Eastman Chemical Company (NYSE: EMN) today announced that it has entered into an alliance with Lurgi Oel Gas Chemie GMBH for the licensing of Eastman's proprietary terephthalic acid (PTA) technology. PTA is the primary intermediate used in the production of polyester for both containers and fibers.

The agreement provides Lurgi with a global exclusive for sub-licensing Eastman's PTA, building on Lurgi's widely acknowledged competence as an engineering, procurement, and construction company, and world class technology provider. Eastman will provide its leadership position in manufacturing and operational expertise to further the value of the technology and the relationship with Lurgi.

While not disclosing the terms or conditions of the agreement, Eastman will support Lurgi's efforts to offer and sub-license the technology throughout the polyester industry.

T.A. Smith, vice president and general manager of Eastman's container plastics business, said, "Consumer acceptance of PET for containers continues to grow at a fast pace. This growth, coupled with the large polyester base for fibers, provides an excellent opportunity to take advantage of Eastman's industry leadership position and our valuable PTA technology. Our global technology ventures group (the technology licensing arm of Eastman) has worked diligently to form a strong relationship with Lurgi, and to provide a very competitive offering for the market."

Michael Straetling, CEO of Lurgi Oel Gas Chemie GmbH, states, "The agreement with Eastman on PTA demonstrates Lurgi's commitment to be an engineering company with total solutions for prospective clients. We can do engineering, procurement, project execution, construction, as well as economic feasibility studies, the conceptual design, product handling, financing and after-sales service of a PTA plant along with the supporting technology license based on Eastman's process. Combined with our sister company, Lurgi Zimmer, we can now offer the total polyester solution starting with PTA, and ending with polyester."

Eastman, the world's largest producer of PET for packaging, has an annual PET capacity of 3.1 billion pounds. The company operates PTA manufacturing facilities in North America and Europe, and these plants are fully integrated to meet PET processing needs. Primary packaging applications for PET include carbonated soft drinks, water and food.

Lurgi is a German-based leading group of companies operating worldwide in the field of process engineering and plant contracting within the mg engineering division of mg technologies ag. The Lurgi companies design, supply and build turnkey plants or plant units for the most diverse applications.

Headquartered in Kingsport, Eastman manufactures and markets chemicals, plastics and fibers. The company employees approximately 15,000 people in more than 30 countries and had 1999 sales of $4.59 billion.