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                                                                   EXHIBIT 10.16

                            LYONDELL CHEMICAL COMPANY
                          1999 LONG-TERM INCENTIVE PLAN

               (As Amended and Restated Effective January 1, 2001)

          1. Objectives. This Lyondell Chemical Company 1999 Incentive Plan (the
"Plan") is intended to:

     .    Focus Participants on key measures of value creation for the Company's
          shareholders
     .    Provide significant upside and downside award potential commensurate
          with shareholder value creation
     .    Encourage a long-term management perspective and reward for sustained
          long-term performance
     .    Enhance the ability of Lyondell to attract and retain highly talented
          and competent individuals
     .    Reinforce a team orientation among top management
     .    Encourage ownership of the Company's stock among top management

          2.   Definitions. As used herein, the terms set forth below shall have
the following respective meanings:

               "Award" means any Option, Performance Shares, Restricted Stock,
Phantom Stock, Cash Award or Stock Appreciation Right, whether granted singly,
in combination or in tandem, granted to a Participant pursuant to any applicable
terms, conditions and limitations as the Committee may establish in order to
fulfill the objectives of the Plan.

               "Award Agreement" means an agreement in the form prescribed by
the Committee that sets forth the terms, conditions and limitations applicable
to an Award.

               "Board" means the Board of Directors of the Company.

               "Cash Award" means an award payable in cash.

               "Code" means the United States Internal Revenue Code of 1986, as
amended from time to time.

               "Common Stock" means the common stock, par value $1.00 per share,
of the Company.

               "Committee" means the Compensation Committee of the Board or any
person or persons appointed by the Board to administer the Plan.

               "Company" means Lyondell Chemical Company.

               "Effective Date" means January 1, 2001, the effective date of the
restatement of the Plan.

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               "Employee" means an individual employed by the Company or a
Subsidiary.

               "Exercise Price" means the price at which the Option Shares may
be purchased under the terms of the Award Agreement.

               "Fair Market Value" of a share of Common Stock means, as of a
particular date, (i) if shares of Common Stock are listed on a national
securities exchange, the closing price per share of Common Stock reported on the
consolidated transaction reporting system for the principal national securities
exchange on which shares of Common Stock are listed on that date, or, if there
shall have been no such sale so reported on that date, on the last preceding
date on which such a sale was so reported, (ii) if shares of Common Stock are
not so listed but are quoted on the Nasdaq National Market, the closing price
per share of Common Stock reported by the Nasdaq National Market on that date,
or, if there shall have been no such sale so reported on that date, on the last
preceding date on which such a sale was so reported, (iii) if the Common Stock
is not so listed or quoted, the mean between the closing bid and asked price on
that date, or, if there are no quotations available for such date, on the last
preceding date on which such quotations are available, as reported by the Nasdaq
Stock Market, or, if not reported by the Nasdaq Stock Market, by the National
Quotation Bureau Incorporated or (iv) if shares of Common Stock are not publicly
traded, the most recent value determined by an independent appraiser appointed
by the Company for such purpose.

               "Grant Date" means the date on which an Award is granted by the
Committee.

               "Option" means a right to purchase a particular number of shares
of Common Stock at a particular Exercise Price, subject to certain terms and
conditions as provided in the Plan and Award Agreement.

               "Option Shares" means the shares of Common Stock covered by a
particular Option.

               "Participant" means an Employee to whom an Award has been granted
under this Plan.

               "Performance-Based Award" means an Award that is paid, vested or
otherwise deliverable solely based on the achievement of one or more Performance
Goals as provided in Section 6(a).

               "Performance Goal" means a standard established by the Committee
to determine in whole or in part whether Performance-Based Awards shall be
earned.

               "Performance Shares" means the contingent right to receive an
amount in cash or Common Stock, as determined by the Committee in its sole
discretion, that is subject to the attainment of one or more Performance Goals.

               "Phantom Stock" means a right to receive the value of a specified
number of shares of Common Stock.

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               "Plan" means the Lyondell Chemical Company 1999 Long-Term
Incentive Plan, as amended from time to time.

               "Restricted Stock" means shares of Common Stock that are
restricted or subject to forfeiture provisions.

               "Stock Appreciation Rights" or "SARs" means the right to receive
an amount in cash or Common Stock equal to the appreciation in value of a
specified number of shares of Common Stock over a particular period of time.

               "Subsidiary" means (i) any corporation, limited liability company
or similar entity of which the Company directly or indirectly owns equity
interests representing more than 50% of the voting power of all classes equity
interests of such entity which have the right to vote generally on matters
submitted to a vote of the equity holders of such entity, (ii) Equistar
Chemicals, LP or LYONDELL-CITGO Refining, LP so long as the Company maintains an
equity ownership interest equal to at least 25% in such entities, or (iii) any
other entity in which the Company has an equity ownership interest of at least
25%, so long as such entity is designated by the Committee as a Subsidiary for
purposes of this Plan; provided, however, that with respect to Options intended
to qualify as incentive stock options within the meaning of Section 422 of the
Code, "Subsidiary" shall have the meaning set forth in Section 424(f) of the
Code or any successor provision.

          3.   Plan Administration and Designation of Participants.

               (a) Eligibility. All Employees of the Company and its
Subsidiaries who, in the judgment of the Committee, are in a position to
contribute significantly to its long-term profit and growth objectives are
eligible for Awards under this Plan. The Committee shall select the Participants
from time to time by the grant of Awards under the Plan and, subject to the
terms and conditions of the Plan, shall determine all terms and conditions of
the Award.

               (b) Administration. The Plan shall be administered by the
Committee, which shall have full and exclusive power to interpret this Plan and
to adopt such rules, regulations and guidelines for carrying out this Plan as it
may deem necessary or appropriate. The Committee may delegate its duties
hereunder to the Chief Executive Officer or other senior officers of the Company
subject to such rules and regulations as the Committee establishes. The
Committee may, in its discretion, retain the services of an outside
administrator for the purpose of performing any of its functions hereunder. The
Committee may, in its discretion, provide for the extension of the
exercisability of an Award, accelerate the vesting or exercisability of an
Award, eliminate or make less restrictive any restrictions contained in an Award
Agreement, waive any restriction or other provision of this Plan or an Award
Agreement or otherwise amend or modify an Award in any manner that is either (i)
not adverse to the Participant holding the Award or (ii) consented to by such
Participant. The Committee may grant an Award to an individual whom it expects
to become an Employee of the Company or any of its Subsidiaries within the
following six months, with such Award being subject to the individual's actually
becoming an Employee within such time period, and subject to such other terms
and conditions as may be established by the Committee. The Committee may correct
any defect or supply any omission or reconcile any inconsistency in this Plan or
in any Award Agreement in the manner and to the

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extent the Committee deems necessary or desirable to further the Plan purposes.
Any decision of the Committee in the interpretation and administration of this
Plan shall lie within its sole and absolute discretion and shall be final,
conclusive and binding on all parties concerned.

               No member of the Committee and no officer of the Company to whom
the Committee has delegated authority in accordance with this Plan shall be
liable for anything done or omitted to be done by him or her in connection with
the performance of any duties under this Plan, except for his or her own willful
misconduct or as expressly provided by statute.

          4.   Award Agreement. Each Award granted hereunder, other than a Cash
Award, shall be described in an Award Agreement, which shall be subject to the
terms and conditions of the Plan. The Committee shall authorize written
guidelines for the issuance of a Cash Award.

          5.   Shares of Common Stock Available for Awards. Subject to the
provisions of Section 11 hereof, no Award shall be granted if it shall result in
the aggregate number of shares of Common Stock issued under the Plan plus the
number of shares of Common Stock covered by or subject to Awards then
outstanding (after giving effect to the grant of the Award in question) to
exceed the lesser of 10 million or 10% of the number of shares of Common Stock
outstanding at the time of granting such Award. No Participant may be granted,
during the term of the Plan, Options covering or relating to more than 2,000,000
shares of Common Stock. No Participant may be granted, during the term of the
Plan, Awards in the form of Performance Shares, Restricted Stock, Stock
Appreciation Rights or Phantom Stock covering or relating to more than 1,000,000
shares of Common Stock. No more than 2,500,000 shares of Common Stock shall be
available for Awards in the form of Performance Shares, Restricted Stock, Stock
Appreciation Rights or Phantom Stock. No Participant may be granted Cash Awards
in respect of any calendar year having a value in excess of $2,000,000. No more
than 1,000,000 shares of Common Stock shall be available for Incentive Stock
Options. The number of shares of Common Stock that are the subject of Awards
under this Plan that are forfeited or terminated, expire unexercised, are
settled in cash in lieu of Common Stock or in a manner such that all or some of
the shares covered by an Award are not issued to a Participant or are exchanged
for Awards that do not involve Common Stock, shall again immediately become
available for Awards hereunder. The Committee may from time to time adopt and
observe such procedures concerning the counting of shares against the Plan
maximum as it may deem appropriate. The Board and the appropriate officers of
the Company shall from time to time take whatever actions are necessary to file
any required documents with governmental authorities, stock exchanges and
transaction reporting systems to ensure that shares of Common Stock are
available for issuance pursuant to Awards.

          6.   Types of Awards.

               (a) Performance-Based Awards. Without limiting the type or number
of Awards that may be made under the other provisions of this Plan, an Award may
be in the form of a Performance-Based Award. Performance-Based Awards are Awards
that shall be paid, vested or otherwise deliverable solely on account of the
attainment of one or more pre-established, objective Performance Goals
established by the Committee prior to the earlier to occur of (x) 90 days after
the commencement of the period of service to which the Performance Goal relates
and (y) the lapse of 25% of the period of service (as scheduled in good faith at
the

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time the goal is established), and in any event while the outcome is
substantially uncertain. A Performance Goal is objective if a third party having
knowledge of the relevant facts could determine whether the goal is met. Such a
Performance Goal may be based on one or more business criteria that apply to the
Employee, one or more business units of the Company, or the Company as a whole,
and may include one or more of the following: economic value, economic value
added, increased revenue, net income, stock price, market share, earnings per
share, return on equity, return on assets, decrease in costs, shareholder value,
net cash flow, total shareholder return, return on capital, return on investors'
capital, operating income, funds from operations, cash flow, cash from
operations, after-tax operating income, and total market value. Prior to the
payment of any compensation based on the achievement of Performance Goals, the
Committee must certify in writing that applicable Performance Goals and any of
the material terms thereof were, in fact, satisfied. In interpreting Plan
provisions applicable to Performance Goals and Performance-Based Awards, it is
the intent of the Plan to conform with the standards of Section 162(m) of the
Code and Treasury Regulation Section 1.162-27(e)(2)(i), and the Committee in
establishing such goals and interpreting the Plan shall be guided by such
provisions. A Performance-Based Award may include Performance Shares, Options,
Restricted Stock, Stock Appreciation Rights, Cash Awards or Phantom Stock.

               (b) Options. Options granted to Employees hereunder may be either
incentive stock options within the meaning of Section 422 of the Code or
nonqualified options within the meaning of Section 83 of the Code. The Exercise
Price of an Option shall not be less than the Fair Market Value of a share of
Common Stock on the Grant Date of the Option and shall not be less than the Fair
Market Value of a share of Common Stock on the Grant Date of any outstanding
Option that is relinquished in connection with a grant of a new Option. The
terms, conditions and limitations applicable to Options awarded to Employees
shall be determined by the Committee.

               (c) Performance Shares. An Award may be in the form of
Performance Shares. Performance Shares shall be payable, in the sole discretion
of the Committee in cash, shares of Common Stock, or any combination thereof.
The terms, conditions and limitations applicable to an Award of Performance
Shares shall be determined by the Committee.

               (d) Restricted Stock. An Award may be in the form of shares of
Common Stock or Restricted Stock. The terms, conditions, and limitations
applicable to any Award of shares of Common Stock or Restricted Stock pursuant
to this Plan shall be determined by the Committee.

               (e) Phantom Stock. An Award may be in the form of Phantom Stock,
or other bookkeeping account tied to the value of shares of Common Stock. The
terms, conditions, and limitations applicable to any Awards of Phantom Stock
shall be determined by the Committee.

               (f) Stock Appreciation Rights. An Award may be in the form of
SARs. The exercise price of an SAR shall not be less than the Fair Market Value
of a share of Common Stock on the Grant Date. The terms, conditions, and
limitations applicable to any Awards of SARs shall be determined by the
Committee.

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               (g) Cash Awards. An Award may be in the form of a Cash Award. The
terms, conditions and limitations applicable to any Cash Awards shall be
determined by the Committee.

          7.   Payment of Awards.

               (a) General. Payment of Awards may be made in the form of cash or
Common Stock or combinations thereof and may include such restrictions as the
Committee shall determine including, in the case of Common Stock, restrictions
on transfer and forfeiture provisions.

               (b) Deferral. The Committee may, in its discretion, (i) permit
selected Participants to elect to defer payments of some or all types of Awards
in accordance with procedures established by the Committee or (ii) provide for
the deferral of an Award in an Award Agreement or otherwise. Any such deferral
may be in the form of installment payments or a future lump sum payment. Any
deferred payment, whether elected by the Participant or specified by the Award
Agreement or by the Committee, may be forfeited if and to the extent that the
Award Agreement so provides.

               (c) Dividends and Interest. Dividends or dividend equivalent
rights may be extended to and made part of any Award denominated in Common Stock
or units of Common Stock, subject to such terms, conditions and restrictions as
the Committee may establish. The Committee may also establish rules and
procedures for the crediting of interest on deferred cash payments and dividend
equivalents for deferred payment denominated in Common Stock or units of Common
Stock.

               (d) Substitution of Awards. At the discretion of the Committee, a
Participant may be offered an election to substitute an Award for another Award
or Awards of the same or different type.

          8.   Stock Option Exercise. The price at which shares of Common Stock
may be purchased under an Option shall be paid in full at the time of exercise
in cash or, if permitted by the Committee, by means of tendering Common Stock or
surrendering all or part of that or any other Award, including Restricted Stock,
valued at Fair Market Value on the date of exercise, or any combination thereof.
The Committee shall determine acceptable methods for tendering Common Stock or
Awards to exercise an Option as it deems appropriate. The Committee may provide
for procedures to permit the exercise or purchase of Awards by use of the
proceeds to be received from the sale of Common Stock issuable pursuant to an
Award. Unless otherwise provided in the applicable Award Agreement, in the event
shares of Restricted Stock are tendered as consideration for the exercise of an
Option, a number of the shares issued upon the exercise of the Option, equal to
the number of shares of Restricted Stock used as consideration therefor, shall
be subject to the same restrictions as the Restricted Stock so submitted as well
as any additional restrictions that may be imposed by the Committee.

          9.   Termination of Employment. Upon the termination of employment by
a Participant, any unexercised, deferred or unpaid Awards shall be treated as
provided in the specific Award Agreement evidencing the Award. Unless otherwise
specifically provided in the

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Award Agreement, each Award granted pursuant to this Plan which is an Option
shall immediately terminate to the extent the Option is not vested (or does not
become vested as a result of such termination of employment) on the date the
Participant terminates employment with the Company or its Subsidiaries.

          10.  Assignability. Except as otherwise provided herein, no Award
granted under this Plan shall be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated by a Participant other than by marital
property settlement or similar domestic relations agreement, decree or order, or
by will or the laws of descent and distribution, and during the lifetime of a
Participant, any Award shall be exercisable only by him, or, in the case of a
Participant who is mentally incapacitated, the Award shall be exercisable by his
guardian or legal representative. The Committee may prescribe and include in
applicable Award Agreements other restrictions on transfer. Any attempted
assignment or transfer in violation of this Section shall be null and void. Upon
the Participant's death, the personal representative or other person entitled to
succeed to the rights of the Participant (the "Successor Participant") may
exercise such rights. A Successor Participant must furnish proof satisfactory to
the Company of his or her right to exercise the Award under the Participant's
will or under the applicable laws of descent and distribution.

               Subject to approval by the Committee in its sole discretion, all
or a portion of the Awards granted to a Participant under the Plan may be
transferable by the Participant, to the extent and only to the extent specified
in such approval, to (i) the children or grandchildren of the Participant
("Immediate Family Members"), (ii) a trust or trusts for the exclusive benefit
of such Immediate Family Members ("Immediate Family Member Trusts"), or (iii) a
partnership or partnerships in which such Immediate Family Members have at least
ninety-nine percent (99%) of the equity, profit and loss interests ("Immediate
Family Member Partnerships"); provided that the Award Agreement pursuant to
which such Awards are granted (or an amendment thereto) must expressly provide
for transferability in a manner consistent with this Section. Subsequent
transfers of transferred Awards shall be prohibited except by will or the laws
of descent and distribution, unless such transfers are made to the original
Participant or a person to whom the original Participant could have made a
transfer in the manner described herein. No transfer shall be effective unless
and until written notice of such transfer is provided to the Committee, in the
form and manner prescribed by the Committee. Following transfer, any such Awards
shall continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, and, except as otherwise provided herein, the
term "Participant" shall be deemed to refer to the transferee. The consequences
of termination of employment shall continue to be applied with respect to the
original Participant, following which the Awards shall be exercisable by the
transferee only to the extent and for the periods specified in this Plan and the
Award Agreement.

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          11.  Adjustments.

               (a) The existence of outstanding Awards shall not affect in any
manner the right or power of the Company or its partners to make or authorize
any or all adjustments, recapitalization, reorganizations or other changes in
the ownership of the Company or its business or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock (whether or not such issue is prior to, on a parity with or junior to the
Common Stock) or other obligations, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other Company act or proceeding of any kind, whether or not of a
character similar to that of the acts or proceedings enumerated above.

               (b) In the event of any Common Stock distribution or split,
recapitalization, extraordinary distribution, merger, consolidation, combination
or exchange of shares of Common Stock or similar change or upon the occurrence
of any other event that the Committee, in its sole discretion, deems
appropriate, the (i) the number of shares of Common Stock reserved under this
Plan and covered by outstanding Awards and related Incentive Stock Option award
limitation; (ii) the Exercise Price in respect of such Awards; and (iii) the
appropriate Fair Market Value and other price determinations for such Awards
shall be adjusted as appropriate.

               (c) In the event of a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation
(such event hereinafter referred to as a "Transaction"), the Board shall be
authorized (i) to issue or assume Awards by means of substitution of new Awards,
as appropriate, for previously issued Awards or to assume previously issued
Awards as part of such adjustment, (ii) to make provision, prior to the
transaction, for the acceleration of the vesting and exercisability of, or lapse
of restrictions with respect to, Awards or (iii) in the event of a Transaction
of which the Company is not the surviving corporation, to (A) cancel Awards that
are Options or SARs and give the Participants who are the holders of such Awards
notice and opportunity to exercise for 30 days prior to such cancellation or (B)
settle an Award that is an Option or SAR by a cash payment equal to the
difference between the Fair Market Value per share of Common Stock on the date
of the Transaction and the Exercise Price of the Award, multiplied by the number
of shares subject to the Award.

          12.  Purchase for Investment. Unless the Awards and shares of Common
Stock covered by this Plan have been registered under the Securities Act of
1933, as amended, each person receiving shares of Common Stock pursuant to an
Award under this Plan may be required by the Company to give a representation in
writing in form and substance satisfactory to the Company to the effect that he
is acquiring such shares for his own account for investment and not with a view
to, or for sale in connection with, the distribution of such shares or any part
thereof.

          13.  Tax Withholding. The Company shall have the right to deduct
applicable taxes from any Award payment and withhold, at the time of delivery or
vesting of cash or shares of Common Stock under this Plan, an appropriate amount
of cash or number of shares of Common Stock or a combination thereof for payment
of taxes required by law or to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for withholding of

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such taxes. The Committee may also permit withholding to be satisfied by the
transfer to the Company of shares of Common Stock theretofore owned by the
holder of the Award with respect to which withholding is required. If shares of
Common Stock are used to satisfy tax withholding, such shares shall be valued
based on the Fair Market Value when the tax withholding is required to be made.

          14.  Amendments or Termination. The Committee may amend, alter or
discontinue this Plan, except that no amendment or alteration that would impair
the rights of any Participant under any Award that he has been granted shall be
made without his consent, and no amendment or alteration shall be effective
prior to approval by the Company's shareholders to the extent such approval is
determined by the Committee to be required by applicable laws, regulations or
exchange requirements. No Awards shall be granted more than ten years after the
Effective Date.

          15.  Restrictions. No shares of Common Stock or other form of payment
shall be issued with respect to any Award unless the Company shall be satisfied
based on the advice of its counsel that such issuance will be in compliance with
applicable federal and state securities laws. The Award Agreement may include
provisions for the repurchase by the Company of Common Stock acquired pursuant
to an Award and repurchase of the Participant's Option rights.

          16.  Unfunded Plan. Insofar as it provides for Awards of cash, Common
Stock or rights thereto, this Plan shall be unfunded. Although bookkeeping
accounts may be established with respect to Participants who are entitled to
cash, Common Stock or rights thereto under this Plan, any such accounts shall be
used merely as a bookkeeping convenience. The Company shall not be required to
segregate any assets that may at any time be represented by cash, Common Stock
or rights thereto, nor shall this Plan be construed as providing for such
segregation, nor shall the Company, the Board or the Committee be deemed to be a
trustee of any cash, Common Stock or rights thereto to be granted under this
Plan. Any liability or obligation of the Company to any Participant with respect
to a grant of cash, Common Stock or rights thereto under this Plan shall be
based solely upon any contractual obligations that may be created by this Plan
and any Award Agreement, and no such liability or obligation of the Company
shall be deemed to be secured by any pledge or other encumbrance on any property
of the Company. None of the Company, the Board, the Committee or a Subsidiary
shall be required to give any security or bond for the performance of any
obligation that may be created by this Plan.

          17.  Miscellaneous. The granting of any Award shall not impose upon
the Company any obligation to maintain any Participant as an Employee and shall
not diminish the power of the Company to discharge any Participant at any time.

          18.  Governing Law. This Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by mandatory
provisions of the Code or the securities laws of the United States, shall be
governed by and construed in accordance with the laws of the State of Texas.

          19.  Effective Date of Plan. This Plan was originally effective
January 1, 1999 and was approved by the shareholders of the Company in May 1999.
This Plan was amended and restated as of the Effective Date.

                                                       LYONDELL CHEMICAL COMPANY

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