however, that any agreement for such purchases by the
                       Partnership from a Partner or one of its Affiliates
                       shall, to the extent not previously performed, be
                       terminable without penalty upon not more than sixty (60)
                       days notice and such purchases shall be at market-based
                       prices that are not more than the prices the Partnership
                       pays third parties for such products or services.

         5.8.    Partnership Interest. All assets contributed to or
                 acquired by the Partnership shall be owned by the Partnership.
                 Each Partner shall have a right only to its "partnership
                 interest" (as such term is used in the Act) in the Partnership
                 (an "Interest"), and to the maximum extent permitted by
                 applicable law each Partner waives any right to partition of
                 the Partnership's assets and agrees that it will not seek or be
                 entitled to partition any such assets, whether by way of
                 physical partition, judicial sale or otherwise, prior to the
                 termination of the Partnership.

         5.9.    Access to and Copies of Records and Documents.

                 (1)   Except as otherwise required by law, any Partner may
                       examine and copy, in person or by representative, at any
                       reasonable time, all records and other information of the
                       Partnership.

                 (2)   Upon request by any Partner, the Partnership shall
                       provide without charge true copies of the Certificate of
                       Limited Partnership, this Agreement, all amendments or
                       restatements thereto, and copies of all federal, state,
                       and local information or income tax returns for each of
                       the Partnership's six most recent tax years.

         5.10.   Partner Covenants. Except to the extent it takes action
                 pursuant to its rights as a Nondefaulting Partner under Section
                 11., each Partner covenants and agrees with the Partnership and
                 with each other Partner as follows:

                 (1)   It shall not exercise, or purport or attempt to exercise,
                       its authority (i) to withdraw, retire, resign, or assert
                       that it has been expelled from the Partnership, or (ii)
                       to dissolve or enter into any proceeding seeking any


                                       21
<PAGE>   27

                       dissolution of such Partner, or (iii) to make any
                       application for judicial dissolution of the Partnership;

                (2)    It shall not do any act that would make it impossible or
                       impracticable to carry on the Partnership Business;

                (3)    It shall not, directly or indirectly through any
                       entity, conduct or engage in any business other than the
                       holding of its Interest and the doing of things necessary
                       or incidental in connection therewith, the exercise of
                       its authority as a Partner, the exercise of its authority
                       pursuant to Section 5.7., and the performance and
                       enforcement of its obligations and rights pursuant to
                       this Agreement; and (1)

                (4)    It shall not act or purport or attempt to act in a
                       manner inconsistent with any Partnership Governance
                       Committee Action or in a manner contrary to the
                       agreements of the Partners set forth in this Agreement.

         5.11.  Indemnification.

                (1)    (1)   Indemnification by Partnership. The Partnership
                             shall, to the fullest extent permitted by
                             applicable law, indemnify, defend and hold harmless
                             each Partner, its Affiliates and their respective
                             officers, directors and employees from, against and
                             in respect of any losses, claims, damages, costs
                             and expenses (including costs of investigation,
                             defense and attorneys' fees) and liabilities
                             arising out of or in connection with the business
                             or affairs of the Partnership (collectively,
                             "Indemnified Losses"), except to the extent that it
                             is finally judicially determined that such
                             Indemnified Losses arose out of or were related to
                             actions or omissions of the indemnified Partner,
                             its Affiliates or any of their respective officers,
                             directors or employees (acting in their capacities
                             as such) constituting (a) bad faith, fraud,
                             violation of law or intentional misconduct or (b) a
                             breach of this Agreement. The Partnership shall
                             periodically reimburse any Person entitled to
                             indemnity under this Section 5.11.(A)(1) for its
                             legal and other expenses incurred in connection
                             with defending any claim (other than a claim by the
                             Partnership or a Partner) with respect to such
                             Indemnified Losses if such Person shall agree to
                             reimburse promptly the Partnership for such amounts
                             if it is finally judicially determined that such
                             Person was not entitled to indemnity hereunder.


                                       22
<PAGE>   28

                       (2)   Partner's Right of Contribution. Each Affiliated
                             Partner Group hereby agrees to indemnify, defend
                             and hold harmless the other Affiliated Partner
                             Group and their respective officers, directors and
                             employees from and against the indemnifying
                             Affiliated Partner Group's Participation Percentage
                             of any Indemnified Losses (calculated at the time
                             any such Indemnified Loss was incurred), except to
                             the extent that it is finally judicially determined
                             that such Indemnified Losses arose out of or were
                             related to actions or omissions of the indemnified
                             Affiliated Partner Group or any of their respective
                             officers, directors or employees (acting in their
                             capacity as such) constituting (a) bad faith,
                             fraud, violation of law or intentional misconduct
                             or (b) a breach of this Agreement; provided,
                             however, that such indemnified Affiliated Partner
                             Group, and their respective officers, directors and
                             employees shall not be entitled to indemnity under
                             this Section 5.11.(A)(2) unless (i) the indemnified
                             Affiliated Partner Group shall make a written
                             demand for indemnification from the Partnership in
                             accordance with Section 5.11.(D) and the
                             Partnership shall fail to satisfy such demand in a
                             manner reasonably satisfactory to the indemnified
                             Affiliated Partner Group within sixty (60) days of
                             such notice or (ii) the Partnership is Insolvent or
                             otherwise unable to satisfy its obligations.

                (2)    Indemnification by Partners. Each Partner hereby
                       indemnifies and shall hold harmless the Partnership and
                       the other Partners, their Affiliates and each director,
                       officer and employee of such other Partners, its
                       Affiliates and the Partnership without duplication from
                       and against any and all Indemnified Losses arising out of
                       any act of, or any purported assumption of any obligation
                       or responsibility by, such indemnifying Partner or its
                       Affiliates, or any of the directors, officers or
                       employees of such indemnifying Partner or its Affiliates,
                       in violation of this Agreement.

                (3)    Indemnification Under Related Agreements. Notwithstanding
                       any other provision of this Agreement, no Partner or its
                       Affiliates or their respective officers, directors or
                       employees shall be entitled to indemnification under this
                       Section 5.11. in respect of any breach by such Partner or
                       its Affiliates of the Related Agreements or in respect of
                       any matter for which such Partner or its Affiliates is
                       required to indemnify the Partnership under the
                       applicable terms of any of the Related Agreements.

                (4)    Procedures. Promptly after receipt by a person
                       entitled to indemnification under Section 5.11.(A) or
                       Section 5.11.(B) (an "Indemnified Party") of notice of
                       any pending or threatened claim against it (an "Action"),
                       such Indemnified Party shall give notice to the 


                                       23
<PAGE>   29

                       party to whom the Indemnified Party is entitled to look
                       for indemnification (the "Indemnifying Party") of the
                       commencement thereof, but the failure so to notify the
                       Indemnifying Party shall not relieve it of any liability
                       that it may have to any Indemnified Party except to the
                       extent the Indemnifying Party demonstrates that it is
                       prejudiced thereby. In case any Action that is subject to
                       indemnification under Section 5.11.(A) or Section
                       5.11.(B) shall be brought against an Indemnified Party
                       and it shall give notice to the Indemnifying Party of the
                       commencement thereof, the Indemnifying Party shall be
                       entitled to participate therein and, to the extent that
                       it shall wish, to assume the defense thereof with counsel
                       reasonably satisfactory to such Indemnified Party and,
                       after notice from the Indemnifying Party to the
                       Indemnified Party of its election to assume the defense
                       thereof, the Indemnifying Party shall not be liable to
                       such Indemnified Party under this Section for any fees of
                       other counsel or any other expenses, in each case
                       subsequently incurred by such Indemnified Party in
                       connection with the defense thereof, other than
                       reasonable costs of investigation. Notwithstanding an
                       Indemnifying Party's election to assume the defense of
                       any such Action that is subject to indemnification under
                       Section 5.11.(A) or Section 5.11.(B), the Indemnified
                       Party shall have the right to employ separate counsel and
                       to participate in the defense of such Action, and the
                       Indemnifying Party shall bear the reasonable fees, costs
                       and expenses of such separate counsel if (i) the use of
                       counsel chosen by the Indemnifying Party to represent the
                       Indemnified Party would present such counsel with a
                       conflict of interest; (ii) the actual or potential
                       defendants in, or targets of, any such Action include
                       both the Indemnifying Party and the Indemnified Party,
                       and the Indemnified Party shall have reasonably concluded
                       that there may be legal defenses available to it which
                       are different from or additional to those available to
                       the Indemnifying Party (in which case the Indemnifying
                       Party shall not have the right to assume the defense of
                       such Action on the Indemnified Party's behalf); (iii) the
                       Indemnifying Party shall not have employed counsel
                       satisfactory to the Indemnified Party to represent the
                       Indemnified Party within a reasonable time after notice
                       of the institution of such Action; or (iv) the
                       Indemnifying Party shall authorize the Indemnified Party
                       to employ separate counsel at the Indemnifying Party's
                       expense. If an Indemnifying Party assumes the defense of
                       such Action, (a) no compromise or settlement thereof may
                       be effected by the Indemnifying Party without the
                       Indemnified Party's consent (which shall not be
                       unreasonably withheld) unless (I) there is no finding or
                       admission of any violation of law or any violation of the
                       rights of any person and no effect on any other claims
                       that may be made against the Indemnified Party and (II)
                       the sole relief provided is monetary damages that are
                       paid in full by the Indemnifying Party and (b) the
                       Indemnified Party shall have no liability with respect to
                       any compromise or settlement thereof effected without its
                       consent (which shall not be unreasonably withheld). The
                       indemnities contained in this Section 5.11. shall survive
                       the termination and liquidation of the Partnership.


                                       24
<PAGE>   30

6.       CAPITAL CONTRIBUTIONS AND PARTICIPATION PERCENTAGE

         6.1.    Prior Capital Contributions. Upon formation of the
                 Company, LParent on behalf of Lyondell GP and CParent on behalf
                 of CITGO LP, contributed certain Assets to and the Company
                 assumed certain liabilities and obligations, as provided for in
                 the Regulations and the Contribution Agreement. From time to
                 time prior to the Conversion Date, Lyondell GP and CITGO LP, as
                 the two members of the Company, made Capital Contributions and
                 loans to the Company as provided for in the Regulations.
                 Capital Contributions and proceeds of loans made prior to the
                 Conversion Date that were of a specific character or designated
                 for a specific purpose shall retain such character or
                 designation and be subject to the restrictions applicable
                 thereto set forth in the Regulations.

         6.2.    Capital Contributions. Except as expressly provided in
                 this Section 6., Section 7.1(D) or as determined by the
                 Partnership Governance Committee, the Partners (i) shall have
                 no obligation to contribute any capital to the Partnership for
                 any purpose and (ii) shall not be entitled to contribute any
                 capital to the Partnership.

         6.3.    Partner Loans. A Partner or its Affiliates may loan funds
                 to the Partnership on such terms and conditions as may be
                 approved by the Partnership Governance Committee pursuant to
                 Section 3.8.(E), and, subject to other applicable law, have the
                 same rights and obligations with respect thereto as a Person
                 who is neither a Partner nor an Affiliate of a Partner. The
                 existence of such a relationship and acting in such a capacity
                 will not result in a Limited Partner being deemed to be
                 participating in the control of the business of the Partnership
                 or otherwise affect the limited liability of a Limited Partner.
                 If a Partner or any Affiliate thereof is a lender, in
                 exercising its rights as a lender, including making its
                 decision whether to foreclose on property of the Partnership,
                 such lender will have no duty to consider (i) its status as a
                 Partner or an Affiliate of a Partner, (ii) the interests of the
                 Partnership, or (iii) any duty it may have to any other Partner
                 or the Partnership.

         6.4.    Participation Percentages.

                 (1)   Capital Contributions and Participation Percentages.

                       (1)   As of and following the Conversion Date, the
                             Partners' respective Capital Contributions shall be
                             equal to the respective amounts set forth in
                             Exhibit 6.4 hereto plus any adjustments thereto
                             made following the Conversion Date in accordance
                             with the terms of this Section 6.4.


                                       25
<PAGE>   31

                       (2)   Each Partner's respective Capital Contributions
                             shall be adjusted to reflect the Distributions (as
                             hereinafter defined), if any, from any financing by
                             the Partnership from the Conversion Date until the
                             Option Date (the "Refinancing"). As used herein,
                             the term "Distributions" shall mean the net
                             proceeds of the Refinancing after the Partnership
                             (i) repays any existing indebtedness of the
                             Partnership (including any and all indebtedness
                             owed to the Partners) which the Partners have
                             agreed to repay but excluding any repayment of the
                             Partnership's revolving credit facility which may
                             be refinanced subsequent to the Refinancing and
                             (ii) withholds any amount of such Refinancing
                             proceeds which the Partnership Governance Committee
                             determines should be maintained by the Partnership.

                       (3)   The Participation Percentage for each Partner
                             shall equal the sum of the Capital Contributions of
                             such Partner divided by the sum of the Capital
                             Contributions of all Partners.

                       (4)   For the Calendar Quarter in which the Conversion
                             occurs, the Participation Percentages through the
                             end of that Calendar Quarter shall be as set forth
                             on Exhibit 6.4. For each Calendar Quarter following
                             such Calendar Quarter, the Participation
                             Percentages of the Partners shall be calculated and
                             in effect as of the first day of the Calendar
                             Quarter based on all events which occurred or are
                             deemed to have occurred through the close of
                             business on the last day of the preceding Calendar
                             Quarter. Except as otherwise provided, the
                             Participation Percentages in effect as of the first
                             day of the Calendar Quarter shall be operative for
                             the entire Calendar Quarter and shall not be
                             changed for any reason until the first day of the
                             next succeeding Calendar Quarter.

                 (2)   From the Option Date, if any: (i) each of the CITGO
                       Partners' Capital Contributions shall include the amount
                       of the Option Date Payment and shall be adjusted by the
                       CITGO Partners Option Date Amount; and (ii) each of the
                       Lyondell Partners' Capital Contributions shall be
                       adjusted by their respective amounts of the Lyondell
                       Partners Option Date Amount.

         6.5.    Capital Expenditure Funding. To the extent that the Partnership
                 Governance Committee determines at any time after the
                 Conversion Date that certain capital expenditures will be
                 required and that funds are needed by the Partnership for such
                 capital expenditures, the Partners shall fund the amount needed
                 by the Partnership for such purposes. With respect to the
                 funding required under this Section, the Partnership Governance
                 Committee or the CEO shall inform the Partners as to the
                 aggregate amount required to be funded, the intended use of the


                                       26
<PAGE>   32
                 funds, and the due date or dates for each Partner's funding
                 obligation. The amount required to be funded by each Partner on
                 any given date shall equal the aggregate amount due on such
                 date multiplied by the Partner's Participation Percentage on
                 such date. The amounts to be funded by the Partners shall be
                 funded with Capital Contributions, if such amounts are funded
                 prorated in accordance with the Partners' Participation
                 Percentage, or may be funded with loans (by unanimous consent
                 of the Partnership Governance Committee). The amounts funded
                 hereunder shall be used solely for the purposes set forth
                 herein as determined by the Partnership Governance Committee.

         6.6.    CITGO Partners' Option to Increase Their Collective
                 Participation Percentage.

                 (1)   CITGO Partners may elect (and in the event of such
                       election shall give the Partnership and Lyondell Partners
                       written notice of CITGO Partners' election), as provided
                       herein, to increase CITGO Partners' Participation
                       Percentage to any Participation Percentage up to fifty
                       percent (50%), in the aggregate (the "Intended
                       Percentage"). The notice shall set forth (i) the Intended
                       Percentage, (ii) CITGO Partners' tentative calculation of
                       the amount it must contribute in order to achieve the
                       Intended Percentage and (iii) the date on which CITGO
                       Partners will make the Capital Contribution to achieve
                       the Intended Percentage, which date ("Option Date") shall
                       be the last date of a calendar quarter, subsequent to
                       January 1, 2000 and not later than September 30, 2000 and
                       must not be less than thirty (30) days following the date
                       of the notice.

                 (2)   CITGO Partners shall be permitted to elect to
                       increase their Participation Percentage only one time
                       under the provisions of this Section 6.6.

                 (3)   On the Option Date, CITGO Partners shall contribute
                       to the Partnership cash in an amount equal to 50% of the
                       Option Date Payment and a promissory note equal to 50% of
                       the Option Date Payment given to the Partnership in
                       accordance with the terms of Section 6.6.(E). "Option
                       Date Payment" shall mean the amount of a Capital
                       Contribution by CITGO Partners such that on the day
                       following the Option Date, and after giving effect to the
                       CITGO Partners Option Date Amount and the Lyondell
                       Partners Option Date Amount, CITGO Partners Participation
                       Percentage would equal the Intended Percentage.


                                       27
<PAGE>   33

                 (4)   To the extent the exact amount of the Option Date
                       Payment cannot be determined on the Option Date, CITGO
                       Partners shall contribute on the Option Date an amount
                       equal to CITGO Partners' good faith estimate of the
                       amount of cash due hereunder. At least ten (10) Business
                       Days prior to the Option Date, CITGO Partners shall
                       furnish the Partnership and Lyondell Partners with a
                       written determination of CITGO Partners' good faith
                       estimate of the total amount due under Section 6.6.(C).
                       Promptly after the Option Date, the Partnership
                       Governance Committee shall determine such amounts as are
                       necessary to be contributed by CITGO Partners under this
                       Section 6.6. Within five (5) Business Days of the
                       determination by the Partnership Governance Committee of
                       the amount of cash required to be contributed by CITGO
                       Partners under this Section 6.6., CITGO Partners shall
                       contribute to the Partnership (i) the difference between
                       such amount and the amount of cash contributed by CITGO
                       Partners on the Option Date plus (ii) interest on the
                       amount contributed under clause (i) at the Agreed Rate
                       (subject to Section 12.11.) from the Option Date through
                       the date CITGO Partners makes the contribution required
                       herein. If the amount of cash contributed by CITGO
                       Partners on the Option Date is greater than the amount
                       required to have been contributed by CITGO Partners, then
                       within five (5) Business Days of such determination the
                       Partnership shall pay such excess to CITGO Partners with
                       interest at the Agreed Rate (subject to Section 12.11.)
                       from the Option Date through the date the Partnership
                       makes the required payment. For purposes of determining
                       Participation Percentages, only the final net amount of
                       CITGO Partners' contribution under this Section 6.6.
                       shall be taken into account and any interim contributions
                       or distributions or interest payments shall be
                       disregarded.

                 (5)   CITGO Partners shall deliver to the Partnership a
                       promissory note equal to 50% of the Option Date Payment.
                       The promissory note shall be delivered to the Partnership
                       as soon as the exact amount of the Option Date Payment is
                       determined pursuant to the procedures set forth in
                       Section 6.6.(D). The promissory note shall be in the form
                       set forth in Exhibit 6.6(E) to this Agreement. All
                       scheduled payments of principal under the promissory note
                       shall be used or deemed used by the Partnership for
                       capital expenditures incurred by the Partnership
                       subsequent to the Option Date and such payments shall be
                       treated as having been used to acquire property in
                       accordance with Section 7.7.(B)(2). The Partnership shall
                       have the right to withhold from distributions payable to
                       CITGO Partners any amounts then due under the promissory
                       note and to apply such withheld amounts to the amounts
                       payable by CITGO Partners to the Partnership under the
                       promissory note.

                 (6)   The amount contributed by CITGO Partners under Section
                       6.6.(C) shall be applied, in order of priority, towards
                       repayment of the Initial 


                                       28
<PAGE>   34

                       Construction Loan, the Additional Construction Loan and,
                       to the extent funds are available, any loan from Lyondell
                       Partners. Any such amounts used to repay Lyondell
                       Partners Loans shall be applied in inverse order by
                       reference to the date each such loan was extended, that
                       is the first repayment shall be of the loans most
                       recently made by Lyondell Partners. If no such loans are
                       outstanding on the Option Date, the amount contributed by
                       CITGO Partners under Section 6.6.(C) shall be used or
                       deemed used by the Partnership for capital expenditures
                       incurred by the Partnership subsequent to the Option Date
                       and such payments shall be treated as having been used to
                       acquire property in accordance with Section 7.7.(B)(2)
                       and all depreciation, cost recovery, or amortization
                       deductions associated with said capital expenditures
                       shall be allocated to CITGO Partners in accordance with
                       Section 7.7.(B)(2).

         6.7.    Return of Capital Contributions. Except as otherwise expressly
                 provided by this Agreement, no Partner shall be entitled to
                 have all or any part of its Capital Contribution returned and
                 no Partner shall be paid interest or any other return on any
                 Capital Contribution or on the balance of its Capital Account,
                 as that term is hereafter defined.

         6.8.    Administration and Investment of Funds. The administration
                 and investment of Partnership funds shall be in accordance with
                 the procedures and guidelines as shall be adopted by the
                 Partnership Governance Committee. The Partnership may delegate
                 to a third party (which may be a Partner or an Affiliate of one
                 of the Partners) the responsibility for administering and
                 investing Partnership funds pursuant to such guidelines.

7.       ALLOCATIONS AND DISTRIBUTIONS

         7.1.    Capital Accounts. A separate capital account (each a
                 "Capital Account") will be maintained for each Partner. Each
                 Partner's Capital Account shall be credited and debited in
                 accordance with the following provisions:

                 (1)   To each Partner's Capital Account there shall be credited
                       such Partner's capital contributions (including the
                       principal amount of any promissory note contributed by a
                       CITGO Partner pursuant to Section 6.6.(E) but excluding
                       the payment of principal on such promissory note), such
                       Partner's distributive share of Profits as determined
                       under Section 7.6(A), and the amount of any Partnership
                       liabilities secured by any Partnership properties
                       distributed to such Partner such that the Partner is
                       considered to assume or take subject to such liabilities
                       under Section 752 of the Code;


                                       29
<PAGE>   35

                 (2)   To each Partner's Capital Account there shall be
                       debited the amount of cash and the fair market value of
                       any Partnership properties distributed to such Partner
                       pursuant to any provision of this Agreement and such
                       Partner's distributive share of Losses as determined
                       under Section 7.6(A);

                 (3)   On the day following an Option Date Payment, if any, the
                       Capital Accounts of the Partners shall be adjusted
                       pursuant to Treasury Regulations Section
                       1.704-1(b)(2)(iv)(f) to reflect the Asset Value on such
                       date of (i) the Working Capital, (ii) the Assets and
                       (iii) any capital assets acquired with funds contributed
                       to the Partnership by a Partner so that the balances in
                       such accounts are in the Proper Ratio on the date of such
                       adjustment; provided, however, that for purposes of this
                       Section 7.1.(C), the Asset Value of such assets shall be
                       adjusted to the extent necessary to cause the balances in
                       the Partners' Capital Accounts to be in the Proper Ratio;

                 (D)   Any payment made by LParent or the Lyondell Partners to
                       the Partnership pursuant to LParent's obligations to the
                       Partnership under the Contribution Agreement or any
                       Related Agreement shall be considered a Capital
                       Contribution; provided, however, the increase to Lyondell
                       Partners' Capital Accounts as a result of any such
                       Capital Contribution shall occur simultaneously with the
                       corresponding reduction in Lyondell Partners' Capital
                       Accounts due to the reduction in Asset Value of the
                       Assets because of the receipt by the Partnership of any
                       such payment. Subject to the provisions of Section
                       7.4.(B), to the extent any such payment is not expended
                       by the Partnership to pay costs for which it is being
                       indemnified by LParent or Lyondell Partners, such amount
                       shall be deposited in the operating fund; and

                 (E)   Any adjustment of Capital Accounts under this Section
                       7.1. shall have no impact upon the determination of
                       Participation Percentages.

         7.2.    Income and Distribution Determinations; Restriction on
                 Distributions and Advances. Profits and Losses shall be
                 allocated as of the close of business on the last day of each
                 Calendar Quarter. Distributions of Distributable Cash shall be
                 made on a monthly basis and, regardless of the date a
                 distribution is actually paid, distributions shall be treated
                 as having been made on the last day of the calendar month
                 immediately preceding the date of the distribution. Any other
                 provisions of this Agreement to the contrary notwithstanding,
                 however, the Partnership shall not make any distribution of
                 Distributable Cash or any advances for so long as, under the
                 terms of any agreement, contract or instrument evidencing,
                 governing or securing any indebtedness for borrowed money
                 (including loans or capital leases), an event of default exists
                 (or would exist upon the making of such distribution or
                 advance) and such agreement, contract or instrument prohibits
                 the 


                                       30
<PAGE>   36

                 making of such distribution or advance during the continuance 
                 of such event of default.

         7.3.    Distributable Cash.

                 (1)   Following the end of each calendar month the amount
                       of Distributable Cash for the immediately preceding
                       calendar month shall be determined, and, subject to the
                       provisions set forth herein, such Distributable Cash
                       amount shall be distributed promptly to the Partners as
                       provided in Section 7.4. Notwithstanding any other
                       provision of this Agreement, the Partnership shall not be
                       required to make any distribution if such distribution is
                       prohibited by Section 17-607 of the Act.

                 (2)   The amount of the Partnership's Distributable Cash
                       for any calendar month shall be the Partnership's net
                       cash provided or used by operating activities for such
                       month (determined in accordance with GAAP) less (i) cash
                       used in financing activities for repayment of long term
                       debt (including but not limited to bonds and Partner
                       Loans) and (ii) any capitalized interest. If the
                       resulting Distributable Cash for any calendar month is
                       negative, no distribution of cash will be made to any
                       Partner until after such amount is reserved from future
                       positive amounts.

                       A Partner's Distributable Cash for any calendar month
                       shall be equal to the product of (i) the Partnership's
                       Distributable Cash for such month and (ii) such Partner's
                       Participation Percentage for the Calendar Quarter in
                       which such month occurs.

                 (3)   To the extent that the Partnership does not have
                       sufficient cash or remaining capacity under its working
                       capital credit facility to make the distributions as
                       provided in Section 7.4., then, except as otherwise
                       expressly provided, distributions shall be made in
                       proportion to the amounts distributable to each Partner.
                       Any amount which is required to be distributed pursuant
                       to Section 7.3.(A), but which is not distributed for any
                       reason, including, without limitation, by reason of
                       insufficient cash or by virtue of the last sentence of
                       Section 7.2., shall constitute a debt owed by the
                       Partnership to the Partner entitled to such distribution,
                       which debt is to be paid, with interest at the Agreed
                       Rate (subject to Section 12.11.), as quickly as possible,
                       but in all events before any other distributions with
                       respect to subsequent months are paid to the Partners.


                                       31
<PAGE>   37
 
        7.4.     Distributions.

                 (A)   Except as otherwise expressly provided in this
                       Agreement, each Partner's Distributable Cash for each
                       calendar month shall be distributed to such Partner. If,
                       following the end of a Calendar Quarter, it is
                       determined that the sum of the monthly distributions to
                       a Partner attributable to the Calendar Quarter exceeds
                       the Partner's Distributable Cash for the Calendar
                       Quarter, such Partner shall promptly contribute the
                       excess to the Partnership together with interest thereon
                       at the Agreed Rate (subject to Section 12.11.).
                       Additional distributions shall be made in such amounts
                       as the Partnership Governance Committee shall determine;
                       provided, however, that such distributions shall be made
                       in proportion to the Partners' Participation Percentages
                       for the Calendar Quarter in which the distribution is
                       made.

                 (B)   After the earlier of the Option Date or the expiration
                       of the period during which CITGO Partners may exercise
                       its option to increase its Participation Percentage
                       under Section 6.6., any cash attributable to a payment
                       described in Section 7.1.(D) but which is not expended
                       by the Partnership to pay costs for which it is being
                       indemnified by LParent or Lyondell Partners, shall be
                       distributed to the Partners in proportion to their
                       Participation Percentages.

        7.5.     Internal Loans. Distributions under this Section 7.5 may be
                 made, as provided herein, to both Partners of an Affiliated
                 Partner Group at any time. Each Affiliated Partner Group shall
                 be entitled to receive distributions hereunder not more than
                 once during each calendar quarter provided additional
                 distributions can be made with the consent of the General
                 Partner of the other Affiliated Partner Group, which consent
                 shall be granted or withheld in the sole discretion of such
                 other General Partner. Any time the Partnership's cash
                 (excluding cash in the capital fund and any other cash held
                 for a specific project) is greater than the Cash Balance
                 Amount, by written notice to the Partnership both Partners of
                 an Affiliated Partner Group shall be entitled to borrow from
                 the Partnership and the Partnership shall promptly advance to
                 such Partners, their respective Participation Percentages of
                 the Partnership's cash in excess of the Cash Balance Amount.
                 The "Cash Balance Amount" shall initially be $20 million,
                 which amount may be changed from time to time by Unanimous
                 Partnership Governance Committee Action. Any advance hereunder
                 shall (subject to Section 12.11) bear interest at the same
                 rate payable by the Partnership on its working capital
                 facility or if the Partnership has no such facility then at
                 the Agreed Rate. Any advance hereunder shall be repaid by
                 withholding from all distributions otherwise payable to the
                 Partner the amount of the advance plus interest thereon.
                 Amounts withheld shall first be applied to interest and
                 thereafter to principal. Each loan shall have a term of 90
                 days so that if the amount of the loan plus interest thereon
                 is not repaid from distributions otherwise payable to the
                 Partner within 90 days of the loan, then the Partner shall be
                 required to repay the loan with other funds.
                
                
                                       32
<PAGE>   38


         7.6.    Internal Revenue Code Section 704(b) Book Allocations for
                 Tax Purposes.

                 (1)   General. For each Calendar Quarter or portion thereof,
                       except as provided in this Section 7.6., each item
                       comprising Profits or Losses shall be allocated to the
                       Partners in proportion to their Participation
                       Percentages.

                 (2)   Internal Revenue Code Section 704(b) Book
                       Depreciation. For each Calendar Quarter or portion
                       thereof, Depreciation shall be allocated to the Partners
                       in proportion to their Participation Percentages.

                 (3)   Partnership Minimum Gain Chargeback. Notwithstanding
                       any other provision of Section 7., if there is a net
                       decrease in "partnership minimum gain" (as defined in
                       Treasury Regulation Sections 1.704-2(b)(2)) during any
                       Partnership taxable year, each Partner shall be
                       specifically allocated, before any other allocation is
                       made, items of income and gain for such year (and, if
                       necessary, subsequent years) equal to such Partner's
                       share of the net decrease in minimum gain (determined in
                       accordance with Treasury Regulation Section 1.704-2(g)).
                       Allocations pursuant to the previous sentence shall be
                       made in proportion to the respective amounts required to
                       be allocated to Partners. This provision shall be applied
                       so that it will constitute a "minimum gain chargeback"
                       within the meaning of Treasury Regulation Section 
                       1.704-2(f).

                 (4)   Partner Minimum Gain Chargeback. Notwithstanding any
                       provision of Section 7. except Section 7.6.(C), if there
                       is a net decrease in "partner nonrecourse debt minimum
                       gain" (as defined in Treasury Regulation Section
                       1.704-2(i)(2)) during any Partnership taxable year, each
                       Partner with a share of that partnership nonrecourse debt
                       minimum gain (determined under Treasury Regulation
                       Section 1.704-2(i)(5)) as of the beginning of the year
                       shall be specifically allocated, before any other
                       allocation is made, items of income and gain for such
                       year (and if necessary, subsequent years) equal to that
                       Partner's share of the net decrease in partner
                       nonrecourse debt minimum gain. Allocations pursuant to
                       the previous sentence shall be made in proportion to the
                       respective amounts required to be allocated to Partners.
                       This provision shall be applied so that it will
                       constitute a "chargeback of Partner nonrecourse debt
                       minimum gain" as prescribed by Treasury Regulation
                       Section 1.704-2(i)(4).

                 (5)   Distribution of Property to Partners. In the event that
                       any property (other than cash) is distributed by the
                       Partnership to a Partner, gain or 


                                       33
<PAGE>   39

                       loss will be allocated to the Partners as if there were a
                       taxable disposition of such property on the date of
                       distribution.

                 (6)   Indemnity Payment Expenditure. All deductions
                       attributable to the expenditure of all amounts described
                       in Section 7.1.(D) shall be allocated to Lyondell LP.

                 (7)   Qualified Income Offset. Notwithstanding any other
                       provisions of Section 7.6. or 7.7., if a Partner
                       unexpectedly receives any adjustments, allocations or
                       distributions described in Treasury Regulation Section
                       1.704-1(b)(2)(ii)(d)(4), (5) or (6) which would create a
                       deficit balance in its Capital Account (and reduced by
                       the amount described in Treasury Regulation Section
                       1.704-1(b)(2)(ii)(d) and the outstanding principal amount
                       of any promissory note(s) contributed by the CITGO
                       Partners to the Partnership pursuant to Section 6.6.(E)
                       such Partner(s) will be allocated gross income and gain
                       in an amount and manner sufficient to eliminate such
                       deficit as quickly as possible. Allocations under this
                       Section 7.6.(G) shall be comprised of a pro rata share of
                       each item of Partnership income and gain for the period.
                       This provision shall be applied so that it will
                       constitute a "qualified income offset" within the meaning
                       of Treasury Regulation Section 1.704-1(b)(2)(ii)(d).

                 (8)   Curative Allocations. If items of income, gain, loss or
                       deduction are allocated under Section 7.6.(G), to the
                       extent possible the allocation of any remaining items of
                       income, gain, loss or deduction pursuant to Section 7.6.
                       shall be allocated such that the net amount allocated to
                       each Partner will be the same amount that would have been
                       allocated if no items of income gain, loss or deduction
                       had been allocated under Section 7.6.(G).

                 (9)   Gain or Loss in Liquidation. To the extent the
                       Partners' Capital Account balances are not in the Proper
                       Ratio, gain or loss on the sale or distribution of assets
                       under Section 11.11. shall be allocated, to the maximum
                       extent possible, so as to cause the Partners' Capital
                       Account balances to be in the Proper Ratio.

         7.7.    Tax Allocations.

                 (1)   General. Except as otherwise provided in this Section
                       7.7., for income tax purposes, each item of income, gain,
                       deduction, loss and credit shall be allocated among the
                       Partners in the same manner as the corresponding items
                       are otherwise allocated under Section 7.6.


                                       34
<PAGE>   40

                 (2)   704(c) Depreciation Allocations. For income tax
                       purposes, pursuant to Section 704(c) of the Code and the
                       Treasury Regulations promulgated thereunder,
                       depreciation, cost recovery and amortization deductions
                       shall be allocated to the Partners as set forth in this
                       Section 7.7.(B) in order to take into account any
                       difference between (x) the Asset Value (as adjusted
                       pursuant to the proviso in Section 7.1.(C)) of the assets
                       on the date the assets are contributed to the Partnership
                       or on any date on which the Capital Accounts are adjusted
                       pursuant to Section 7.1.(C) and (y) the Partnership's
                       adjusted tax basis in the assets on each such date. The
                       foregoing allocation shall be implemented through the
                       following provisions:

                       (1)   If a Partner contributes property to the
                             Partnership, all depreciation, cost recovery or
                             amortization deductions attributable to the
                             property shall be allocated to the Partner
                             contributing the property;

                       (2)   Subject to Section 7.7.(B)(6) below, if a Partner
                             contributes cash (including the amounts described
                             in Section 7.1.(D) and payments made with respect
                             to the promissory note, if any, delivered under
                             Section 6.6.(E)) which is used or deemed to be used
                             to acquire property, all depreciation, cost
                             recovery or amortization deductions attributable to
                             the property acquired with the Partner's
                             contribution shall be allocated to the Partner
                             contributing the cash;

                       (3)   All depreciation, cost recovery or amortization
                             deductions attributable to the expenditure of any
                             funds paid by LParent or a Lyondell Partner to the
                             Partnership pursuant to LParent's indemnity
                             obligation to the Partnership under the
                             Contribution Agreement or any Related Agreement
                             shall be allocated to Lyondell Partner LP;

                       (4)   Subject to Section 7.7.(B)(5) and Section
                             7.7.(B)(6), all depreciation, cost recovery or
                             amortization deductions attributable to property
                             acquired with funds loaned to the Partnership by a
                             third party shall be allocated to the Partners in
                             accordance with their Participation Percentages;

                       (5)   Subject to Section 7.7.(B)(6), all depreciation,
                             cost recovery or amortization deductions
                             attributable to funds loaned to the Partnership by
                             a Partner shall be allocated to the Partner loaning
                             such funds; and


                                       35
<PAGE>   41

                       (6)   If a Partner contributes cash to the Partnership
                             which is used to repay a debt of the Partnership,
                             any remaining deductions for depreciation, cost
                             recovery or amortization attributable to the
                             property acquired with the borrowed funds shall be
                             allocated to the Partner contributing the funds
                             used to repay the debt. If the Partnership borrows
                             funds from a third party which are used to repay a
                             debt of the Partnership from a Partner, any
                             remaining deductions from depreciation, cost
                             recovery or amortization attributable to the
                             property acquired with the funds so borrowed from a
                             Partner shall be allocated to the Partners in
                             accordance with their Participation Percentages.

                 (3)   704(c) Gain or Loss Allocations. Solely for income
                       tax purposes, gain or loss resulting from any sale,
                       exchange or disposition of an asset shall be allocated
                       among the Partners, in accordance with Section 704(c) of
                       the Code and the Treasury Regulations promulgated
                       thereunder, so as to take into account any difference
                       between (i) the Asset Value (as adjusted pursuant to the
                       proviso in Section 7.1.(C)) of such asset, adjusted to
                       reflect Depreciation and (ii) the Partnership's adjusted
                       tax basis in such asset.

                 (4)   Recapture. Solely for income tax purposes, in the event
                       that a portion of the taxable gain recognized on the
                       sale, exchange or other disposition of a Partnership
                       asset is characterized as ordinary income under the
                       recapture provisions of the Code, each Partner's
                       distributive share of taxable gain from the sale of
                       Partnership assets (to the extent possible) shall include
                       a proportionate share of the recapture income equal to
                       that Partner's share of prior depreciation deductions
                       with respect to the assets that gave rise to the
                       recapture income.

                 (5)   Imputed Interest Income. To the extent the Partnership
                       recognizes imputed interest income in connection with any
                       transaction involving a Partner, such interest income
                       shall, for tax purposes, be allocated to the Partner who
                       is a party to the transaction which generated the imputed
                       interest income.

                 (6)   Production Expenditures. All "production expenditures",
                       as defined for purposes of Section 263A of the Code,
                       which result from any construction that is financed with
                       funds contributed by a Partner, shall be allocated to the
                       Partner which contributed such funds.


                                       36
<PAGE>   42

                 (7)   Payments. To the extent that the Partnership recognizes
                       income or gain as a result of any payment (other than any
                       interest payments) made by LParent or Lyondell LP to the
                       Partnership pursuant to LParent's obligations to the
                       Partnership under the Contribution Agreement or any
                       Related Agreement, such income or gain shall be allocated
                       to Lyondell LP.

         7.8.    Transfers of Interest. Each item of income, gain, loss,
                 deduction and credit allocable to any Interest transferred
                 during a quarter shall be allocated between the transferor and
                 transferee in proportion to the number of days during the
                 quarter for which each was the owner of the Interest, without
                 regard to the results of Partnership operations during the
                 portions of the quarter the transferor and transferee owned the
                 Interest. Distributions attributable to the ownership of a
                 transferred Interest shall be paid to the Person who owned the
                 Interest on the last day of the calendar month preceding the
                 date of the distribution.

8.       BOOKS OF ACCOUNT AND TAX MATTERS

         8.1.    Books of Account. The Partnership will maintain at its
                 principal office proper books of account on the accrual method
                 of accounting in accordance with GAAP. The Partnership shall
                 also maintain proper books of account necessary to enable the
                 Partnership to file all required tax returns and reports and to
                 make all determinations required under this Agreement.
                 Financial statements and a list of commitments for expenditures
                 will be delivered to the Partners monthly. The books of account
                 shall be reviewed quarterly and audited annually and certified
                 financial statements in accordance with GAAP will be delivered
                 to each Partner. Further, the Partnership shall keep and
                 maintain books and records at its principal office as required
                 by applicable law.

         8.2.    Tax Treatment.

                 (1)   Amounts reimbursed pursuant to Section 6.6.(D) shall be
                       treated as distributions described in Treasury Regulation
                       1.707-4(d).

                 (2)   The Partnership will be taxed as a partnership and no
                       Partner will elect to be excluded from the application of
                       any of the provisions of Subchapter K, Chapter 1 of
                       Subtitle A of the Code or any similar provision of any
                       applicable state law.

                 (3)   The Partnership will use the LIFO method of
                       accounting for inventory unless the Partnership
                       Governance Committee unanimously decides to use an
                       alternative method.


                                       37
<PAGE>   43

                 (4)   The Partnership will file an election under Section
                       754 of the Code to cause the tax basis of Partnership
                       property to be adjusted for federal income tax purposes
                       as provided in Sections 734, 743 and 754 of the Code.

         8.3.    Tax Returns.

                 (1)   Lyondell GP shall be the Tax Matters Partner as defined
                       in Section 6231(a)(7) of the Code ("TMP") for all taxable
                       years of the Partnership through the earlier of the
                       taxable year that includes the Option Date or the
                       expiration of the period during which CITGO Partners may
                       exercise its option to increase its Participation
                       Percentage under Section 6.6. Thereafter, at any time
                       during the first sixty (60) days of a taxable year, CITGO
                       GP, by written notice to Lyondell GP, may elect to be the
                       TMP for the current taxable year and the next two
                       succeeding taxable years; provided, however, that CITGO
                       GP shall serve as TMP at no cost to the Partnership.
                       Thereafter, the Partnership Governance Committee shall
                       select one of the General Partners to serve as TMP for a
                       specified term. If the Partnership Governance Committee
                       cannot agree as to which General Partner shall be the
                       TMP, the General Partners shall alternate serving as TMP
                       for a term of three taxable years each, beginning with
                       the General Partner that has not served as TMP for the
                       most recent taxable year; provided, however, that any
                       General Partner serving as TMP shall serve at no cost to
                       the Partnership. In the event of any change of TMP, the
                       General Partner serving as TMP for a given taxable year
                       shall (unless such General Partner ceases to be a General
                       Partner) continue as TMP with respect to all matters
                       concerning that year. The TMP shall use its best efforts
                       to cause the Partnership to file all tax returns and
                       reports by the due date thereof (after taking into
                       account any extensions thereof). At least twelve (12)
                       weeks prior to the filing of the Partnership's U.S.
                       Partnership Return of Income, a draft of such return
                       shall be circulated to the other Partners for their
                       review. The TMP shall circulate to the other Partners a
                       draft of any state income tax return promptly after it is
                       available, and, in any event, at least four (4) weeks
                       prior to the filing of any such return. Prior to the
                       filing of any other federal, state or local tax return,
                       the TMP shall cause a draft of such tax return to be
                       circulated to the other Partners for their review
                       promptly after it is available.

                (2)    If a Partner objects to the tax treatment of an item on
                       any income tax return, such Partner shall promptly inform
                       the TMP of its objection and the grounds upon which the
                       objection is based and shall in any event use its best
                       efforts to inform the TMP of such objection and the
                       grounds upon which such objection is based at least two
                       (2) weeks 


                                       38
<PAGE>   44

                       (eight (8) weeks as to any U.S. Partnership Return of
                       Income) prior to the date on which the tax return is
                       required to be filed. However, if the TMP, after due
                       consideration of a Partner's objection, is of the view
                       that the tax treatment of the item in question on the
                       return as originally submitted is reasonable, then the
                       TMP shall cause the Partnership to file the return
                       reporting the item in question in the manner originally
                       submitted. A Partner may treat the item in question (but
                       no other item) in a manner different from that reported
                       on the return and file a statement of inconsistent
                       treatment with its tax return. If any Partner files a
                       statement of inconsistent treatment of a Partnership
                       item, the Partner filing the statement shall use its best
                       efforts to inform the Partnership at least two (2) weeks
                       prior to filing the statement.

         8.4.    Tax Controversies. The Partners shall comply with the
                 responsibilities outlined in this Section 8.4. and in Sections
                 6222 through 6231 and 6050K of the Code (including any Treasury
                 Regulations promulgated thereunder) and in doing so shall incur
                 no liability to any other Partner. The TMP shall not agree to
                 any extension of the statute of limitations for making
                 assessments of tax on behalf of any other Partner without first
                 obtaining the written consent of such other Partner. The TMP
                 shall not bind any other Partner to a settlement agreement in
                 respect of taxes without obtaining the written consent of such
                 other Partner. If a notice or assessment for any tax (Federal
                 or State) is agreed to by the TMP, the TMP shall notify each
                 other partner of such agreement within 30 days from the date
                 such notice or assessment is agreed to. Any Partner who enters
                 into a settlement agreement with the Secretary of the Treasury
                 with respect to any "partnership items", as defined by Section
                 6231(a)(3) of the Code, shall notify each other Partner of such
                 settlement agreement and its terms within ninety (90) days from
                 the date of settlement. No Partner shall file a request
                 pursuant to Section 6227 of the Code for an administrative
                 adjustment of partnership items for any partnership taxable
                 year without first notifying each other Partner. If each of the
                 other Partners agrees with a requested adjustment, the TMP
                 shall file the request for administrative adjustment on behalf
                 of the Partnership. If any other Partner does not agree with
                 the requested adjustment within thirty (30) days from such
                 notice, or, if shorter, within the period required to timely
                 file the request for administrative adjustment, then the
                 requesting Partner may file a request for administrative
                 adjustment on its own behalf. The TMP shall not, in its
                 capacity as TMP, file a petition under Code Sections 6226, 6228
                 or any other Code Sections with respect to any Partnership
                 item, or other tax matters involving the Partnership, without
                 the consent of each Partner. A Partner intending to file a
                 petition under Section 6226, 6228 or any other Code Sections
                 with respect to any Partnership item, or other tax matters
                 involving the Partnership, will notify each of the other
                 Partners of that intention and the nature of the contemplated
                 proceeding. If any Partner intends to seek review of any court
                 decision rendered as a result of a proceeding instituted under
                 the preceding part of this Section 8.4., that Partner will
                 notify the other Partners of that intended action. The
                 provisions of this Section 8.4. will survive the termination of
                 the Partnership and the transfer of any Partner's Interest and
                 will remain binding on the Partners for a period of time
                 necessary to resolve any and all matters regarding the federal
                 and, if 


                                       39
<PAGE>   45
                 applicable, state income taxation of the Partnership. The
                 Partnership shall retain its records with respect to each
                 fiscal year until the expiration of ninety (90) days after the
                 period within which additional federal or state income tax may
                 be assessed for such year.

         8.5.    Tax Rulings. No Person other than the TMP shall request an
                 administrative ruling (or similar administrative procedures)
                 from any taxing authority with respect to any tax issue
                 relating to the Partnership or affecting the taxation of any
                 other Partner. The TMP shall not request such a ruling (or
                 similar procedure) without the consent of each General Partner.

9.       ANNUAL BUDGETS, FIVE YEAR PLAN AND COMMERCIAL LOANS

         9.1.    Fiscal Year. The fiscal year of the Partnership shall be the
                 calendar year.

         9.2.    Annual Budgets. The Partnership will operate on the basis
                 of the following annual budgets:

                 (1)   "Operating Budget," which shall be an estimate for a
                       fiscal year of all of the Partnership's operating
                       revenues and expenses, including expenses required to
                       maintain, repair and restore to good and usable condition
                       the Partnership's assets; and

                 (2)   "Capital Budget", which shall be an estimate for a
                       fiscal year of the capital expenditures (i) necessary to
                       maintain the Partnership's assets; (ii) necessary to
                       achieve or maintain compliance with any Environmental
                       Law; (iii) necessary to accomplish capital enhancement
                       projects approved by the Partnership Governance Committee
                       ("Capital Enhancement Projects"); and (iv) permitted,
                       pursuant to Partnership Governance Committee Action, to
                       be undertaken by the CEO in his or her discretion (the
                       funding and overrun provisions with respect to such
                       expenditures being set forth in such budget).


                                       40
<PAGE>   46

         9.3.    Approval of Budgets.

                 (1)   Each budget shall be approved by Partnership Governance
                       Committee Action. Prior to November 15 of each fiscal
                       year, the CEO shall prepare and submit to the Partnership
                       Governance Committee for approval each of the budgets for
                       the ensuing fiscal year (and, as appropriate, for
                       subsequent periods), and on or before December 1, the
                       Partnership Governance Committee shall by Partnership
                       Governance Committee Action approve, with such
                       modifications as it considers appropriate, each such
                       budget.

                 (2)   If the Partnership Governance Committee does not approve
                       the Operating Budget for the next fiscal year by December
                       1, pending approval of such budget by Partnership
                       Governance Committee Action, the preceding fiscal year's
                       Operating Budget shall, to the extent practicable, guide
                       the operation of the Partnership. The failure to approve
                       an Operating Budget shall in no way limit or restrain the
                       authority of the Partnership or its officers to conduct
                       operations.

                 (3)   The Partnership Governance Committee may, by Partnership
                       Governance Committee Action, amend or supplement any
                       previously approved budget at any time.

         9.4.    Funding of Budgets. The Operating Budget and all operating
                 expenses regardless of whether included in any such budget
                 shall be funded from operating cash flows. The Capital Budget
                 shall be funded in accordance with Section 6.5. and no other
                 additional Capital Contributions by the Partners shall be
                 required with respect thereto unless otherwise agreed by the
                 Partnership Governance Committee.

         9.5.    Implementation of Budgets and Discretionary Expenditures
                 by CEO.

                 (1)   After the Capital Budget has been approved, the
                       Partnership will be authorized, without further action by
                       the Partnership Governance Committee, to make any
                       expenditures specifically identified within such budget;
                       provided, however, that all internal control policies and
                       procedures, including those regarding the required
                       authority for certain expenditures, shall have been
                       followed and that with respect to each capital
                       expenditure above an amount established from time to time
                       by Unanimous Partnership Governance Committee Action
                       there shall have been a Partnership Governance Committee
                       Action approval of the "authority for commitment."


                                       41
<PAGE>   47

                 (2)   In any emergency, the CEO or the CEO's designee shall be
                       authorized to take such actions and to make such
                       expenditures as may be reasonably necessary to react to
                       the emergency, regardless of whether such expenditures
                       have been included in an approved budget. As soon as
                       practical after the commencement of an emergency, the CEO
                       or such designee shall notify the Representatives of the
                       response that has been made, or is committed or proposed
                       to be made, with respect to the emergency.

         9.6.    Five Year Plan. The CEO of the Partnership shall prepare
                 and furnish annually to the Partnership Governance Committee a
                 projected five year business plan.

         9.7.    Commercial Loans.

                 (1)   Other Loans. The Partnership Governance Committee may by
                       Partnership Governance Committee Action, authorize the
                       CEO to cause the Partnership to borrow funds from third
                       party lenders. No Partner shall be required, and the
                       Partnership Governance Committee shall not be authorized
                       to require any Partner, to guarantee or to provide other
                       credit or financial support for any loan.

                 (2)   Partner Loans. The Partnership Governance Committee
                       may by unanimous Partnership Governance Committee Action,
                       subject to Section 3.8., authorize the CEO to cause the
                       Partnership to borrow money from a Partner.

         9.8.    Insurance and Risk Management. The Company is either an
                 additional named insured under LParent's insurance program or
                 has its own policy of insurance under LParent's insurance
                 program and as of the Conversion Date, LParent shall substitute
                 the Partnership for the Company, making the Partnership an
                 additional named insured, if applicable, under LParent's
                 insurance program. As such coverages become subject to renewal
                 or otherwise expire, the Partnership, by Partnership Governance
                 Committee Action, shall approve any material change in the
                 amount and scope of such coverages (including the extent to
                 which the Partnership will continue to be included as an
                 additional named insured under LParent's insurance program), or
                 in the portion of the premium charges for such coverages
                 allocable to the Partnership.


                                       42
<PAGE>   48

10.     TRANSFERS AND PLEDGES

        10.1.    Prohibition of Transfer. Except pursuant to Section 11. or as
                 described below in this Section 10., a Partner shall not, in
                 any transaction or series of transactions, directly or
                 indirectly, (i) sell, assign or otherwise in any manner dispose
                 of all or any part of its Interest (such term, as used in this
                 Section 10.1., including any Profits Interest), whether by act,
                 deed, merger or otherwise (any of the foregoing, as referred to
                 in this Section 10., a "transfer"), or (ii) mortgage, pledge or
                 create a lien or security interest upon all or any part of its
                 Interest; provided, however, that notwithstanding this Section
                 10.1., a General Partner may transfer all or any portion of its
                 Interest to its Affiliated Limited Partner and a Limited
                 Partner may transfer all or any portion of its Interest to its
                 Affiliated General Partner. Any attempt by a Partner to
                 transfer all or a portion of its Interest in violation of this
                 Agreement shall be void ab initio and shall not be effective to
                 transfer such Interest or any portion thereof.

        10.2.    Transfers Prior to the Option Date. No Partner shall
                 transfer all or any part of its Interest or Profits Interest
                 prior to the Option Date; provided, however, that in any event
                 this restriction shall cease upon the expiration of the period
                 during which the CITGO Partners may exercise their option to
                 increase their Participation Percentages under Section 6.6.

        10.3.    Transfers After the Option Date.

                 (1)   After the earlier of the Option Date or the expiration of
                       the period during which the CITGO Partners may exercise
                       their option to increase their Participation Percentages
                       under Section 6.6., an Affiliated Partner Group (the
                       "transferring Partners") may transfer all (but not less
                       than all) of its Profits Interests; provided, however,
                       that it complies with all of the provisions of Sections
                       10.3.(C), 10.3.(D), 10.3.(E) and 10.3.(F).

                 (2)   After the earlier of the Option Date or the expiration of
                       the period during which the CITGO Partners may exercise
                       their option to increase their Participation Percentages
                       under Section 6.6., any Affiliated Partner Group may
                       transfer all (but not less than all) of its Interests,
                       collectively, but only if: (i) it obtains the prior
                       written consent of the other Affiliated Partner Group
                       (the "nontransferring Partners"), which consent may be
                       withheld in the sole discretion of such other Affiliated
                       Partner Group; (ii) it complies with the provisions of
                       Sections 10.3.(C), 10.3.(D), 10.3.(E) and 10.3.(F); and
                       (iii) the purchaser or transferee of such Interests
                       executes a written agreement to be bound by this
                       Agreement (including the encumbrance of such Interest
                       pursuant to this Agreement including Section 11.1.), to
                       assume and satisfy all the liabilities and pay and
                       perform all the obligations and duties of the
                       transferring Partners and, subject to the consent of the
                       nontransferring 


                                       43
<PAGE>   49

                       Partners as provided in Section 10.4., to become
                       substituted Partners in place of the transferring
                       Partners.

                 (3)   Any Affiliated Partner Group desiring to transfer its
                       Interest (such term, as used in Sections 10.3.(C),
                       10.3.(D), 10.3.(E) and 10.3.(F), meaning either its
                       Interest or its Profits Interest, as applicable) shall
                       deliver a written notice to the other Affiliated Partner
                       Group, which notice shall specify the Interests desired
                       to be transferred and shall constitute an offer to sell
                       all (but not less than all) of the transferring Partners'
                       Interests (the "Purchase Offer"). The Purchase Offer
                       shall specify the price (which shall be cash payable in
                       same-day funds in Houston, Texas) and other terms (e.g.,
                       provisions for the elimination of loans to or from the
                       Partners, the release of any guarantees, the procedure
                       for closing the books on the effective date of the sale
                       and the treatment of Partnership distributions payable to
                       the transferring Partners) upon which the transferring
                       Partners are willing to sell all (but not less than all)
                       of their Interests to the nontransferring Partners. The
                       nontransferring Partners shall have sixty (60) days from
                       the date of receipt of the Purchase Offer within which to
                       accept the Purchase Offer and shall have the right to
                       assign their rights with respect to the Purchase Offer in
                       whole or in part to an Affiliate or to any other person
                       or entity. If the nontransferring Partners or their
                       assignee accept the Purchase Offer, the closing shall
                       take place within sixty (60) days of such acceptance.

                 (4)   If the nontransferring Partners do not accept a
                       Purchase Offer pursuant to Section 10.3.(C), the
                       transferring Partners shall, as provided herein, have one
                       hundred eighty (180) days after expiration of the first
                       60-day period described in Section 10.3.(C) (or after the
                       earlier express written rejection of the Purchase Offer
                       by the nontransferring Partners) within which, subject to
                       the provisions of this Section 10.3.(D), Section 10.1.,
                       Section 10.3.(B) and Section 10.4., the transferring
                       Partners may attempt to sell all of their Interests,
                       subject to Section 10.3.(F), to a single (and only a
                       single) third party at a price and on terms and
                       conditions that are identical to (or more favorable in
                       all respects to the transferring Partners than) the cash
                       price, terms and conditions contained in the Purchase
                       Offer. If during this 180-day period, the transferring
                       Partners identify a proposed purchaser (i) that is a
                       single entity that is organized under the laws of the
                       United States, (ii) that is not insolvent prior to or
                       immediately upon consummation of the proposed transfer,
                       and (iii) that makes a bona fide offer (not subject to
                       due diligence, financing or any other similar
                       contingencies) to purchase the transferring Partners'
                       Interests at a cash price and on terms and conditions
                       that are identical to (or more favorable in all respects
                       to the transferring Partners than) the cash price, terms
                       and conditions contained in the Purchase Offer, the
                       transferring Partners shall notify the nontransferring
                       Partners of the identity of the proposed purchaser 


                                       44
<PAGE>   50

                       and the terms of the proposed sale (the "Second Notice").
                       The nontransferring Partners or their assignee then shall
                       have thirty (30) days from the Second Notice within which
                       to elect to purchase the transferring Partner's Interests
                       at the cash price and on the terms and conditions
                       contained in the Second Notice. If the nontransferring
                       Partners elect to make the purchase, the closing shall
                       take place within sixty (60) days of its election to
                       purchase.

                 (5)   If the nontransferring Partners or their assignee do not
                       elect to purchase the transferring Partners' Interest
                       after receiving the Second Notice, then subject to
                       Section 10.1., Section 10.3.(B) and Section 10.4. the
                       transferring Partners may then sell such Interest to the
                       third party at the cash price and on the terms and
                       conditions specified in the Second Notice; provided,
                       however, that if the transferring Partners do not dispose
                       of their Interest at the cash price and on the terms and
                       conditions specified in the Second Notice, and in all
                       events within sixty (60) days after expiration of the
                       30-day period described in the penultimate sentence of
                       Section 10.3.(D) (or after the earlier express written
                       rejection by the nontransferring Partners after receiving
                       the Second Notice), the transferring Partners' Interest
                       shall not be transferred and shall again be subject to
                       the restrictions contained in Section 10.3. (1)

                 (6)   Inclusion of General or Limited Partner Interest. No
                       Limited Partner may transfer its Interest to any Person
                       unless the Interest of its Affiliated General Partner is
                       simultaneously transferred to such Person or a Wholly
                       Owned Subsidiary of such Person. No General Partner may
                       transfer its Interest to any Person unless the Interest
                       of its Affiliated Limited Partner is simultaneously
                       transferred to such Person or a Wholly Owned Subsidiary
                       of such Person.

         10.4.   Transferees. The purchaser or transferee of a Partner's
                 Interest pursuant to Section 10.3. or Section 10.5. shall not
                 become a Partner without the consent of the nontransferring
                 Partners as provided for in clause (i) of Section 10.3.(B). A
                 transferee who acquires an Interest pursuant to Section 10.3.
                 or Section 10.5. but who does not receive such consent shall be
                 entitled only to allocations of income and loss and
                 distributions with respect to such Interest in accordance with
                 this Agreement and shall not be or become entitled to exercise
                 the rights or powers of a Partner. However, the nontransferring
                 Partners may, in the exercise of their sole discretion, at any
                 time thereafter consent to such purchaser or transferee
                 becoming a Partner or withhold such consent. A purchaser or
                 transferee as to whom the nontransferring Partners at any time
                 grants such consent shall be deemed to become a substituted
                 Partner in place of the transferring Partners when and as
                 provided in such consent.


                                       45
<PAGE>   51

         10.5.   Pledge of Interest.

                 (1)   Except as contemplated by Section 10.5.(B) and Section
                       11.1., no Partner shall mortgage, pledge, encumber or
                       create or suffer to exist any pledge, lien or encumbrance
                       upon, or security interest in ("pledge"), all or any part
                       of its Interest (such term, as used in this Section
                       10.5., including any Profits Interest). Any attempt by a
                       Partner to pledge all or a portion of its Interest in
                       violation of this Agreement shall be void ab initio and
                       shall not be effective to pledge such Interest.

                 (2)   Any Affiliated Partner Group (the "pledging Partners")
                       may pledge its Interest; provided, however, that (i) any
                       such pledge, shall expressly be subject and fully
                       subordinated, on terms reasonably acceptable to the other
                       Affiliated Partner Group (the "nonpledging Partners"), to
                       the encumbrance of the pledging Partners' Interests
                       pursuant to this Agreement including Section 11.1. and
                       (ii) no such pledge shall give any right to the pledgee
                       as a Partner (as such term is used in the Act) with
                       respect to the Partnership or the nonpledging Partners or
                       create any duty to the pledgee on the part of the
                       Partnership or the nonpledging Partners other than the
                       payment to the extent pledged of distributions from the
                       Partnership under Section 7.

                 (3)   Prior to any pledge under Section 10.5.(B), (i) the
                       pledging Partners shall submit to the nonpledging
                       Partners all documentation relating to the proposed
                       pledge for the approval of the nonpledging Partners and
                       shall not effect such pledge without the prior written
                       approval of the nonpledging Partners (such approval not
                       to be unreasonably withheld); (ii) the proposed pledgee
                       shall deliver a written agreement of such pledgee (which
                       shall be binding upon any of its successors or assigns)
                       to the Partnership and the nonpledging Partners,
                       providing that (a) the right to foreclose upon the
                       pledging Partners' Interests pursuant to the pledge shall
                       be conditioned upon delivery to the nonpledging Partners
                       of an opinion of counsel satisfactory to the nonpledging
                       Partners that such foreclosure would not cause the
                       Partnership to be treated as an association taxable as a
                       corporation and that any "termination" of the Partnership
                       within the meaning of Section 708 of the Code caused by
                       such foreclosure would not create any adverse
                       consequences for the nonpledging Partners and (b) the
                       pledgee's right to receive any distributions that are
                       pledged is subject to being reduced pursuant to the
                       provisions of this Agreement; and (iii) the proposed
                       pledgee and the pledging Partners shall deliver to the
                       nonpledging Partners a written agreement, in form
                       reasonably satisfactory to the nonpledging Partners,
                       providing that (a) the pledgee shall notify the
                       nonpledging Partners in writing at least one hundred
                       twenty (120) days prior to initiation of foreclosure
                       proceedings, (b) the nonpledging Partners shall have the
                       right during such 120-day period to purchase the debt
                       owed 


                                       46
<PAGE>   52

                       by the pledging Partners to the pledgee, together with
                       all rights of the pledgee in, to and with respect to the
                       pledged Partners' Interests, for an amount equal to the
                       outstanding principal amount of such debt plus the
                       interest due and payable on and any cost of collection
                       associated with such debt, (c) immediately upon the
                       purchase of the debt, together with all rights of the
                       pledgee in, to and with respect to the pledged Partners'
                       Interests, by the nonpledging Partners pursuant to clause
                       (iii)(b) of this Section 10.5.(C), the pledgee shall (1)
                       deliver to the nonpledging Partners a written
                       acknowledgment that its debt has been satisfied in full
                       and (2) take any action necessary to transfer to the
                       nonpledging Partners possession of a perfected first
                       priority security interest in the pledging Partners'
                       Interest and (d) the pledging Partners appoint the
                       nonpledging Partners as its attorney-in-fact authorized
                       to take on the pledging Partners' behalf all actions
                       required to effect any purchase of the pledgee's debt and
                       any transfer of the pledging Partners' Interest pursuant
                       to this clause (iii) of this Section 10.5.(C).


                                       47
<PAGE>   53

11.      REMEDIES AND DISSOLUTION

         11.1.   Security for Performance. Each Affiliated Partner Group (the
                 "Pledgor Group") shall and hereby does pledge and grant to the
                 other Affiliated Partner Group (the "Pledgee Group") a first
                 priority lien on and security interest in the Pledgor Group's
                 Interests in the Partnership as security for the satisfaction
                 of all the Pledgor Group's liabilities and the payment and
                 performance of all the Pledgor Group's obligations and duties
                 under this Agreement. At any time and from time to time, the
                 Pledgor Group also will promptly execute and deliver all such
                 further agreements, instruments and documents and take all such
                 further action that may be necessary or desirable or that the
                 Pledgee Group may reasonably request in order (i) to perfect
                 and protect the lien and security interest created hereby,
                 including the execution and filing of appropriate financing
                 statements and directing the Partnership to register, on the
                 Partnership's books and records, the pledge of the Pledgor
                 Group's Interest to the Pledgee Group; (ii) to enable the
                 Pledgee Group to exercise and enforce its rights and remedies
                 under this Agreement in respect to the Pledgor Group's
                 Interest; or (iii) otherwise to effect the purposes of this
                 Section 11.1. The Pledgor Group hereby authorizes the Pledgee
                 Group to file, without the signature of such Pledgor Group
                 granting the security interest provided for herein, where
                 permitted by applicable law, at any time the Pledgee Group
                 acting as a secured party deems necessary or appropriate to
                 protect its lien and security interest under this Agreement,
                 one or more financing or continuation statements, and
                 amendments thereto, relating to such lien and security
                 interest. If the Pledgor Group fails to perform any agreement
                 or obligation contained in this Section 11.1., the Pledgee
                 Group may perform, or cause performance of, such agreement or
                 obligation, and the expenses of the Pledgee Group so performing
                 incurred in connection therewith shall be payable to the
                 Pledgee Group, on demand, by the Pledgor Group that has failed
                 to so perform. The Pledgee Group shall not, without the prior
                 written consent of the Pledgor Group, sell, assign, transfer,
                 mortgage, pledge or otherwise encumber any of its rights in the
                 Pledgor Group's Interests as pledged to the Pledgee Group under
                 this Section 11.1. except with regard to a failure by the
                 Pledgor Group to satisfy the Pledgor Group's liabilities, and
                 the payment and performance of all its obligations and duties
                 under this Agreement.

         11.2.   Default.

                 (1)   Each of the following events shall, upon determination of
                       the existence thereof as provided in Section 11.2.(B),
                       constitute a "Default" and create the rights provided for
                       in this Agreement in favor of the Nondefaulting Partners
                       against the Defaulting Partners:

                       (1)    the failure by a Partner to make any contribution,
                              including, without limitation, a Partner's failure
                              to make when due any contribution for capital
                              expenditures as determined by Partnership
                              Governance Committee Action to be due form the
                              Partners, or loan to the Partnership as required
                              by this Agreement, which failure continues for at
                              least three (3) 


                                       48
<PAGE>   54

                              Business Days from the date such contribution
                              should have been received;

                       (2)    other than as described in item (1) above, a
                              material breach or violation under this Agreement
                              by a Partner, which breach or violation continues
                              unremedied for at least ninety (90) days after the
                              Nondefaulting Partners have given written notice
                              of such breach or violation to the Defaulting
                              Partners;

                       (3)    as to Lyondell Partners, a material breach or
                              default by LParent under the terms of the
                              Contribution Agreement, which breach or default
                              continues unremedied or uncured for at least 90
                              days after the Partnership or the CITGO GP has
                              given written notice of such breach or default to
                              LParent; (1)

                       (4)    as to CITGO Partners, a material breach or default
                              by CParent under the terms of the Product Purchase
                              Agreement, which breach or default continues
                              unremedied or uncured for at least ninety (90)
                              days after the Partnership or Lyondell GP has
                              given written notice of such breach or default to
                              CParent; or

                       (5)    the withdrawal, retirement, resignation or
                              dissolution of a Partner; or the bankruptcy of a
                              Partner or its Parent (including the filing
                              against a Partner or its Parent of a petition in
                              bankruptcy or seeking any reorganization,
                              liquidation or similar relief, which petition
                              shall remain undismissed or unstayed for an
                              aggregate of ninety (90) days; the adjudication of
                              a Partner or its Parent as Insolvent, or the
                              institution by a Partner or its Parent of
                              proceedings to be adjudicated as a voluntary
                              bankrupt, or the consent by a Partner or its
                              Parent to the filing of a bankruptcy proceeding
                              against it, or the failure of a Partner or its
                              Parent to contest a bankruptcy proceeding against
                              it; or the appointment, or any consent by a
                              Partner or its Parent to the appointment, of a
                              receiver, custodian, liquidator or trustee for the
                              Partner or its Parent or for all or any
                              substantial portion of its property, which
                              appointment remains undismissed or unstayed for a
                              period of ninety (90) days).

                 (2)   The existence of a Default shall be determined either by
                       written agreement among the Partners or by resort to an
                       appropriate court. Once such Default has been determined
                       to exist (including, as appropriate, exhausting all
                       appeals), then the Defaulting Partners shall have thirty
                       (30) days from the determination date to cure such
                       Default; provided, however, that there shall not be a
                       cure period for a Default described in Section
                       11.2.(A)(5) and that the cure period for a Default


                                       49
<PAGE>   55

                       described in Section 11.2.(A)(1) shall be limited to
                       three (3) Business Days.

                 (3)   The day upon which the Default is determined to exist (or
                       if the Default is subject to a cure period and is not
                       timely cured, then the day following the end of the
                       applicable cure period) shall be the "Default Date."
                       Without prejudice to a Partner's (or any of its
                       Affiliates') rights to seek temporary or preliminary
                       judicial relief, prior to any such Default Date all
                       rights and obligations of the Partners under this
                       Agreement shall remain in full force and effect.

                 (4)   With respect to any Default, the term "Damages" shall
                       mean (in each case to the extent reasonably and
                       necessarily incurred) any and all obligations (including
                       all obligations to take an affirmative or curative act),
                       liabilities, damages (including, damages arising out of
                       any breach of any representation or warranty, damages
                       related to investigations, proceedings, audits, the
                       interruption of the Partnership's Business, restrictions
                       upon the use of, or adverse impact on, the assets or the
                       Partnership's Business, or the interruption, breach or
                       termination of any Related Agreements, including any lost
                       profits attributable thereto), fines, penalties,
                       deficiencies, losses, judgments, settlements, costs and
                       expenses (including costs and expenses incurred in
                       connection with performing obligations, bonding and
                       appellate costs and attorneys', accountants', engineers',
                       health, safety, environmental and other consultants' and
                       investigators' fees and disbursements, liquidating,
                       selling or offering for sale the Partnership Business and
                       assets or winding up the Partnership Business, or other
                       payments in respect of such payments) arising out of or
                       incurred in connection with such Default, regardless of
                       whether any of the foregoing are foreseeable,
                       unforeseeable, matured or unmatured, existing or
                       contingent as of the date of such Default. "Damages" also
                       shall include, if and to the extent interest is not
                       already included therein under applicable law or other
                       provisions hereof and subject to Section 12.11., interest
                       on amounts actually due until payment thereof is made at
                       a rate per annum equal to the rate set forth in Section
                       12.10.(B).

         11.3.   Remedies for Default. Provided that there shall be no
                 duplication of remedies, without prejudice to the Nondefaulting
                 Partners' right to foreclose upon the Defaulting Partners'
                 Interest pursuant to the lien and security interest created in
                 Section 11.1. or to pursue independently and at any time,
                 including simultaneously, any other remedy it may have under
                 law, including the right to seek to recover Damages, or equity,
                 upon determination (either judicially or otherwise) of a
                 Default and the related Damages, and the failure of the
                 Defaulting Partners to cure such Default as provided in Section
                 11.2.(B), the Nondefaulting Partners in their sole discretion
                 may elect to pursue the following remedies:


                                       50
<PAGE>   56

                 (1)   At any time prior to the expiration of sixty (60) days
                       from the Default Date (or if later, from the judicial or
                       other determination of the Default Date and the related
                       Damages), the Nondefaulting Partners may elect to
                       exercise their purchase right for the Defaulting
                       Partners' Interest as described in Section 11.5. and
                       thereby cause the Partnership to dissolve under Section
                       11.9(D); provided, however, that within ten (10) days
                       after the determination of the Fair Market Value, the
                       Nondefaulting Partners may elect not to proceed with a
                       purchase of the Defaulting Partners' Interest, in which
                       case the Nondefaulting Partners shall have an additional
                       thirty (30) days from its determination not to proceed to
                       elect as an alternative remedy Section 11.3.(B) below;
                       and

                 (2)   At any time prior to the expiration of sixty (60) days
                       from the Default Date (or if later, from the judicial or
                       other determination of the Default Date and the related
                       Damages) (or if the Nondefaulting Partners initially
                       elected to pursue its remedy under Section 11.3.(A)
                       above, then at any time prior to the expiration of the
                       30-day extension period), the Nondefaulting Partners may
                       elect to effect a liquidation of the Partnership under
                       Section 11.6. and thereby cause the Partnership to
                       dissolve under Section 11.9.(E).

         11.4.   Consequences of Default. Notwithstanding any other provision of
                 this Agreement, commencing on the Default Date and (i) prior to
                 the Nondefaulting Partners' collection of Damages through the
                 exercise of its legal remedies or otherwise, or (ii) while the
                 Nondefaulting Partners are pursuing its remedies under Section
                 11.5. or Section 11.6., the Defaulting Partners'
                 Representatives on the Partnership Governance Committee shall
                 not have any voting rights and all matters requiring
                 Partnership Governance Committee Action shall be determined
                 solely by the Nondefaulting Partners' Representatives;
                 provided, however, that the foregoing loss of voting rights
                 shall not occur as a result of a Default caused solely by the
                 insolvency, bankruptcy or similar proceedings of a Partner or a
                 Parent described in the second through final clauses of Section
                 11.2.(A)(5); and provided further, that the foregoing loss of
                 voting rights shall not apply to those voting rights contained
                 in Sections 3.8.(A), 3.8.(B), 3.8.(C), 3.8.(D), 3.8.(F), and
                 3.8.(Y), which voting rights shall continue in full force and
                 effect at all times.

         11.5.   Purchase of Defaulting Partners' Interest

                 (1)   The Nondefaulting Partners shall have the right to elect
                       to purchase the Interest of the Defaulting Partners by
                       delivering notice of such election in writing to the
                       Partnership Governance Committee and the Defaulting
                       Partners (the "Purchase Notice"). The purchase of such
                       Interest shall be consummated prior to the expiration of
                       thirty (30) days from the determination of the purchase
                       price as provided herein.


                                       51
<PAGE>   57

                 (2)   The purchase price that the Nondefaulting Partners shall
                       pay to the Defaulting Partners for the Defaulting
                       Partners' Interest shall be an amount equal to (i) the
                       amount that the Defaulting Partners would receive in a
                       Liquidation (assuming that the sale under Section
                       11.11.(B)(1) is for an amount equal to the Fair Market
                       Value) reduced by (ii) the Damages incurred by the
                       Partnership.

                 (3)   "Fair Market Value" shall be the fair market value of all
                       of the Partnership Business and assets (including
                       tangible and intangible assets) as of the date of the
                       Purchase Notice, without giving effect to the Damages,
                       determined as follows:

                       (1)    The Defaulting Partners and the Nondefaulting
                              Partners shall first attempt to agree on such
                              value, which if agreed to shall be the Fair Market
                              Value;

                       (2)    If the Partners are unable to agree within twenty
                              (20) days of the Purchase Notice, then the
                              Defaulting Partners, on the one hand, and the
                              Nondefaulting Partners, on the other hand, shall
                              (at their own cost) cause an independent,
                              qualified appraiser to deliver a written appraisal
                              of such value within fifty (50) days of the
                              Purchase Notice. If the lower appraised value is
                              greater than or equal to ninety percent (90%) of
                              the higher appraised value, then the average of
                              the two appraised values shall be the Fair Market
                              Value; and (1)

                       (3)    If the lower appraised value is less than ninety
                              percent (90%) of the higher appraised value, then
                              the Partners shall jointly appoint a mutually
                              acceptable neutral person or entity (the
                              "Neutral") not affiliated with either of the
                              Partners within seventy (70) days of the Purchase
                              Notice (and if the Partners have been unable to
                              agree upon such appointment within sixty (60) days
                              of the Purchase Notice, then such Neutral shall
                              upon the application of either the Defaulting
                              Partners or the Nondefaulting Partners be
                              appointed within seventy (70) days of the Purchase
                              Notice by the Center for Public Resources, or if
                              such appointment is not so made then promptly
                              thereafter by the American Arbitration Association
                              in New York, New York, or if such appointment is
                              not so made then promptly thereafter by the senior
                              United States District Court judge sitting in the
                              Borough of Manhattan, in New York, New York), and
                              the Neutral shall within ninety (90) days of the
                              Purchase Notice or, if later, within twenty (20)
                              days of the appointment of the Neutral determine
                              which of the two appraised values is closest 


                                       52
<PAGE>   58

                              to the fair market value of the Partnership's
                              assets as determined by the Neutral, and that
                              appraised value shall be the Fair Market Value.

         11.6.   Liquidation. The Nondefaulting Partners shall have the right to
                 elect to dissolve and liquidate the Partnership pursuant to the
                 procedures in Section 11.11. (such procedures constituting a
                 "Liquidation"); provided, however, that any amount payable to
                 the Defaulting Partners in such Liquidation pursuant to Section
                 11.11.(B)(7) shall be reduced by the Nondefaulting Partners'
                 Participation Percentage of the Damages incurred by the
                 Partnership. The Nondefaulting Partners shall deliver notice of
                 such election to dissolve and liquidate in writing to the
                 Partnership Governance Committee and the Defaulting Partners.

         11.7.   Closing of Purchase Rights. In the event of the exercise of
                 purchase rights pursuant to Section 11.5. (any such event a
                 "Purchase"), the Purchase shall be consummated by appropriate
                 and customary documentation (including customary
                 representations and warranties) as soon as practicable and in
                 any event within the applicable time period specified in
                 Section 11.5 or Section 11.8. The Partners entitled or
                 obligated to Purchase shall have the right to transfer or
                 assign, in whole or in part, its right or obligation to
                 Purchase to an Affiliate or to a third party.

         11.8.   Recision. In the event that the Partnership is rendered
                 Insolvent by reason of a breach, default or failure of an
                 agreement, covenant, indemnity, representation or warranty made
                 by LParent in the Contribution Agreement (including the
                 exhibits and schedules thereto) and such breach, default or
                 failure has not been cured as provided in the Contribution
                 Agreement (a "Recision Event"), then CITGO GP shall deliver a
                 notice to Lyondell GP specifying in reasonable detail the
                 particulars of such Recision Event (a "Recision Event Notice").
                 Within 60 days after the earlier to occur of agreement between
                 the Partners or final judicial determination that a Recision
                 Event has occurred, Lyondell Partners shall purchase CITGO
                 Partners' Interest (a "Recision Purchase") for an amount of
                 cash (the "Recision Purchase Price") equal to the sum, without
                 duplication, of the following amounts, each calculated or
                 determined from the Closing Date to the date of purchase: (i)
                 CITGO Partners' capital contributions made pursuant to Section
                 6., plus (ii) all Profits allocated to CITGO Partners, minus
                 (iii) all Losses allocated to CITGO Partners and minus (iv) the
                 amount of all distributions actually made to CITGO Partners
                 pursuant to Section 7.4. In the event of a Recision Purchase,
                 CITGO Partners shall execute and deliver to Lyondell Partners
                 such documents as Lyondell Partners shall reasonably require to
                 evidence and effect the Recision Purchase against receipt by
                 CITGO Partners of the Recision Purchase Price. The amount of
                 any debt to CITGO Partners under Section 7.3.(C) shall be
                 deemed to be paid upon payment of the Recision Purchase Price.

         11.9.   Dissolution. The Partnership shall be dissolved within the
                 meaning of the Act upon the first to occur of the following:


                                       53
<PAGE>   59

                 (1)   the written determination of all General Partners to
                       dissolve the Partnership;

                 (2)   the bankruptcy (including the matters referred to in
                       Section 11.2.(A)(5) of the Partnership;

                 (3)   the withdrawal, retirement, resignation, dissolution
                       or bankruptcy (including the matters referred to in
                       Section 11.2.(A)(5)) of a Partner;

                 (4)   the closing of a Purchase as the result of a Default;

                 (5)   the election of the Nondefaulting Partners to effect
                       a dissolution of the Partnership under Section 11.6.; or

                 (6)   any other act or event which results in the
                       dissolution of a limited partnership under the Act.

         11.10.  Reconstitution of Partnership. If the Partnership dissolves
                 pursuant to Section 11.9.(C) or Section 11.9(D) (even if other
                 dissolution provisions also are invoked), it may be
                 reconstituted and continued upon the written consent of all
                 remaining Partners other than the former Partner that sold its
                 Interest.

         11.11.  Liquidation; Winding Up and Distributions upon Dissolution.

                 (1)   Upon a dissolution, absent a reconstitution and
                       continuation of the Partnership under Section 11.10., the
                       Partnership shall commence to wind up its affairs and the
                       Partners shall file appropriate documents of dissolution
                       and proceed to effect the Liquidation of the Partnership
                       pursuant to the procedures set forth in this Section
                       11.11.; provided, however, that in the event of a
                       dissolution resulting from an event described in Section
                       11.9.(D), sufficient time shall be allowed prior to any
                       liquidation or winding up of the Partnership to give
                       effect to the remedies provided by Section 11.5. and
                       Section 11.6. Notwithstanding any other provision of this
                       Agreement, during the period of the winding up, the
                       Nondefaulting Partners (or the Partnership Governance
                       Committee if the Partners have agreed to terminate the
                       Partnership or there are otherwise not Nondefaulting
                       Partners) shall make all decisions relating to the
                       conduct of any business or operations, and the sale or
                       disposition of the Partnership's assets.


                                       54
<PAGE>   60

                 (2)   Upon dissolution of the Partnership, the following
                       shall occur unless the Partners agree otherwise:

                       (1)    The Partnership's assets shall be collected and
                              sold to unaffiliated third parties in arm's-length
                              transactions; provided, however, that any Partner
                              or its Affiliates shall have the right to
                              participate in any public sale or auction of the
                              Partnership's property or any other reasonable
                              competitive bid process (such as a private sale
                              pursuant to a "data room" process conducted by an
                              independent investment banking firm);

                       (2)    Gain or loss with respect to the Partnership's
                              sale or distribution of assets shall be allocated
                              to the Partners' Capital Accounts as provided in
                              Section 7.6.;

                       (3)    Any liabilities owed to third parties shall be
                              paid in full;

                       (4)    Appropriate reserves for contingencies shall
                              be established;

                       (5)    Any outstanding loans that have been made to
                              the Partnership by any Partner shall be repaid in
                              full;

                       (6)    CITGO Partners' Capital Accounts shall be reduced
                              by the amount of the outstanding principal of any
                              promissory note contributed to the Partnership
                              pursuant to Section 6.6.(E); and

                       (7)    Any remaining cash or non-cash assets that cannot
                              be sold for cash shall be distributed to the
                              Partners in accordance with their positive Capital
                              Account balances.

                 No Partner shall have any obligation to contribute capital to
                 restore any negative balance in its Capital Account.

         11.12.  Enforcement. Only a General Partner shall have the ability to
                 enforce the provisions of this Section 11.

12.      MISCELLANEOUS


                                       55
<PAGE>   61

         12.1.   Confidentiality and Use of Information. Each Partner will keep
                 confidential all information regarding the business of the
                 Partnership and will not use any such information in any manner
                 not related to the business of the Partnership; provided,
                 however, that the term "information" as used in this Section
                 does not include any information that (i) is or becomes
                 generally available to and known by the public or the petroleum
                 refining industry (other than as a result of an unpermitted
                 disclosure directly or indirectly by the Partnership or a
                 Partner), (ii) is or becomes available to a Partner on a
                 nonconfidential basis from a source other than the Partnership
                 or a Partner; provided, however, that such source is not and
                 was not bound by a confidentiality agreement with, or other
                 obligation of secrecy to, the Partnership or any other Partner,
                 (iii) has already been or is hereafter independently acquired
                 or developed by a Partner without violating any confidentiality
                 agreement with or other obligation of secrecy to the
                 Partnership or another Partner or (iv) is generated by the
                 Partnership with the intention that it not be held as
                 confidential.

         12.2.   Auditors. Selection of the Partnership's auditors will be
                 delegated to the Finance-Control Committee. The Partnership
                 Governance Committee will have final authority to select,
                 appoint and establish the terms of the engagement of the
                 Partnership's auditors. The Partnership Governance Committee
                 shall, in consultation with the Finance and Control Committee,
                 establish the accounting policies for the Partnership,
                 including the policy for determining whether an expenditure
                 should be capitalized or expensed.

         12.3.   Indemnification of Officers.

                 (1)   The Partnership shall indemnify any person who was or is
                       a named defendant or respondent or is threatened to be
                       made a named defendant or respondent to any threatened,
                       pending or completed action, suit or proceeding, whether
                       civil, criminal, administrative, arbitrative or
                       investigative, any appeal to such an action, suit or
                       proceeding and any inquiry or investigation that could
                       lead to such an action, suit or proceeding (collectively,
                       such actions, suits, proceedings, appeals, inquiries and
                       investigations are referred to collectively as
                       "Proceedings" and individually as "Proceeding") by reason
                       of the fact that such person either is or was an officer
                       of the Partnership, or, while an officer of the
                       Partnership, is or was serving at the request of the
                       Partnership as a director, manager, officer, partner,
                       venturer, proprietor, trustee, employee, agent or similar
                       functionary of another domestic or foreign corporation,
                       limited partnership, partnership, joint venture, sole
                       proprietorship, trust, employee benefit plan or other
                       enterprise, against judgments, penalties (including
                       excise and similar taxes), fines, settlements and
                       reasonable expenses actually incurred by such person in
                       connection with such Proceeding if it is determined that
                       such person conducted himself in good faith, and if such
                       conduct was in such person's official capacity as an
                       officer of the Partnership, in a manner 



                                       56
<PAGE>   62
                       he reasonably believed to be in the best interests of the
                       Partnership and, in all other cases, in a manner he
                       reasonably believed was not opposed to the best interests
                       of the Partnership, and, in the case of any criminal
                       Proceeding, had no reasonable cause to believe his
                       conduct was unlawful; provided, however, that if a person
                       is found liable to the Partnership or is found liable on
                       the basis that personal benefit was improperly received
                       by him, the indemnification shall not be available. The
                       Partnership may pay or reimburse expenses incurred by an
                       officer in connection with such person's appearance as a
                       witness or other participation in a Proceeding at a time
                       when such person is not a named defendant or respondent
                       in such Proceeding.

                 (2)   The determination to be made in the preceding subsection
                       (A) shall be made (i) by the Partnership Governance
                       Committee; or (ii) by special legal counsel selected by
                       the Partnership Governance Committee. A determination as
                       to the reasonableness of expenses (including court costs
                       and attorneys' fees) shall be made in the same manner as
                       the determination that indemnification is permissible.

                 (3)   Reasonable expenses incurred by an officer in connection
                       with a Proceeding may be paid by the Partnership in
                       advance of the final disposition of such Proceeding and
                       without any of the determinations specified in the
                       preceding subsection (B) upon receipt by the Partnership
                       of a written affirmation by the officer of his good faith
                       belief that he has met the standard of conduct necessary
                       for indemnification under this Section 12.3. and a
                       written undertaking by or on behalf of the officer to
                       repay such amount if it is ultimately determined that he
                       is not entitled to be indemnified by the Partnership as
                       authorized in this Section 12.3., which undertaking shall
                       be an unlimited general obligation of such officer and
                       may be unsecured.

                 (4)   The right to indemnification conferred in this Section
                       12.3. shall be a contract right and shall not be deemed
                       exclusive of any other rights to which those indemnified
                       may be entitled under any other law, agreement,
                       Partnership Governance Committee Action, or otherwise,
                       both as to action in their official capacities and as to
                       action in another capacity while acting as an officer and
                       shall continue as to a person who has ceased to be an
                       officer and shall inure to the benefit of the heirs,
                       executors and administrators of such person. Any
                       indemnification of or advance of expenses to an officer
                       in accordance with this Section 12.3. shall be reported
                       in writing to the Partnership Governance Committee.

                 (5)   The Partnership may purchase and maintain insurance on
                       behalf of any person who is or was an officer or employee
                       of the Partnership, or who 



                                       57
<PAGE>   63
                       is or was serving at the request of the Partnership as a
                       manager, officer, partner, venturer, proprietor, trustee,
                       employee, agent, or similar functionary of another
                       foreign or domestic corporation, limited partnership,
                       partnership, joint venture, sole proprietorship, trust,
                       other enterprise, or employee benefit plan, against any
                       liability asserted against or incurred by that person in
                       such a capacity or arising out of his status as such a
                       person, whether or not the Partnership would have the
                       power to indemnify such person against such liability
                       under this Section 12.3.

                 (6)   Except as indicated in the proviso in Section
                       12.3.(A), the Partnership intends that the
                       indemnification provided hereunder shall indemnify its
                       officers to the fullest extent possible under the Act;
                       and if any indemnification which would otherwise be
                       granted by this Section 12.3. shall be disallowed by any
                       competent court or administrative body as illegal, then
                       any officer with respect to whom such adjudication was
                       made, and any other officer, shall be indemnified to the
                       fullest extent permitted under the Act.

         12.4.   Waivers, Modifications and Amendments. All modifications or
                 amendments of this Agreement or the Certificate of Limited
                 Partnership shall require the approval of Representatives
                 representing 100 percent of the total votes as provided in
                 Section 3.8.(C).

         12.5.   Further Assurances. From time to time, each Partner agrees to
                 execute and deliver such additional documents, and will provide
                 such additional information and assistance as the Partnership
                 may reasonably require to carry out the terms of this Agreement
                 and to accomplish the Partnership's Business.

         12.6.   Successors and Assigns. This Agreement shall be binding upon
                 and inure to the benefit of the successors of the Partners,
                 but, except as expressly provided herein, no Limited Partner or
                 its Affiliated General Partner may assign or delegate any of
                 their rights or obligations under this Agreement without the
                 prior written consent of the other Partners, which consent
                 shall be in the sole and absolute discretion of such other
                 Partners. Any purported assignment or delegation without such
                 consent shall be void and ineffective.

         12.7.   Benefits of Agreement Restricted to the Parties. This Agreement
                 is made solely for the benefit of the Partnership and the
                 Partners, and no other person or entity shall have any right,
                 claim or cause of action under or by virtue of this Agreement.

         12.8.   Expenses. Except as otherwise provided herein, each party
                 hereto shall be responsible for its own expenses incurred in
                 connection with this Agreement.


                                       58
<PAGE>   64

         12.9.   Currency Conversions. All contributions, allocations,
                 distributions and other payments shall be made, and all
                 calculations performed and books and records kept, in United
                 States currency, without any reference to foreign currency
                 exchange rates or other conversion calculations.

         12.10.  Payment Terms and Interest Calculations

                 (1)   If the payment due date for any payment hereunder
                       (including Capital Contributions and Damages) falls on a
                       Saturday or a bank or federal holiday, other than a
                       Monday, the payment shall be due on the past preceding
                       business day. If the payment due date falls on a Sunday
                       or Monday bank or federal holiday, the payment shall be
                       due on the following business day.

                 (2)   Interest shall accrue on any unpaid and outstanding
                       amount from the time such amount is due and payable
                       through the date upon which such amount, together with
                       accrued interest thereon, is paid in full. Interest
                       shall, subject to the provisions of Section 12.11.,
                       accrue at a per annum rate equal to the lesser of (i) 125
                       percent of the Agreed Rate, compounded quarterly, to the
                       extent permitted by law or (ii) the Highest Lawful Rate.

                 (3)   A wire transfer or delivery of a check shall not
                       operate to discharge any payment under this Agreement and
                       shall be accepted subject to collection.

         12.11.  Usury Savings Clause. Notwithstanding any other provision of
                 this Agreement, it is the intention of the parties hereto to
                 conform strictly to applicable usury laws regarding the use,
                 forbearance or detention of any indebtedness arising under this
                 Agreement whether such laws are now or hereafter in effect,
                 including the laws of the United States of America or any other
                 jurisdiction whose laws are applicable, and including any
                 subsequent revisions to or judicial interpretations of those
                 laws, in each case to the extent they are applicable to this
                 Agreement (the "Applicable Usury Laws"). Accordingly, if any
                 payments made pursuant to this Agreement result in any person
                 having paid any interest in excess of the Maximum Amount, as
                 hereinafter defined, or if any transaction contemplated hereby
                 would otherwise be usurious under any Applicable Usury Laws,
                 then, in that event, it is agreed as follows: (i) the
                 provisions of this Section 12.11. shall govern and control;
                 (ii) the aggregate of all interest under Applicable Usury Laws
                 that is contracted for, charged or received under this
                 Agreement shall under no circumstances exceed the Maximum
                 Amount, and any excess shall be promptly refunded to the payor
                 by the recipient hereof; (iii) no person shall be obligated to


                                       59
<PAGE>   65

                 pay the amount of such interest to the extent that it is in
                 excess of the Maximum Amount; and (iv) the effective rate of
                 any interest payable under this Agreement shall be ipso facto
                 reduced to the Highest Lawful Rate, as hereinafter defined, and
                 the provisions of this Agreement immediately shall be deemed
                 reformed, without the necessity of the execution of any new
                 document or instrument, so as to comply with all Applicable
                 Usury Laws. All sums paid, or agreed to be paid, to any person
                 pursuant to this Agreement for the use, forbearance or
                 detention of any indebtedness arising hereunder shall, to the
                 fullest extent permitted by the Applicable Usury Laws, be
                 amortized, pro rated, allocated and spread throughout the full
                 term of any such indebtedness so that the actual rate of
                 interest does not exceed the Highest Lawful Rate in effect at
                 any particular time during the full term thereof. As used
                 herein, the term "Maximum Amount" means the maximum nonusurious
                 amount of interest that may be lawfully contracted for, charged
                 or received by any person in connection with any indebtedness
                 arising under this Agreement under all Applicable Usury Laws,
                 and the term "Highest Lawful Rate" means the maximum rate of
                 interest, if any, that may be charged to any person under all
                 Applicable Usury Laws on any principal balance from time to
                 time outstanding pursuant to this Agreement.

        12.12.   Notices. All notices, requests, demands and other
                 communications that are required or may be given under this
                 Agreement shall, unless otherwise provided for elsewhere in
                 this Agreement, be in writing and shall be deemed to have been
                 duly given if and when (i) transmitted by telecopier facsimile,
                 (ii) delivered personally or (iii) mailed, first class mail,
                 postage prepaid, return receipt requested, as follows:

                 (a)   if to CITGO LP, CITGO GP or its Representatives:

                       CITGO Refining Investment Company
                       P. O. Box 3758
                       Tulsa, Oklahoma 74556
                       Attention: Treasurer
                       Telecopy:  918-495-4511

                       with a copy to:

                       Vice President and General Counsel
                       CITGO Petroleum Corporation
                       P. O. Box 3758
                       Tulsa, Oklahoma 74556
                       Telecopy:  918-495-5559


                                       60
<PAGE>   66

                 (b)   if to Lyondell LP, Lyondell GP or its Representatives:

                       Lyondell Refining Company
                       P. O. Box 3646
                       Houston, Texas  77253-3646
                       Attention: Vice President, General Counsel & Secretary

                       with a copy to:

                       Lyondell Refining LP, LLC
                       300 Delaware Avenue
                       Wilmington, Delaware 19801-1622
                       Attention: Vice President, General Counsel & Secretary

                 (c)   if to the Partnership:

                       LYONDELL-CITGO Refining LP
                       P. O. Box 2451
                       Houston, Texas  77252-2451
                       Attention:  President & CEO
                       Telecopy:  713-321-6900

                 Any changes to the addresses set forth above shall be made by
                 written notice delivered to the Secretary of the Partnership
                 who shall maintain such addresses.

         12.13.  Waiver of Immunity. EACH OF THE CITGO PARTNERS HEREBY WAIVES
                 ANY RIGHT IT MAY HAVE TO CLAIM FOR ITSELF OR


                                       61
<PAGE>   67

         12.14.  WITH RESPECT TO ITS REVENUES, ASSETS OR PROPERTIES IMMUNITY
                 FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS.
                 TO THE EXTENT ANY JURISDICTION WOULD ATTRIBUTE SUCH IMMUNITY TO
                 EITHER OR BOTH OF THE CITGO PARTNERS, EACH OF THE CITGO
                 PARTNERS HEREBY WAIVES ANY RIGHT TO CLAIM SUCH IMMUNITY AND TO
                 ANY DEFENSES AVAILABLE TO IT UNDER THE FOREIGN SOVEREIGN
                 IMMUNITIES ACT, AND ANY DEFENSE BASED ON IMMUNITY ARISING UNDER
                 U.S. FEDERAL OR STATE LAW, OR UNDER ANY INTERNATIONAL, FOREIGN
                 OR OTHER APPLICABLE LAW.

         12.15.  Governing Law. THE INTERPRETATION AND CONSTRUCTION OF THIS
                 AGREEMENT, AND ALL MATTERS RELATING HERETO, SHALL BE GOVERNED
                 BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REFERENCE TO ITS
                 PRINCIPLES OF CONFLICTS OF LAW.

         12.16.  Jurisdiction; Consent to Service of Process; Waiver. ANY
                 JUDICIAL PROCEEDING BROUGHT AGAINST ANY OF THE PARTNERS OR THE
                 PARTNERSHIP OR ANY DISPUTE UNDER OR ARISING OUT OF OR IN
                 CONNECTION WITH THIS AGREEMENT OR ANY MATTER RELATED HERETO
                 SHALL BE BROUGHT IN THE FEDERAL OR STATE COURTS OF THE STATE OF
                 NEW YORK LOCATED IN THE BOROUGH OF MANHATTAN, AND, BY EXECUTION
                 AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTNERS AND THE
                 PARTNERSHIP ACCEPTS THE EXCLUSIVE JURISDICTION OF SUCH COURTS
                 AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT (AS FINALLY
                 ADJUDICATED) RENDERED THEREBY IN CONNECTION WITH THIS
                 AGREEMENT. EACH OF THE PARTNERS AND THE PARTNERSHIP SHALL
                 APPOINT C T CORPORATION SYSTEM, THE PRENTICE-HALL CORPORATION
                 SYSTEM, INC. OR A SIMILAR ENTITY (THE "AGENT") AS AGENT TO
                 RECEIVE ON ITS BEHALF SERVICE OF PROCESS IN ANY PROCEEDING IN
                 ANY SUCH COURT IN THE STATE OF NEW YORK BY ENTERING INTO AN
                 AGREEMENT WITH THE AGENT TO SUCH EFFECT, AND EACH PARTNER AND
                 THE PARTNERSHIP SHALL MAINTAIN SUCH AGREEMENT (OR AN
                 APPROPRIATE SUBSTITUTE TO THE SAME EFFECT WITH THE SAME OR A
                 DIFFERENT AGENT) FOR THE ENTIRE TERM OF EXISTENCE OF THE
                 PARTNERSHIP. THE FOREGOING CONSENTS TO JURISDICTION AND
                 APPOINTMENTS OF AGENT TO RECEIVE SERVICE OF PROCESS SHALL NOT
                 CONSTITUTE GENERAL CONSENTS TO SERVICE OF PROCESS IN THE STATE
                 OF NEW YORK FOR ANY PURPOSE EXCEPT AS PROVIDED ABOVE AND SHALL
                 NOT BE DEEMED TO CONFER RIGHTS ON ANY PERSON OTHER THAN THE
                 PARTNERSHIP AND THE PARTNERS.


                                       62
<PAGE>   68

                     IN LIGHT OF THE EXPRESS INTENT OF THE PARTIES TO
                 SUBMIT TO THE JURISDICTION OF NEW YORK COURTS FOR THE
                 RESOLUTION OF ANY AND ALL DISPUTES ARISING UNDER THIS
                 AGREEMENT, THE PARTIES FURTHER HEREBY WAIVE ANY AND ALL
                 AFFIRMATIVE DEFENSES THEY COULD OR MIGHT OTHERWISE BE ABLE TO
                 ASSERT BASED ON AN ALLEGED INCAPACITY OF THE PARTNERSHIP TO
                 ASSERT A CLAIM OR COUNTER-CLAIM IN EITHER THE FEDERAL OR STATE
                 COURTS OF THE STATE OF NEW YORK LOCATED IN THE BOROUGH OF
                 MANHATTAN. THE AFFIRMATIVE DEFENSES AND MOTIONS HEREBY WAIVED
                 INCLUDE BUT ARE NOT LIMITED TO OBJECTIONS TO SUIT PURSUANT TO
                 N.Y. BUSINESS CORPORATION LAW SS. 1312, N.Y. PARTNERSHIP LAW
                 SS. 121-907, N.Y. CLS GENERAL BUSINESS LAW SS. 130 SUBD.
                 1(II)(A) AND N.Y. GENERAL ASSOCIATIONS LAW SS. 18(4). THE
                 PARTIES WAIVE ALL AFFIRMATIVE DEFENSES AND DEFENSIVE MOTIONS
                 PREDICATED ON, BUT NOT LIMITED TO, THE FOREGOING STATUTORY
                 PROVISIONS WITH FULL KNOWLEDGE OF THEIR RIGHTS, IF ANY, UNDER
                 THOSE PROVISIONS. IT IS THE EXPRESS AND KNOWING INTENTION OF
                 THE PARTIES TO WAIVE THE RIGHT TO ASSERT AS AN AFFIRMATIVE
                 DEFENSE THE LEGAL INCAPACITY OF THE PARTNERSHIP TO MAINTAIN A
                 CLAIM OR COUNTER-CLAIM ON THE GROUNDS THAT THE PARTNERSHIP
                 FAILED TO COMPLY WITH ANY OR ALL REGISTRATION, CERTIFICATION,
                 NOTIFICATION, FILING OR DESIGNATION-OF-AGENT REQUIREMENTS SET
                 FORTH AND ENFORCED BY THE FOREGOING OR ANY SIMILAR STATUTORY
                 PROVISIONS.

         12.17.  Entire Agreement. This Agreement, together with the Certificate
                 of Limited Partnership, the Master Transaction Agreement, the
                 Confidentiality Agreements (as defined in the Master
                 Transaction Agreement) and the Related Agreements constitute
                 the entire agreement between the parties and supersedes all
                 prior agreements and understandings, oral and written, between
                 the parties with respect to the subject matter hereof, with the
                 exception of those matters which will continue to be governed
                 under the Regulations.

         12.18.  Severability. In the event that any provision of this Agreement
                 shall finally be determined to be unlawful, such provision
                 shall, so long as the economic and legal substance of the
                 transactions contemplated hereby is not affected in any
                 materially adverse manner as to any Partner, be deemed severed
                 from this Agreement and every other provision of this Agreement
                 shall remain in full force and effect.

         12.19.  Construction. In construing this Agreement, the following
                 principles shall be followed: (i) no consideration shall be
                 given to the captions of the articles, sections, subsections or
                 clauses, which are inserted for convenience in locating the


                                       63
<PAGE>   69

                 provisions of this Agreement and not as an aid in construction;
                 (ii) no consideration shall be given to the fact or
                 presumptions that any Partner had a greater or lesser hand in
                 drafting this Agreement; (iii) examples shall not be construed
                 to limit, expressly or by implication, the matter they
                 illustrate; (iv) the word "includes" and its syntactic variants
                 mean "includes, but is not limited to" and corresponding
                 syntactic variant expressions; (v) the plural shall be deemed
                 to include the singular, and vice versa; (vi) each gender shall
                 be deemed to include the other genders; and (vii) each exhibit,
                 attachment and schedule to this Agreement is a part of this
                 Agreement.

         12.20.  Counterparts. This Agreement may be executed in one or more
                 counterparts, each of which shall constitute an original, and
                 all of which when taken together shall constitute one and the
                 same original document.



                            [signature page follows]

                                       64
<PAGE>   70

        IN WITNESS WHEREOF, this Limited Partnership Agreement has been
executed on behalf of each Partner, by their respective officers thereunto duly
authorized, effective as of the 31st day of December, 1998.

LYONDELL REFINING LP, LLC
a Delaware limited liability company  (Lyondell LP)


By:
    -----------------------------------------
        Name:
              -------------------------------
        Title:
                -----------------------------



CITGO GULF COAST REFINING, INC.
a Delaware corporation (CITGO GP)


By:
    -----------------------------------------
        Name:
              -------------------------------
        Title:
                -----------------------------



LYONDELL REFINING COMPANY,
a Delaware corporation  (Lyondell GP)



By:
    -----------------------------------------
        Name:
              -------------------------------
        Title:
                -----------------------------



CITGO REFINING INVESTMENT COMPANY
an Oklahoma corporation (CITGO LP)


By:
    -----------------------------------------
        Name:
              -------------------------------
        Title:
                -----------------------------


                                       65
<PAGE>   71
                                    EXHIBIT 1

                            TO PARTNERSHIP AGREEMENT

                  DEFINITION OF TERMS IN PARTNERSHIP AGREEMENT


         Act. The Delaware Revised Uniform Limited Partnership Act, as amended
and in effect from time to time. See Section 2.2.

         Action. See Section 5.11.(D).

         Additional Construction Loan. As defined in the Regulations.

         Affiliate. As to any specified Person, any other Person that directly
or indirectly through one or more intermediaries controls or is controlled by or
is under common control with the specified Person; provided, however, that for
purposes of this Agreement and regardless of whether the specified Person would
otherwise be deemed an Affiliate for any other purpose or under any other
agreement, the Partnership or any entities controlled by the Partnership shall
not be deemed to be an Affiliate of LParent, Lyondell GP or Lyondell LP or any
entities controlled by LParent, Lyondell GP or Lyondell LP or of CParent, CITGO
GP or CITGO LP or any entities controlled by CParent, or CITGO GP or CITGO LP.
For purposes of this definition the term "control" shall have the meaning set
forth in 17 CFR 230.405.

         Affiliated General Partner. In the case of Lyondell LP, the "Affiliated
General Partner" shall mean Lyondell GP. In the case of CITGO LP, the
"Affiliated General Partner" shall mean CITGO GP.

         Affiliated Limited Partner. In the case of Lyondell GP, the "Affiliated
Limited Partner" shall mean Lyondell LP. In the case of CITGO GP, the
"Affiliated Limited Partner" shall mean CITGO LP.

         Affiliated Partner Group. A General Partner and its Affiliated Limited
Partner.

         Agent. See Section 12.15.

         Agreed Rate. With respect to any period for which interest is to be
calculated, the Citibank, N.A. "base rate" from time to time in effect for each
day in such period, calculated by multiplying the Citibank, N.A. "base rate" by
the number of days such "base rate" is in effect, determining the sum of the
products obtained thereby and dividing such sum by the number of days in such
period.

         Alternate. See Section 3.2.(B).

         Annual Meeting. See Section 3.4.(A).

         Applicable Usury Laws. See Section 12.11.

         Assets. The assets defined as such in the Contribution Agreement
together with all assets provided to the Partnership pursuant to the Related
Agreements.


                               Exhibit 1, Page 1
<PAGE>   72

         Asset Value. With respect to any asset, the asset's adjusted basis for
federal income tax purposes, except that the Asset Value of any asset
contributed by a Partner to the Partnership or acquired with funds contributed
by a Partner shall be the fair market value of such asset on the date of
contribution or on any date on which the asset is revalued pursuant to Section
7.1.(C) hereof; provided, however, that the fair market value of the Assets (net
of the Assumed Liabilities) on each such date shall be deemed to be $825
million, reduced, without duplication, (i) by the amount of any payment
described in Section 7.1.(D) and (ii) by the amount of any indemnification
forgone by the Partnership pursuant to the proviso of Section 5.2 of the
Contribution Agreement; and provided further (a) that the fair market value of
the Working Capital on each such date shall be the amount determined pursuant to
Exhibit 6.1(B) and (b) that the fair market value of the assets which are
acquired with funds contributed by a Partner in each such date shall be the
original cost of such assets. Any such adjustments shall be effective on a
prospective basis only.

         Auxiliary Committee. See Section 3.10.

         Average Participation Percentage. The mathematical average of a
Partner's Participation Percentages, by Calendar Quarter, for any applicable
period.

         Blended Rate. For any Calendar Quarter or portion thereof, a fraction
(i) the numerator of which is equal to the aggregate federal income tax
depreciation, amortization or other cost recovery deductions for such period
with respect to all assets and (ii) the denominator of which is equal to the
aggregate adjusted tax basis of the assets on the date such assets were
contributed to the Partnership or, if any adjustment to the Capital Accounts has
occurred pursuant to Section 7.1.(C), the date of the most recent such
adjustment.

         Business Day. Any day other than a Saturday, Sunday or other day on
which banks are closed in New York City, New York.

         Calendar Quarter. In each year, each calendar quarter.

         Capital Account. See Section 7.1.

         Capital Budget. See Section 9.2.(B).

         Capital Contribution. See Section 6.4.

         Capital Enhancement Projects. See Section 9.2.(B).

         Cash Balance Amount. See Section 7.5.

         CEO. The President and Chief Executive Officer of the Partnership. See
Section 4.5.

         CERCLA shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.

         Chemical Substance shall mean (i) any chemical substance, pollutant,
contaminant, constituent, chemical, mixture, raw material, intermediate, product
or byproduct that is regulated (including any requirement for the reporting of
any Release thereof) under any Environmental Law, as now or hereafter in effect,
or defined or listed as an industrial, toxic, deleterious, harmful, 


                               Exhibit 1, Page 2
<PAGE>   73

radioactive, infectious, disease-causing or hazardous substance, material or
Waste under any Environmental Law, as now or hereafter in effect, and (ii)
petroleum or any fraction thereof, asbestos or asbestos-containing material or
polychlorinated biphenyls.

         CITGO GP. CITGO Gulf Coast Refining, Inc., a Delaware corporation, the
General Partner that is an Affiliate of CParent. See Section 2.2.

         CITGO LP. CITGO Refining Investment Company, an Oklahoma corporation,
the Limited Partner that is an Affiliate of CParent. See Section 2.2.

         CITGO Partners. CITGO GP and CITGO LP.

         CITGO Partners Option Date Amount. The product of (i) CITGO Partners
Average Participation Percentage for the period beginning on the day following
the In-Service Date and ending on the Option Date times (ii) the remainder of
Option Date Working Capital minus In-Service Date Working Capital.

         Closing Date. See Section 2.2.

         Code. The Internal Revenue Code of 1986, as amended and in effect from
time to time and any successor thereto.

         Company. LYONDELL-CITGO Refining Company Ltd., a Texas limited
liability company, which was converted into the Partnership as of the date of
this Agreement.

         Compensation Committee. See Section 3.10.(A).

         Conflict Circumstance. See Section 5.7.

         Conflicted General Partner. See Section 5.7.

         Contribution Agreement. The agreement dated July 1, 1993 between the
Company and LParent pursuant to which the Refinery Business and certain other
Assets and Working Capital were contributed to the Company by LParent on behalf
of Lyondell Refining Company n/k/a Lyondell GP.

         Conversion Date. See Section 2.2.

         CParent. CITGO Petroleum Corporation, a Delaware corporation. See
Section 2.2.

         Damages. See Section 11.2.(D).

         Default. See Section 11.2.(A).

         Default Date. See Section 11.2.(C).

         Defaulting Partners. Lyondell GP and Lyondell LP, in the case of a
Default by Lyondell GP or Lyondell LP; and CITGO GP and CITGO LP, in the case of
a Default by CITGO GP or CITGO LP.


                               Exhibit 1, Page 3
<PAGE>   74

         Depreciation. For each Calendar Quarter or portion thereof, an amount
equal to the federal income tax depreciation, amortization or other cost
recovery deduction allowable with respect to an asset for such period.
Notwithstanding the preceding sentence, if the Asset Value (after taking into
account any adjustment pursuant to the proviso of Section 7.1.(C)) of an asset
differs from its adjusted tax basis on the date such asset is contributed or, if
applicable, on the date of any adjustment to Capital Accounts which has taken
place pursuant to Section 7.1.(C), Depreciation for any period shall be an
amount which bears the same ratio to such Asset Value (as adjusted pursuant to
the proviso of Section 7.1.(C)) as the federal income tax depreciation,
amortization or other cost recovery deduction for such period bears to such
adjusted tax basis, except that in the case of any asset that has a zero
adjusted tax basis on either the date of its contribution to the Partnership or
on the date of any adjustment pursuant to Section 7.1.(C), Depreciation for any
period shall be an amount equal to the product of (i) the Asset Value (as
adjusted pursuant to the proviso of Section 7.1.(C)) of such asset on the date
of contribution, or, if applicable, the date of the most recent adjustment to
Capital Accounts pursuant to Section 7.1.(C) and (ii) the Blended Rate.

         Distributable Cash. The amount of cash distributable to the Partners as
determined under Section 7.3., and in regard to each Partner.

         Distributions. See 6.4.(A)(2).

         Environment shall mean any ambient air, surface water, drinking water,
groundwater, land surface, subsurface strata, river sediment, natural resources
or real property and the physical buildings, structures and fixtures thereon,
including sewer, septic and waste treatment, storage or disposal systems.

         Environmental Law shall mean any legal requirement or permit relating
to (i) the Environment, including pollution, contamination, cleanup,
preservation, protection and reclamation of the Environment; (ii) health or
safety, including the exposure of employees and other Persons to any Chemical
Substance; (iii) the Release or threatened Release of any Chemical Substance,
noxious noise or odor, including investigation, study, assessment, testing,
monitoring, containment, removal, remediation, response, cleanup and abatement
of such Release or threatened Release; and (iv) the management of any Chemical
Substance, including the manufacture, generation, formulation, processing,
labeling, use, treatment, handling, storage, disposal, transportation,
distribution, re-use, recycling or reclamation of any Chemical Substance.

         Executive Officers. Those officers of the Partnership then designated
as Executive Officers by Partnership Governance Committee Action.

         Fair Market Value. See Section 11.5.(C).

         Finance-Control Committee. See Section 3.10(A).

         Financing Plan. Certain Partnership plans, as approved by unanimous
actions of the Partnership Governance Committee, setting forth the Partnership's
funding requirements for the Capital Budget and the sources of funds to finance
such requirements.

         GAAP. Generally accepted accounting principles.


                               Exhibit 1, Page 4
<PAGE>   75

         General Partners. Each Person who executes this Agreement and who is
hereby admitted to the Partnership as a general partner of the Partnership,
unless such General Partner ceases to be a General Partner hereunder or sells,
transfers, forfeits or otherwise disposes of its Interest and is replaced by a
Substitute General Partner in accordance with this Agreement and the Act, and
each Person that becomes a Substitute General Partner, if any, of the
Partnership as provided herein, in such Person's capacity as a general partner
of the Partnership.

         Highest Lawful Rate. See Section 12.11.

         Indemnified Losses. See Section 5.11.(A)(1).

         Indemnified Party. See Section 5.11.(D).

         Indemnifying Party. See Section 5.11.(D).

         Initial Construction Loan. As defined in the Regulations.

         In-Service Date. February 28, 1997, except for the Working Capital
Valuation for which the In-Service Date is March 31, 1997.

         In-Service Date Working Capital. The value of the Working Capital on
the In-Service Date determined pursuant to Exhibit 6.1(B).

         Insolvent and Insolvency. The Partnership is insolvent if it has ceased
to pay its debts in the ordinary course of business or cannot pay its debts as
they become due or is insolvent within the meaning of the federal bankruptcy
law.

         Intended Percentage. See Section 6.6.(A).

         Interest. At any point in time, the entire ownership interest of a
Partner in the Partnership at such time. See Section 5.8.

         Limited Partner. Each Person who executes this Agreement and who is
hereby admitted to the Partnership as a limited partner of the Partnership,
unless such Limited Partner ceases to be a Limited Partner hereunder or sells,
transfers, forfeits or otherwise disposes of its Interest and is replaced by a
Substitute Limited Partner in accordance with this Agreement and the Act, and
each Person that becomes a Substitute Limited Partner, if any, of the
Partnership as provided herein, in such Person's capacity as a limited partner
of the Partnership.

         Liquidation. See Section 11.6.

         LParent. Lyondell Chemical Company, a Delaware corporation, formerly
known as Lyondell Petrochemical Company. See Section 2.2.

         Lyondell GP. Lyondell Refining Company, a Delaware corporation, the
General Partner that is an Affiliate of LParent.

         Lyondell LP. Lyondell Refining LP, LLC, a Delaware limited liability
company, the Limited Partner that is an Affiliate of LParent.


                               Exhibit 1, Page 5
<PAGE>   76

         Lyondell Partners. Lyondell GP and Lyondell LP.

         Lyondell Partners Option Date Amount. The product of (i) Lyondell
Partners Average Participation Percentage for the period beginning on the first
day following the In-Service Date and ending on the Option Date times (ii) the
remainder of the Option Date Working Capital minus In-Service Date Working
Capital.

         Maintenance Capital. Those capital expenditures reasonably required to
fund capital expenditures that are necessary to maintain the Refinery in
substantially the same condition existing on the Closing Date.

         Master Transaction Agreement. The agreement so named, dated as of May
5, 1993, among LParent, CParent, Lyondell GP and CITGO LP.

         Maximum Amount. See Section 12.11.

         Neutral. See Section 11.5.(C)(3).

         Nonconflicted General Partner. See Section 5.7.

         Nondefaulting Partners. The Partners other than the Defaulting
Partners. See Section 11.2.

         Operating Budget. See Section 9.2.(A).

         Operating Committee. See Section 3.10.(A).

         Option Date. See Section 6.6.(A).

         Option Date Payment. See Section 6.6.(C).

         Option Date Working Capital. The value of Working Capital on the Option
Date determined pursuant to Section 6.6.

         Owners. Lyondell GP and CITGO LP in their capacity as members of the
Company.

         Parents. LParent and CParent.

         Partners. The General Partners and the Limited Partners on the date of
this Agreement until such Person ceases to be a partner of the Partnership.

         Partnership Business. See Section 2.3.

         Partnership Governance Committee. The committee of six Representatives
through which the General Partners manage the Partnership. See Section 3.1.(A).

         Partnership Governance Committee Action. The formal actions taken by
vote of the Partnership Governance Committee, which is the exclusive method by
which the General Partners manage the Partnership. See Section 3.6.(A).


                               Exhibit 1, Page 6
<PAGE>   77

         Participation Percentage. The percentage calculated for each Partner,
from time to time, pursuant to Section 6.4.

         Person. Any natural person or any corporation, limited liability
company, partnership, group, joint venture, trust or other entity.

         Pledgee Group. See Section 11.1.

         Pledgor Group. See Section 11.1.

         Product Sales Agreement. The Product Sales Agreement-Refined Products
dated July 1, 1993 between the Company and CITGO Petroleum Corporation, as
amended from time to time.

         Profits and/or Losses. For each Calendar Quarterly period or other
period, an amount equal to the Partnership's taxable income or loss for such
year or period, determined for federal income tax purposes in accordance with
Code Section 703(a) (for this purpose, all items of income, gain, loss,
deduction or credit required to be stated separately pursuant to Code Section
703(a)(1) shall be included in Profits or Losses), with the following
adjustments:

                 (i) any income of the Partnership that is exempt from federal
         income tax and not otherwise taken into account in computing Profits or
         Losses pursuant to this definition shall be added to such Profits or
         subtracted from such Losses;

                 (ii) any expenditures of the Partnership described in Code
         Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
         expenditures pursuant to Treasury Regulation Section
         1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing
         Profits or Losses pursuant to this definition, shall be subtracted from
         such Profits or added to such Losses;

                 (iii) gain or loss resulting from any disposition of an asset
         with respect to which gain or loss is recognized for federal income tax
         purposes shall be computed by reference to the Asset Value (as adjusted
         pursuant to the proviso in Section 7.1.(C), adjusted to reflect
         Depreciation; and

                 (iv) in lieu of the depreciation, amortization, and other cost
         recovery deductions otherwise required to be taken into account in
         computing such Profits or Losses, there shall be taken into account
         Depreciation.

         Profits Interest. The right of any Partner to receive Profits allocated
or cash distributed to such Partner pursuant to Section 7, but not including the
right to participate in or manage the affairs of the Partnership as a Partner,
the right to receive any information or accounting of the affairs of the
Partnership, the right to inspect the books or records of the Partnership or any
other right of a Partner pursuant to this Agreement.

         Proper Ratio. With respect to the Capital Account balances of the
Partners at any time, the ratio of the Partners' Participation Percentages at
such time.

         Purchase. See Section 11.7.


                               Exhibit 1, Page 7
<PAGE>   78


         Purchase Notice. Notice given by the Nondefaulting Partners exercising
their purchase rights. See Section 11.5.(A).

         Purchase Offer. See Section 10.3.(C).

         Recision Event. See Section 11.8.

         Recision Event Notice. See Section 11.8.

         Refinery. The Refinery located at 12000 Lawndale in Houston, Texas.

         Refinery Business. The Refinery and lube blending facility located in
Birmingport, Alabama and all related assets (of every kind, nature, character
and description, tangible and intangible, real, personal or mixed, wherever
located), businesses, contracts and permits, that are used solely in the
operations of such Refinery and lube blending facility, and all activities
reasonably related or incidental thereto.

         Regulations. See Section 2.2.

         Related Agreements. Those agreements defined as such in Exhibit 1A to
this Agreement.

         Release shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, dumping, discharge, dispersal, leaching, escaping,
emanation or migration of any Chemical Substance in, into or onto the
Environment of any kind whatsoever, including the movement of any Chemical
Substance through or in the Environment, exposure of any type in any workplace,
any release as defined under CERCLA or any other Environmental Law and any
noxious noise or odor emission.

         Representatives. Those persons designated by each General Partner to
serve as such General Partner's representatives on the Partnership Governance
Committee. See Section 3.2.(A).

         Second Notice. See Section 10.3.(D).

         Secretary. See Section 4.7.

         Substitute General Partner. A Person who is admitted as a General
Partner to the Partnership in place of and with the rights of a General Partner.

         Substitute Limited Partner. A Person who is admitted as a Limited
Partner to the Partnership in place of and with the rights of a Limited Partner.

         TMP. The "tax matters partner" as defined in Section 6231(a)(7) of the
Code. See Section 8.3.(A).

         Treasury Regulations. The income tax regulations promulgated by the
Department of Treasury, as amended from time to time. Treasury Regulations
include final and temporary regulations.

         Unanimous Partnership Governance Committee Action. See Section 3.8.


                               Exhibit 1, Page 8
<PAGE>   79

         U.S. Partnership Return of Income. See Section 8.3.(A).

         Vice President. See Section 4.6.

         Wholly Owned Subsidiary. As to any Person, a subsidiary of such Person
all of the equity interests of which are owned, directly or indirectly, by such
Person.

         Working Capital. The Partnership's current assets minus current
liabilities (excluding the current portion of long-term debt and capital
leases). Current assets and current liabilities will be determined in accordance
with current accounting principles under GAAP as in effect at the Conversion
Date, except (i) that any cash, cash equivalents and short-term investments
included in the capital fund will be excluded and (ii) that inventory will be
carried at its Fair Market Value. The inventory value on the Conversion Date
will be its actual Fair Market Value as determined by Exhibit 6.1.(B) and on
other valuation dates will be valued in accordance with Exhibit 6.1.(B).


                               Exhibit 1, Page 9
<PAGE>   80

                                   EXHIBIT 1A

                               RELATED AGREEMENTS

TIER 1 RELATED AGREEMENTS

13.   Amended and Restated Regulations 

14.   Performance Guaranty and Control Agreement 15. Contribution Agreement,
      including the following exhibits:

      15.1.  General Warranty Deed (relating to Houston Land) (Exhibit A-1)

      15.2.  General Warranty Deed (relating to Birmingport Land) (Exhibit A-2)

      15.3.  Assignment of Real Property Interests (relating to the "Ballpark)
                  (Exhibit A-3)

      15.4.  Pipeline Deed, Bill of Sale and Assignment of Easements (relating 
                  to the Company Pipelines) (Exhibit (A-4)

      15.5.  Assignment and Assumption Agreement (between Lyondell and the
             Company relating to Assets other than real property) (Exhibit A-5)

      15.6.  Grants of Easements for Pipelines and Meter Sites (Exhibit B)

16.   Crude Supply Agreement

17.   Supplemental Supply Agreement

18.   Product Sales Agreement Refined Products , CITGO

19.   Inter-Plant Agreements:

      19.1.  Company Feedstock Purchase Agreements:

             (1)    Heavy Pyrolysis Gasoline

             (2)    Light Pyrolysis Gasoline

             (3)    C5 Raffinate

             (4)    OP Hydrogen


                               Exhibit 1A, Page 1
<PAGE>   81

             (5)    MeOH Hydrogen

             (6)    Pyrolysis Gas Oil

             (7)    Toluene

             (8)    Methanol

             (9)    RAFF II

            (10)    RAFF II Isomerate

            (11)    MTBE

            (12)    Isopentane/Heavy Py Mix

            (13)    Ethylene

      19.2. Company Product Sales Agreement , Lyondell:

             (1)    OP , 400

             (2)    OP , 700

             (3)    Mixed Propylene

             (4)    Refinery Normal Butane

             (5)    Refinery Propane


                               Exhibit 1A, Page 2
<PAGE>   82

             (6)    Alkylation Normal Butane

             (7)    Alkylation Propane

             (8)    Benzene

             (9)    Toluene

      19.3.  Tolling Agreement

TIER 2 RELATED AGREEMENTS

20.   Employee Transfer and Benefits Agreement

21.   Intellectual Property Rights Agreement

22.   Trademark Assignment Agreement

23.   Trademark License Agreement

24.   Tradename Licensing Agreement

25.   Software Agreement

26.   Terminal and Storage Agreement

27.   Mont Belvieu Storage and Pipeline Agreement

28.   Marketing Services Agreement , Aromatics

29.   Paraffinic Lubricants Base Oil Sales Agreement

30.   Naphthenic Lubricants, White Mineral Oils and Specialty Oils Sales 
      Agreement

31.   Lubricant Facility Operating Agreement

32.   Manufacturing Services Agreement

33.   Employee Services Agreement

34.   Administrative Services Agreement

35.   Product Sales Agreement MTBE , Lyondell and CITGO

36.   Refinery Office Lease

37.   Exchange Agreement

38.   Assignment and Assumption Agreement - CITGO and LCR (Lubricants)


                               Exhibit 1A, Page 3
<PAGE>   83
                                  EXHIBIT 6.4

<TABLE>
<CAPTION>
                                                                 CONVERSION
                                       CAPITAL                      DATE
                                     CONTRIBUTION               PARTICIPATION
                                                                 PERCENTAGES
<S>                                <C>                          <C>  
Lyondell LP                             784,315,812                  48.65

Lyondell GP                            162,828, 154                  10.10


                                    $   947,143,966                  58.75%
                                    ---------------              ---------

CITGO LP                                648,866,453                  40.25

CITGO GP                                 16,120,906                   1.00
                                    ---------------              ---------

                                    $   664,987,359                  41.25%
                                    ---------------              ---------

                                    $ 1,612,131,325                 100.00%
                                    ===============              =========
</TABLE>