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Hexion Specialty Chemicals and OAO Shchekinoazot Form Joint Venture To Produce Resins For Forest Products & Construction in Russia

May 16, 2007 at 12:00 AM EDT

COLUMBUS, Ohio(May 16, 2007) – Hexion Specialty Chemicals, one of the world's leading producers of thermoset resins, and OAO Shchekinoazot, a large Russian industrial chemicals producer, announced today they have formed a joint venture company to manufacture resins for the forest products and construction markets.  The announcement was made at the LIGNA Fair exhibition in Hannover, Germany.

The joint venture company, Hexion-Shchekinoazot, will produce a wide range of resin systems used in mineral wool insulation, plywood, medium density fiberboard and particleboard.  The company will construct a resin production facility in the Tula region of Russia, directly at the Shchekinoazot industrial site.  Production is planned to start by the end of this year.  Initially the new resins plant will produce phenol formaldehyde resins before expanding to include production of urea formaldehyde resins and other thermoset formaldehyde derivatives.  OAO Shchekinoazot will ensure a reliable and regular supply of raw materials for the new production site through its operating UFC plant and formalin plant.

The new resin plant to be constructed by the joint venture company is based on high efficiency and environmentally safe technology from Hexion.

“We are excited to partner with such a highly regarded organization as Shchekinoazot,” said Joseph Bevilaqua, President for Hexion's Phenolic & Forest Products Division.  “Hexion has significant expertise and experience in advanced resin technology. This combination with Shchekinoazot's production capabilities and successful position in the Russian marketplace will enable Hexion-Shchekinoazot to create value for customers.”

Boris Sokol, President of OAO Shchekinoazot, added, “Establishing this enterprise is the result of effective joint work by our two teams which have succeeded in mutual understanding in all the issues connected with realizing this project. It is very important for us that Shchekinoazot's partner in the joint venture is the global leader in resins production, active in research and development and constantly updating its technology.  Successful realization of our project will enable us to provide customers with the highest-quality products produced according to all environmental and safety requirements.”

Russia's tremendous forest resources make it likely to be one of the most dynamic forest products markets in the world over the next decade.  Development of mineral wool, furniture, construction materials and other production will create an increasing demand for synthetic resins. The Tula region's excellent transportation infrastructure and location to key markets in the center of Europe make it an excellent location to base Hexion-Shchekinoazot commercial activities, Bevilaqua and Sokol said.

“As a global leader in resin systems for the forest products industry, our goal continues to be to locate where we can efficiently serve our global customer base,” Bevilaqua added.  “Establishment of the joint venture company is a part of our ongoing strategy of providing advanced technology to customers in key markets around the world.”

About Hexion Specialty Chemicals, Inc.
Based in Columbus, Ohio (USA), Hexion Specialty Chemicals is the global leader in thermoset resins. Hexion serves the global wood and industrial markets through a broad range of thermoset technologies, specialty products and technical support for customers in a diverse range of applications and industries. Additional information is available at www.hexion.com.

About OAO Shchekinoazot 
Based in Pervomaysky Settlement, Tula Region, Russia, Shchekinoazot is a large producer of industrial chemicals such as methanol, caprolactam, hexamine, ammonium sulphate, ion-exchange membranes as well as household chemicals.  Additional information is available at http://n-azot.ru/.

Safe Harbor Language
Statements contained in this press release may include "forward-looking statements" about the Company's financial results under the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended. Forward-looking statements are based on our currently available financial, economic and competitive data and on business plans. Actual results could vary materially depending on risks and uncertainties that may affect the company's operations, markets, services, prices and other factors as discussed in our filings with the Securities and Exchange Commission. These risks and uncertainties include, but are not limited to, economic, competitive, legal, governmental and technological factors. There is no assurance that the company's expectations will be realized. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as otherwise required by law.

CONTACTS:
Peter Loscocco
VP, Public Affairs
614-225-4127
peter.loscocco@hexion.com

John Kompa
Director, Investor Relations
614-225-2223
john.kompa@hexionchem.com

Shchekinoazot Contact:
Yelena Kornilkova
Press Agent Shchekinoazot
8-910-701-67-74
himikazot@mail.ru