Highlights:
       -- Fourth quarter net income of $65 million, or $0.67 per share;
            -- Full-year core product volumes up 16% versus 1996;
   -- Cost reduction program beginning to yield benefits in fourth quarter

    NEWTOWN SQUARE, Pa., Jan. 22 /PRNewswire/ -- ARCO Chemical Company
(NYSE: RCM) today reported results for the quarter and year ending
December 31, 1997.  Full year net income for 1997 was $111 million, or
$1.14 per share.  Included in the full year earnings was the previously
announced after-tax charge of $116 million, or $1.20 per share, for the
company's restructuring program and other actions.  Excluding this charge, net
income for 1997 was $227 million, or $2.34 per share, which compares to net
income of $348 million, or $3.60 per share for 1996.  The decline reflects
lower product margins, higher plant turnaround costs and higher foreign
exchange charges.
    Revenue for 1997 was $3,995 million compared with $3,955 million a year
ago.  Core product volumes rose 16% versus 1996.  Propylene oxide (PO)
derivatives accounted for over half of this increase.
    Fourth quarter net income was $65 million, or $0.67 per share, compared
with net income of $64 million, or $0.66 per share, for the fourth quarter of
1996.  Net income for the third quarter of 1997, excluding the one-time
charge, was $79 million, or $0.82 per share.  Revenue for the fourth quarter
of 1997 was $1,006 million, compared with $979 million for the same quarter a
year ago, and $1,004 million in the third quarter.
    "Compared to the third quarter, we saw seasonally lower MTBE margins and
higher turnaround expenses.  Also, in Asia, toward the end of the quarter, we
saw decreased demand for our products.  On the positive side, core product
volumes were up 4%, driven mainly by higher aircraft deicer sales.
Additionally, we are beginning to realize some early benefits of our cost
reduction program," said Alan R. Hirsig, president and chief executive
officer.
    Fourth quarter charges related to Asian bad debts and currency
devaluations were not significant.  Plant turnaround costs in the fourth
quarter were $13 million compared to $8 million in the third quarter.  The
company anticipates turnaround costs will be in the $20-22 million range in
1998, substantially lower than 1997 expenses of $45 million.
    Comparing fourth quarter 1997 with the same period last year, core product
volumes increased 16%.  The increase reflected strong demand for PO
derivatives, including polyols, butanediol and propylene glycol, and higher
TDI volumes due to the Olin acquisition.  Net income was essentially unchanged
as higher core product volumes and margins and lower SG&A expenses were offset
by a higher effective tax rate and higher turnaround costs.
    "While we did not meet all of our financial goals for the year, 1997 was
nonetheless a period of significant accomplishment for the company,"
Mr. Hirsig commented.  "We achieved worldwide growth in our core businesses,
while initiating an aggressive program to reduce costs, increase efficiency
and enhance profitability.  We moved forward with our focused capital program
with the award of engineering and construction contracts for our new PO plant
in Europe.  As we enter 1998 and look to the future, we are solidly positioned
to deliver superior value to our shareholders."
    ARCO Chemical Company is a leading worldwide manufacturer and marketer
of propylene oxide and derivatives and other intermediate chemicals.  Its
products are used in a wide range of consumer and industrial goods, including
automotive components, cushioning, paints and coatings, plastics, home
furnishings, engine coolants and reformulated gasoline.

    Except for historical facts, the matters discussed in this press release
concerning the company's outlook and business plans are forward-looking
statements.  Since these statements are based on certain assumptions and
involve risks and uncertainties, they are subject to change at any time.
Actual results could differ materially from expected results based on numerous
factors, including the level of product demand, the cost and availability of
raw materials, changes in the competitive environment, the achievement of cost
reductions and efficiencies, the timing and scope of technological advances,
the company's ability to complete construction projects on schedule, the
overall condition of the chemical industry and other risks detailed from time
to time in the company's filings with the Securities and Exchange Commission,
including the company's Report on Form 10-Q for the quarterly period ended
June 30, 1997.

                            ARCO CHEMICAL COMPANY
                           Selected Financial Data
                 (Millions of Dollars, except per share data)

                                     Three Months Ended   Twelve Months Ended
                                       December 31            December 31
                                                  (Unaudited)
                                       1997      1996       1997       1996
    Sales and other
     operating revenues              $1,006      $979      $3,995    $3,955
    Costs and other
     operating expenses                 819       794       3,230     3,067

    Gross profit                        187       185         765       888

    Selling, general and administrative
    expenses                             54        67         252       267
    Research and development             21        20          82        81
    Restructuring and other
     unusual items                       --        --         175        --

    Operating income                    112        98         256       540

    Interest expense                     19        21          80        86
    Other (income) expense, net (A)      (6)       (7)          8       (33)

    Income before income taxes           99        84         168       487
    Provision for income taxes           34        20          57       139

    NET INCOME                          $65       $64        $111      $348

    Earnings per share:
    Basic                              $.67      $.66       $1.14     $3.60
    Diluted                             .67       .66        1.14      3.59

    (A) Primarily foreign exchange gains and losses, interest income, and
         results from equity investments.

    Depreciation/amortization expense for the twelve months ended 12/31/97 and
12/31/96 was $229 million and $222 million, respectively.

                            ARCO CHEMICAL COMPANY
                           SALES VOLUME STATISTICS

                                     Three Months Ended    Twelve Months Ended
                                        December 31           December 31
                                       1997       1996      1997       1996
    Core Products (B)
     (mm lbs.)                        1,099       946       4,135     3,570

    Co-products:
      TBA and Derivatives               265       272       1,054     1,107
       (mm gals.)

    SM and Derivatives                  635       567       2,577     2,647
       (mm lbs.)

    (B) Core products include PO, PO derivatives, TDI and ADI.

    Visit the new Press Room on ARCO Chemical's website at
http://www.arcochem-news.com where you'll find our press releases, company
facts and figures, photo images, and more.  To receive a press release by fax,
call 800-758-5804; use code No. 062063 (US only).

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