Fluid technologies for a better world™

Fluid Technologies For ABetter World™

Our Growth Plan

• We will create technologies to make the world a better place.

• We will invest in the development of high performance fluid technologies resulting in products that work better, last longer and benefit the environment.

Lubrizol at a Glance

• Business: A global, fluid technology company concentrating on high-performance chemicals, systems and services for industry and transportation.

• Founded: 1928 in Cleveland, Ohio USA

• World headquarters: Wickliffe, Ohio USA

• Employees: Approximately 4,000 worldwide

• Manufacturing Plants: 29 facilities in 15 countries

• Sales and Technical Service Offices: 46 worldwide

• Research Centers: Wickliffe, Ohio USA; Hazelwood, England U.K.; Kinuura, Japan

• Annual Sales: US$1.7 billion

$1,460 million $314 millionFuel Products

Specialty Fluids

Additives forEngine Oils

Performance Systems

Performance Chemicals

Industrial Fluids

6%

28%

66%

9%

36%

55%

Chemicals for Transportation

Chemicals &Systems for Industry

•Heavy-duty diesel • Passenger cars • Marine diesel • Stationary power • Small engines

Lubrizol Today(2000 Sales)

Emulsifiers/Surfactants

Friction Modifiers

Fluid Sensors

Fluid MeteringMonomers/

PolymersEmission Control

Dispersants

Rheology Control

Viscosity Modifiers

Surface Modifiers

Extreme Pressure Agents

Water-based Fluids

Anti-wear

Oxidation Control

Corrosion Protection

Mist Control

Combustion Modifiers

FluidTechnologies

Detergents

Lubrizol Technologies

Chemistry Systems

Focused on applications to:• Improve operating performance• Extend equipment life• Improve environmental impact

Services

Fluid Technology For A Better World

Ethical, trustworthy conduct

Loyal employees andcustomers

Can-do problem solving

Innovative technologies that result in significant benefits to our world

Our Vision Leverages Our Strengths

Expected Emission Requirements for 2007 :

NOx : 0.2 g/hp-hr

Particulates.: 0.01 g/hp-hr

Particulate, g/hp-hr

1988

1991

1994

1998

2002

NO x

, g/h

p-hr

0 0.1 0.70.60.50.40.30.20

2

12

10

8

6

4

1990

2007

HD EMISSION REQUIREMENTS

PuriNOx™

PuriNOx™ low-emission water-blend diesel fuel developed with support from Caterpillar

• Reduces emissions NOx 5-20% PM 20-50%

• Fill-n-go No equipment changes

• Provides quick, easy solution for EPA non-attainment regions

• Cost the same as conventional fuel

• Lower fuel economy by 12-13% but yields more output per unit of hydrocarbon

• Tax relief

Benefits Considerations

PuriNOx™

200 billion gallons worldwide

1/3 central fueled =

66 billion gallons

Worldwide Diesel Fuel Consumption

PuriNOx™

Global fleet testing under way - 16 fleets Durability testing completed Tax incentives in place in Italy, France and U.K. Ten blenders in place around the world by December 2000 Several major marketers have approached Lubrizol about possible alliances EPA certification filing under way Texas EPA proposed PuriNOx™ be mandated for nine counties

PuriNOx™ Progress

Fluid technologies for a better world™

PuriNOx IN USALatest DevelopmentsFebruary 2001

Market Update

• Caterpillar Engines & PuriNOx Fuel– Joint development began in 1997– Caterpillar undergoing field trials

Market Update

• CARB approval– Received 31 January 2001– Reduced NOx emissions by 14%– Reduced particulate matter emissions by

62.9%– No net increase in toxic emissions

Fluid technologies for a better world™

PuriNOx IN EUROPELatest DevelopmentsJanuary 2001

CONTENTS

• KEY ENVIRONMENTAL BENEFITS• EUROPEAN MARKET DEVELOPMENT

FOR EMULSION FUELS; Fiscal/Specification

• MARKET DEVELOPMENT PROCESS• UPDATE ON PuriNOx SUPPLY

POSITION

EUROPEAN MARKET SUMMARY FOR EMULSION FUELS• There is great variability in the level of market

development for emulsion fuels within Europe.• The degree of acceptance is different from

country to country as it is driven by national factors.

• The European Commission is supportive but passive - allowing member states to make national decisions.

PURINOX MARKET DEVELOPMENT PROCESSLubrizol

Fuel Supplier

End User Public Authority

Government

Additive, Equipment

Emulsion Fuel

Tax Incentive

Obligation, or Support

Cost-Benefit Data, Proof of Operability

Cost-Benefit Data

Proof of Operability,Comfort viz OEMs

STAGES OF MARKET DEVELOPMENTRepresentation; Emulsion Fuels

INTERMEDIATE

ADVANCED

EARLY

Each stage currently takes 12-18 months. This will decrease in countries adopting this technology later on.

STAGES OF MARKET DEVELOPMENTEarly Stage

• Characterised by;– Lack of established competitors. One ‘market

leader’.– Need for tests to prove emissions benefits under

local circumstances– No fiscal incentives. Fuel is more costly to user.– Interest from Public Authorities.– Opportunities only in ‘hotspots’ where environmental

improvement considerations outweigh fuel costs.

STAGES OF MARKET DEVELOPMENTIntermediate Stage

• Characterised by;– Some competition in market making activities.– Need for tests to prove operational

robustness in the field.– Agreement not to tax water. Fuel is marginally

more costly to user.– Support from Public Authorities.– Semi-commercial trials in ‘hotspots’.

STAGES OF MARKET DEVELOPMENTAdvanced Stage

• Characterised by;– Market established with competition.– Regular Field usage, creating wider awareness.– Tax incentives granted by Government to achieve cost

neutrality/ advantage.– Tax incentives based on a National Fuel Specification. – Roll out to other locations/ applications.– Further commercial trials in additional ‘hotspots’.– Most major fuel suppliers wanting an emulsion offering.

STAGES OF MARKET DEVELOPMENTCurrent Status of European Countries; Jan 2001

INTERMEDIATE ADVANCEDEARLY

Market Making Market Development Commercial Sales

UKSwitzerlandGermany

Sweden

France

Italy

Spain

Netherlands

NATIONAL DEVELOPMENTS; Fiscal/Specification• ITALY

– 36% less than diesel tax from 01/01/2001 (739 vs 474 ITL/litre)

– Based on Draft Fuel Specification of 12-15% m/m water.

• FRANCE– 32% less than diesel tax (161.80 FF vs 238.46 FF/100

litres)– Based on proposed EEG (Emulsion d’Eau et Gazole)

Specification (9-15% m/m water).

ITALIAN EMULSIONFUEL SPECIFICATION

SPECIFICATION

WATER IN FUEL EMULSION FOR ENGINE APPLICATIONS

min. max.

appearance milky

mass @ 15 °C 835 870

water content, % wt. 12 15

centrifuge stability (loss after 5 minutes @ 4200 rpm) % v/v - 9

viscosity @ 40 °C 2 7

sulphur, % wt. - 0.031

sulphated ash, % wt. - 0.01

sediments mg/kg 24

copper corrosion (3 hrs @ 50 °C) 1

flash point °C (D92) 55 -

alkilnitrate, mg/kg 750 2500

lubricity, µ - 460

CFPP, °C winter - -10 summer - zero

NOTES

addition of antifreeze is allowed for the winter version on top of the water emulsion must be used within 4 months from delivery de-ionized water must be used (conducibility max. 30 microsiemens/m) additives must not contain fluorine, chlorine, metals

NATIONAL DEVELOPMENTS; Fiscal/Specification• SWITZERLAND

– Government agreement not to tax water or additives.

• UK– Government agreement not to tax water

(effective since 01/08/2000).• NETHERLANDS

– Government agreement not to tax water

NEW ENGINE DATA FOR PuriNOx

• Perkins 1000 series engine testing:– European Transient Cycle (ETC)– Off-Highway Certification Cycle ISO

8178– R24

ETC; Data on emulsion fuels compared to ULSD - Perkins 1000 series engine (g/kW-hr)

0

1234567

89

g/kW

-hr

ULSD 8.306 0.207

PuriNOx 10E 7.143 0.176

PuriNOx 20E 6.091 0.158

NOx PM

- 14

- 27

- 15 - 24

ISO 8178; Data on emulsion fuels compared to ULSD - Perkins 1000 series engine (g/kW-hr)

0

1

2

3

4

5

6

7

8

g/kW

-hr

ULSD 7.229 0.235

PuriNOx 10E 6.474 0.174

PuriNOx 20E 5.731 0.143

NOx PM

- 10- 21

- 26 - 39

R24; Data on emulsion fuels compared to ULSD - Perkins 1000 series engine

0

50

100

150

200

250

300

350

400

ULSD 70.8 373.3

PuriNOx 10E 65.9 336.8

PuriNOx 20E 61.4 297.5

Rated Power Pk Torque

- 6.9 - 13.3

- 9.8- 20

R24; Data on emulsion fuels compared to ULSD - Perkins 1000 series engine

0

0.20.40.60.8

1

1.21.4

1.61.8

ULSD 1.2 1.7

PuriNOx 10E 0.6 0.6

PuriNOx 20E 0.3 0.3

Smoke (2200rpm) Smoke (1400rpm)

- 50

- 78

- 64

- 81

ILLUSTRATION OF CO2 REDUCTION BENEFITExample for Purinox 10E (10% m/m Water)

1.00 kg Diesel

1.11 kg Purinox 10E

1.00 kg Purinox 10E

1.00 km

1.03 km

0.93 km

KEY ENVIRONMENTAL BENEFITS• For Emulsion Fuel containing X% m/m H20;

– Smoke Reduction = 4X-5X % i.e. 50-80%– Particulate Reduction = 2X %– NOx Reduction = X %– Power Loss = 0.7X-0.8X %– Fuel Consumption Increase = 0.7X-0.8X %

• Reduction in Formaldehyde/Ozone forming HC species of 20-40%

• CO2 Reduction = 2-6%

UPDATE ON PuriNOx SUPPLY POSITIONManufacturing Units• 2 alternative PuriNOx batch manufacturing

units are commercially available;– Large Scale Fuel Production Unit (40 M

litres/yr)– Intermediate Scale Fuel Production Unit

(10 M litres/yr)• A continuous PuriNOx manufacturing unit

is under development.

UPDATE ON PuriNOx SUPPLY POSITIONOperational Experience

• Europe; 2 Fuel Blending Units in commercial operation at Bromborough, UK and Italy. 4 more being manufactured.

• USA; 3 Fuel Blending Units running commercially. 4 more in manufacture/installation.

Our Future is Full of Promise