AgipPetroli Example

1. AgipPetroli Example Six Week Study: Supply Chain Diagnostic Architecture

2. Presentation Outline • Introductions • Our Understanding of Your Requirements & Scope • Creating Value in the AgipPetroli Downstream Supply Chain • Trading Perspective & Supply Chain Complexities • PwC Downstream Supply Chain Assignments & Route Map • Work Plan, Timeline, Deliverables and Project Organization • Summary & Next Steps • PWC Consulting Capabilities (from Bill Noon) • Relevant Citations • Representative Resumes

3. Our Understanding of Your Requirements& Project Objectives • AgipPetroli’s goal is to optimise the technology supporting the work processes in supply chain planning. • In the first phase, AgipPetroli requires assistance in evaluating its supporting system architecture for its supply operation to select an Advanced Planning & Scheduling (APS) software and IT architecture to optimise related supply processes. • This project phase includes the following: • Assessment of AS IS in terms of Supply Management needs and how effective the "Dorsale Supply" solution is in meeting the needs • Definition of TO BE state in terms of processes, organisation and systems architecture to support the supply organisation • Recommend an APS solution thereby assessing available software packages across the supply chain, based upon the defined needs and the assumption that part of your tailormade “Dorsale Supply” software could be used • Understand the current and map the future IT architecture, interfaces and support organisation with special attention to the SAP IS-Oil links

4. Project Scope The circled process areas constitute Agip Petroli’s Bulk Supply Chain • In scope • All processes from crude supply to the terminal - supply/demand balancing, refinery scheduling, primary distribution, demand forecasting, crude planning • Demand and inventory information at terminal level i.e. a consolidated demand by grade • Fuels business incl. marine, consumer, commercial, aviation • Out of scope • Secondary distribution, order fulfilment • Customer forecasting • Lubricants and chemicals (they will be treated as customers, and therefore forecast will be consolidated at relevant point in the supply network) Secondary Transport Wholesale Crude Acquisition Crude Transport Primary Transport Refining Terminals Retail

5. Achieving Supply Chain Value Steps to achieve value: • Start from AgipPetroli Supply Management needs • Assess what problem are we trying to solve • Evaluate the trading impact on planning • Consider the business peculiarities with main impact on software solution • Deliver Systems Architecture - - - integrated with process and organization

6. AgipPetroli Supply Management Needs • As we understand it Agip Petroli is faced with the following challenges: • Refining capacity surplus • Due to the government promotion of Italy as an export center with large, complex refineries along the Mediterranean coast, the country now has low throughputs and utilization rates. • Price volatility • Price volatility means that refinery margins are no longer easily predictable. Refinery managers are driven to improve yields and cut operating expenses. • Over half of the domestic demand is met by imported oil • Potential high capital expenditures to comply with environmental legislation • Government controls refining and marketing sector • Price controls have driven out competition from major oil companies. • The restrictions governing filling stations limit the ability to close inefficient sites leading to high operating cost.

7. AgipPetroli Supply Management Needs Refineries statistics: • Livorno, 84,000 b/cd – the main plant for the production of lube bases • Sannazzaro, 200,000 b/cd – supplies light products to geographic markets and markets in Switzerland, Austria and Bavaria • Venice-Porto Marghera, 80,000 b/cd - supplies light products to geographic markets • Taranto, 84,000 b/cd – supplies gasoline and other light products to geographic markets • Gela, 105,000 b/cd - refines heavy crude oil coming from local ENI wells and production of no-lead gasoline • Priolo, 220,000 b/cd - refines parafcinic crudes for feedstock to ENI's integrated petrochemical plants. Includes production of high quality no-lead gasoline We believe AgipPetroli’s supply has three distinct networks

8. To Create Value from your Supply Chain, you need to Determine…. What problem are we trying to solve? Problem Level Volatility drives decision making - Our SCM Services “Optimize all networks” 1 Maximize potential of one individual network 2 Integration drivesdecision making - Our Refinery Services “Make Things Happen Right Every Day” inside each operating unit of an individual network 3

9. How Important is a Trading Perspective? A simplified view may not tell the whole downstream supply chain story Units: Kbcd Spot Sales (30) Term Sales (10) Intermediates (20) Spot Sales (30) Exchange Deliveries (20) Equity Production (60) Discretionary Demand (40) 100 100 110 100 Term Purchase (20) Refinery Scheduling Terminals Customers Crude Supply Base Demand (60) Spot Purchase (50) Spot Purchase (30) Term Purchase (10) Feedstocks (20) Exchange Receipts (20) In a 100 kbcd refinery system, supply & trading can control an additional 240 kbcd of throughput transactions to effectively meet customer demand

10. Supply Chain Complexities Impact APS Software When considering APS software solutions in the downstream supply chain, there are significant complexities not faced by other industries... • Must understand & manage volatility • Find ways to manage, not just reduce inventories • Move towards a “demand-pull”, rather than “supply-push” mindset • Take into account trading/exchange opportunities at all points in the supply chain • Routinely quantify price/demand elasticity • Manage margin complexities • Accurately model co-joint production in refineries

11. PwC Downstream Supply Chain Assignments Distribution Customers Supply & Trading Refining & Mtg. • Koch Refining (ISC) Scheduling & PlanningPerformance • Indian Oil (ISC) SC & Refinery Optimization • NZ Refining (ISC) SC &Refining Optimization • Shell LOBP Performance Improvement • Burmah Castrol (ISC) Strategy and process harmonization • Oil Monitor • Star Enterprise (ISC) Crude selection and revenue improvement • Equiva World Class Deal • STASCO Mid and Back Office BPR • Koch Industries (ISC) • BP- OTI BPR • Nynas (ISC) Asset Optimization & Distribution Strategy • Chevron Pipeline Analytics • Shell SEOP Process Harmonization/ Ops Review, SC Clustering Process Improvement • MOL/Slovnaft (ISC) Supply Chain Planning and APS system selection • Shell- CCA Customer Service Centers • SEOP Customer Service Center Process & Op Design • Shell Middle East Marketing & Sales Planning • ManagementHorizon Convenience Stores • TOTAL Merchandising Technology (ISC) = Integrated Supply Chain

12. Route Map for your Target System Definition Envision TO-BE Processes & Rules Define Target System Evaluate AS IS Set up and initiate project Cross functional work sessions to design TO BE Level 2 processes, organization, system features & architecture • Define models for: • Supply sourcing • Refinery networks • Distribution • constraints • Define • system features • process details • people requirements Define target system environment • Evaluate • processes • IT-architecture • decision rules • physical capabilities • market/supply issues Recommend Best Software Option OPTION: Performance measures and methods AGIP vs SCM best practices & external research options Develop next stage work and timing Assess other AGIP IT initiatives Assess adequacy of current systems Assess IT Interfaces & support organization • Implement effective communications • Build employee commitment Manage organisation & people development • Assess change barriers • Manage conflicting agendas

13. Project Work Plan - Timeline Based on similar projects we propose the following sequence of activities... Activity Wk 1 Wk 2 Wk 3 Wk 4 Wk 5 Wk6 Wk7 Project Kick-Off Step 1 - Evaluate AS IS Systems and Processes Step 2 - Envision TO BE Processes Step 3 - Define Target Systems Architecture • Recommend Sys. Arch. and Next Stages Sharing • Implementation Initiatives

14. Typical Deliverables & Work Products • Deliverable: Categorized business drivers along the AgipPetroli supply chain • Deliverable: Catalogue of key AgipPetroli systems, data structures and key issues as they relate to SCM or APS options. • Work Product: Summary of applicable best practices and "To-Be" key performance measures • Work Product: Summary of Level 2 "to be" processes, including current & proposed owners. • Deliverable: Target system environment: Key features, Data requirements, Reporting requirements, Interface needs, etc... • Deliverable: Final management presentation Approach, Findings, PwC recommendation,What's next

15. Project Organization Executive SponsorAgip Petroli TBN Active full-time participation required with Agip Petroli personnel to meet project schedule SteeringCommittee Project Management Agip Petroli TBN Guido Massari (PWC) Process TeamAgip Petroli TBN Thomas Vrba (PwC) IT-System Team Agip Petroli TBN Maurizio Lorettu (PwC) To be Nominated: PwC Global Subject Matter ExpertsIntegrated Supply Chain, Refinery Planning, SAP-ISOil

16. Preliminary Project Staffing Core Team Project Management - Guido Massari, Director Supply Chain Process Expert - Thomas Vrba, Principal Consultant IT-System Expert - Maurizio Lorettu, Principal Consultant Representative Subject Matter Experts Supply and Trading Expert - Marty Stetzer, Director Integrated Supply Chain Expert - Bill Noon, Director; Eirik Albrigtsen, Director Refinery Supply Chain Expert - Kevin Waguespack, Director; Andrew Dolman, Consultant Optimisation & APS Software Selection Expert - Wes Clavey, Director Data Model and Interface Expert - Greg Hobson, Consultant SAP R/3 IS-Oil Expert - Varun Bijlani, Principal Consultant Subject Matter Experts depend on final project requirements discussion with AgipPetroli

17. Summary - PWC Consulting Advantage PWC Competitive Advantage Agip Petroli Result • Utilizing a holistic approach to analyze key business drivers: systems, process, technology & organization Completeness of Vision • Rigorous analysis & understanding of the root issues Diagnostic Approach • Speed of process/systems assessment and vision Quick execution • Over 2000 petroleum resources with specialized experience to deliver value on this project Deep Supply Chain expertise • PwC has successfully completed similar projects from developing supply chain strategies to implementations of fully integrated system solutions in the oil industry Wide experience • I2, AspenTech, Manugistics, SAP ISOil & APO to deliver more value than isolated implementations Alliance with software vendors • Turning data into information to improve decision making System Integration Capability • We have done relevant work with major clients such asKoch Refining, Nynas, BP, MOL, Sunoco, Star Enterprise Representative clients

18. Thanks & Next Steps Open Discussion…..Citations & Resumes coming from Bill Noon