Keyuan Petrochemicals Inc. (otcqb:KEYP), ("Keyuan" or the "Company"), an independent manufacturer and supplier of various petrochemical products in China, today announced that it has signed a long-term supplier agreement with Shell Petrochemicals Company Limited ("CSPC"), a joint venture between CNOOC and Royal Dutch Shell Group, to purchase butadiene, an essential raw material used in the production of Styrene-Butadiene-Styrene (SBS).

This year (2012) will be the first full year of commercial SBS production. In the past twelve months, the price for butadiene has ranged between approximate $2,144/t and $5,083/t, with current prices at approximate $4,765/t. The one-year agreement with CSPC ensures Keyuan has adequate supply of butadiene to meet its 70,000-ton SBS production target in 2012.

"This agreement provides important stability for one of our new business units," explained Mr. Chunfeng Tao, Chairman and Chief Executive Officer of Keyuan Petrochemicals Inc. "We have secured an adequate supply from a trusted partner and at a reasonable cost. Having recently secured strong orders for SBS, we can now focus on optimizing our production for the remainder of 2012."

CSPC is a joint venture between CNOOC and Shell Nahai BV, a subsidiary of the Royal Dutch Shell Group. With its butadiene production facilities located in Huizhou, Guangdong Province and annual production capacity of 165,000 metric tons of butadiene, CSPC can conveniently ship materials directly to Keyuan's production plants in Ningbo.