SCM Client Presentation Deck

1. SCM Client Presentation Deck PwC ConsultingTM Pwc A business of

2. Sample Deck SCM Presentation Outline • Introductions • PWC to Provide • PWC SCOS – Industry Capabilities • Our Integrated Approach & Organization • Attachments: • Representative Citations • Representative Resumes (**** Tailor to client)

3. PwC to Provide *** Based on our interviews to date, you are asking for: Your Request We Will Discuss 1. Our experience in this kind of project APO implementations andOil industry/LPG supply chain optimisation  2. Main problems in projects of this type Lessons Learned Throughout this Document 3. Additional IT requirements Solution Architecture KeyConsiderations  4. Proposed Project OrganisationContinuous Business Ownership & Input Essential  5. Incorporate Reengineered ProcessesBusiness Strategy & Process drives Technology

4. Pemex Gas Objectives & PwC Lessons Learned*** • As we understand it, your objectives are to: • Develop basis for the project bid, either restricted or open • Maximize benefits, routinely obtain the best supply & transportation option • Minimize cost to fulfil LPG demand in every POS (using Pemex Gas global profit equation) • Substitute the current transportation optimisation model • Implement using SAP-APO and define appropriate “bolt-ons” • Lessons Learned: Based on similar projects, PwC recommends the following additions: • Define the integrated solution architecture, including data, presentation and application modules • Determine realistic implementation plan • Identify organizational change management requirements to maximize acceptance

5. Our PwC Supply Chain Practice • Our Supply Chain Operations Systems (SCOS) practice is organised globally which gives us access to resources with local knowledge and the experience required to match the needs of today’s global organisations • We have over 8,000 Supply Chain professionals giving us the resources required to manage major global supply chain projects. This expertise covers the entire supply chain from procurement through to customer management, and from strategy through to operations • We provide integrated services to our clients combining our expertise in supply chain strategy, supply chain re-engineering and operations improvement, with our demonstrated capabilities in systems implementation and enterprise wide business change

6. Our Integrated Approach & Project Organization PwC ConsultingTM Pwc A business of

7. BusinessStrategy& User Buy-in Process Analysis With Decision Rules Data Management & Technology New Organization Structures & Upgraded Skills Solving this type of Problem Optimisation improvement is at the heart of the downstream business… Lesson Learned: Project needs strong business support, and an integrated & iterative approach

8. To Create Value from your supply chain, you need to Determine…. What problem are we trying to solve? Problem Level “Optimize all networks” 1 Maximize potential of one individual network 2 “Make Things Happen Right Every Day” inside each operating unit of an individual network 3

9. Project Scope **** The circled process areas constitute the Pemex Gas Bulk LPG Supply Chain Secondary Transport Wholesale Crude Acquisition Crude Transport Primary Transport Refining Terminals Retail • 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)

10. Define target system environment Recommend Best Option AGIP vs SCM best practices & external research options Develop implemen-tation plan Assess impact on other AGIP IT initiatives Assess IT Interfaces & support organization High Level:Cost -Benefits case Assess adequacy of current systems - Focus on Dorsale system NEW:Agip Petroli suggested Route Map for the Target System Definition Envision TO-BE Processes & Rules Define Target System Evaluate AS IS Set up and initiate project Assess functional coverage of APS systems • Define • system features • process details • people requirements • Evaluate • actual strategy • processes • IT-architecture • organization Cross functional work sessions to design TO BE state of system features & architecture • Review: • Internal studies • External Studies • Any benchmarks • Implement effective communications • Build employee commitment Manage organisation & people development • Assess change barriers • Manage conflicting agendas

11. Route Map for the A Target System Definition *** Understand AS IS Define TO-BE Processes Define Target System • Mobilize: • Establish team roles • Executive interviews • Confirm Pemex strategy • Understand Business Requirements • Customer requirements • Statutory, regulatory and contractual • Business targets and constraints • Define Functional Requirements • Review functional coverage of APS options • Review process and capability needs • Prepare requirements documents for systems, applications, interfaces, support, performance, testing, and change management • Identify Gaps • Compare SCM leading practices to As-Is • Assess adequacy of current processes and systems to meet requirements for APS capability • Define process and enabling system gaps based on strategy, leading practices, requirements • Review: • Internal and external studies, desk data • Process and systems documentation • Prepare High-Level Implementation Plan • State assumptions regarding features deployed • Include plans for change management, process improvement, data cleansing, interface development, and testing • Estimate cost of each major plan element • Document As-Is • Processes • Transactions • Systems / applications • Organization / capability • Known gaps • Define To-Be • Cross-functional process design work sessions • Determine high-level process and systems functional requirements and staff capabilities necessary to support new APS processes • Assess impact on other initiatives / strategies • Define Benefits to Pemex • Estimate benefits to Pemex for each major implementation component, both in terms of serving customers and improving profitability • Prepare timing estimate of cash inflows and outflows with overall financial return to Pemex

12. Strategic and Process Improvement Considerations Pemex has also indicated that this project may have strategic and process improvement elements; here are some options for consideration: Profitability Is Pemex interested in reviewing customer, location, product, channel, or mode profitability to help understand tradeoffs which could improve overall profitability? Service Mix AS part of the APS project, would Pemex like the team to review service offerings in terms of service mix rationalization to reduce costs or improve profitability? Channels Is Pemex interested in reviewing the network channel configuration to understand whether alternate modes and channels may offer benefits? Transactions Is Pemex interested in a review of the opportunities for cost and performance improvements regarding logistics and customer transactions? Network Assets Does Pemex wish to re-assess and potentially re-deploy network assets to improve performance or profitability? Asset Ownership Is Pemex interested in reviewing alternative ownership options and business relationships to improve ROA, cash flow, or regulatory position?

13. ILLUSTRATIVE Our Understanding Strategic Inquiry Opportunities Fundamental Business Strategy • What operating cost reductions must be achieved to sustain and enhance Pemex competitive position? • What new geographic markets will Pemex tackle? • How many more locations will Pemex enter? • Which existing markets are critical to Pemex success? • What customer operations infrastructure will be needed to support further acquisitions? • How can management exercise centralized control? Customers Drivers of Market Presence • How do customers want to communicate with Pemex: • In selling situations? • In emergencies? • On important customer issues? • On routine issues? • How do customers want Pemex to respond? • What technologies should Pemex use? • How else can Pemex reduce the cost of its Customer functions? • How do we make each customer a profitable customer? • Which customer segments are priority targets? • Which new products / services will be available? • How do customers want to buy from Pemex? • What “Win Back” programs will re-attract customers? • How can Pemex reduce the cost of its Sales functions? Customers Distribution and Logistics Service • What service issues are most important for the most critical customer segments? • How do customers in each segment want Pemex to handle these service issues? • Should the service approach vary from geographic market to market? • How should Pemex deploy available technologies to effectively measure service quality and efficiency? • How else can Pemex reduce the total cost of servicing its customers? • How and when do customers in each segment want delivery to occur? • How can Pemex simplify and accelerate its delivery processes? • How should Pemex deploy available technologies to optimize routes and dispatching? • How else can Pemex reduce the total cost of delivering to its customers?

14. ILLUSTRATIVE Degree Day Forecasting 18 $0.830 16 $0.825 14 $0.820 12 $0.815 10 $0.810 8 $0.805 6 $0.800 4 $0.795 2 0 $0.790 01-Jan 08-Jan 15-Jan 22-Jan 29-Jan 05-Feb 12-Feb 19-Feb Degree Day Error Cost/Pallet Shipped Route Miles Total Route Miles vs Demand Shipped Pounds Shipped 1400 2500 1200 2400 1000 2300 800 2200 600 2100 400 2000 200 1900 0 1800 01-Jan 08-Jan 15-Jan 22-Jan 29-Jan 05-Feb 12-Feb 19-Feb Project Approach Process improvement example: logistics KPIs Multi-Stop Cost Components KPI Analysis and Determination Fixed Admin & Overhead VariableMileage-basedCosts Driver Burden/Benefits Driver Pay - Mileage Domicile Admin Variable Mx Fleet Depreciation FixedAsset-basedCosts Fuel & Fuel Tax Fixed Maintenance Driver Pay - Stop Cost Domicile Facility Lease LayoverCosts VariableStop-basedCosts THE GOAL THE GOAL Understand drivers of success to define a balanced scorecard that will help management discern the difference between volume-based gain and losses versus operations-driven impacts Understand the cost drivers and most significant improvement opportunity areas

15. ILLUSTRATIVE Project Approach Sample Strategic Analysis: Customer Lifetime Value Step 1: Determine Transaction Profitability by Segment for one period. Residential – 80% x trips @ $ Value x margin rate = $ Profitability Rural Customers 50% CustomerSegment Agriculture – 20% x trips @ $ Value x margin rate = $ Profitability Metro Area Industrial/Comm. Customers - 30% Total Segment Profitability Other - 20% Step 2: Calculate the lifetime value for each customer segment. • Inputs • Segment profitability by period • Loyalty / Retention rate • Acquisition costs • Annual profits per customer segment • Annual costs per customer Cumulative Value Time Annual Profits per Customer Cumulative Value Time Note: Depending on the level of information available from Pemex, market sales information across the industry will be used; or Pemex sales information will be used. Several variables can be used to determine the time horizon to use, including loyalty rate and retention rate. Customer will shift between channels during this lifecycle.

16. Typical Solution Architecture Considerations A realistic target solution architecture is essential to establish implementation plan, get early benefits and train people Level 4: Level 3 plus New “custom” optimisation integration & planning tools Level 3: Level 2 plus Current APS or Optimisation functions configured for the downstream business Level 2: Level 1 plus Specific (simple) “what if” decision support functions Level 1: Data Warehouse Integrated to Legacy Apps and Tailored User Dashboards Lesson Learned: Start with clear ownership for accurate, repeatable data It drives the optimisation effectiveness

17. Project Organization Executive SponsorClient TBN Active full time participation required from Clientpersonnel to meet project schedule SteeringCommittee Project Management Client TBN (PWC) Process TeamClient TBN (PwC) IT-System Team Client TBN (PwC) To be Nominated: PwC Global Subject Matter ExpertsLPG, Integrated Supply Chain, Data Management, SAP-ISOil

18. PWC Lessons Learned – Industry Process Improvements • Find ways to manage, not just reduce inventories • Move towards a “demand-pull”, rather than “supply-push” mindset • Take into account exchange opportunities available • Routinely quantify price/demand elasticity • Manage margin & cost complexities • Accurately model JV supply facilities When considering APO or other APS software solutions in the downstream supply chain, there are significant complexities not faced by other industries...

19. PWC Lessons Learned – SAP APO • APO Lessons Learned • Use APO CIF interface architecture for real-time data transfer. However, in most cases, user exits had to be written to achieve data aggregation, transformation and mapping • Product Line based APO Pilot approach not effective: identifying resource capacity for that product line accurately is an issue. Carry out capacity analysis in legacy tools for products not in APO and reduce resource capacity accurately. • Excessive manipulation of APO generated build plans to achieve local optimum plans – perform only exception based adjustments • Guidelines (error thresholds) should be in place to accept APO generated schedules as workable • Run time issues with SNP solver and release of DP forecast to SNP – performance testing should be done early

20. PWC Lessons Learned – SCM Project Management • Project Management Lessons Learned: • Use business strategy to drive project • Business ownership of the project is critical • Ensure user buy-in of scope • User understanding of constraint based planning concepts • Participation of the business owners in solution development to ensure buy-in • Take a holistic and large-scale view of the optimization problem • Analyze key drivers: strategy, process, organization (measures) & technology • Develop realistic implementation plan • Prototype often for user involvement, testing and acceptance • Determine new skill sets required and start training early • Data quality drives the implementation schedule • Define success as an “accepted system” – not an installed system

21. PWC Lessons Learned – IT Optimization • IT Optimization Lessons Learned: • Optimization is very different from transaction processing • Must monitor solution quality – establish KPI reporting • Continually get and maintain accurate supply chain costs • Clean data and clear ownership is critical for optimization • Early system performance testing is very important • “Bolt-on’s” Lessons Learned • Many oil industry supply chain developments are outside SAP • Ensure application architecture is open and flexible • Define & test “bolt-on’s” in parallel with application architecture

22. PWC Lessons Learned – SCM Project Management • Ensure client understanding and buy-in of Constraint based planning. • Business ownership of the project. • Accuracy of supply chain costs. • Use business strategy to drive project. • Take a holistic and large-scale view of the optimization problem. • Analyze key business drivers: organization, process, systems and technology. • Participation of the business owners in solution development to ensure buy-in. • Document configuration and process steps and ensure timely updates. • Realistic implementation plan. • Monitor solution quality – establish KPI reporting. • Use SCM interface architecture for real-time data transfer.

23. PwC Consulting Advantage PWC Advantage Client 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 IS Oil & 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 asNynas, Texaco, Indian Oil, Sunoco, Star Enterprise Representative clients

24. Citations & Staff PwC ConsultingTM Pwc A business of

25. PWC Representative Assignments Distribution Customers Supply Processing Shell Europe – LPG: SAP Implementation – Diablo Project LPG & Industrial Gas Indian Oil Corporation: IT Strategy for LPG operations Gov. of Hong Kong: Wholesale LPG pricing strategy Industrial Gas Supplier: SAP APO implementation Koch Refining: KPI’s & Plant Performance Star Enterprise: Crude selection and revenue improvement Nynas: Asset Optimization & Distribution Strategy Chevron Products: Proof of Concept – SAP APO Fuels Sunoco APS Evaluation: USA Fuel supply Chain Diagnostic Shell Europe APS Evaluation: Crude & Products Supply Chain Optimization, Process Re-engineering, Cluster Demand Planning Improvement

26. Relevant Citations – LPG/Industrial Gas Bulk Industrial Gas SAP APO Project The client is a leading supplier of high quality industrial gas products to a variety of industries. It serves large customers using direct pipeline and also distributes a variety of liquefied gases from their plants. Optimization project would cover 2600 Vendor Managed Inventory locations, 26 plants, 50 suppliers and 3300 customers. Majority of VMI locations could be serviced from any of the 26 manufacturing plants . PWC was engaged for package selection through implementation. Given this level of supply chain complexity, the client required a synchronized planning process from forecasting through distribution and vehicle routing to achieve lowest cost while meeting customer requirements. SAP APO was chosen as the APS software. PWC’s “Ascendant for APO methodology” provided the structure for the entire project. Based on the client requirements, it was determined that Demand Planning, Supply Network Planning and Transportation Planning and Vehicle Scheduling were required. Additionally, the transportation solution incorporated custom optimization algorithms developed by ILOG interfaced with APO.

27. Relevant Citations - LPG Government of Hong Kong (GOHK)– LPG Pricing Strategy In 1999, In response to a government tender: Pricing Mechanism for DBOT Tender of LPG Fill-Stations. An important task to achieve this policy statement is setting up several dedicated sites for LPG filling stations throughout the territory. The GOHK employed PwC assistance on commercial and legal aspects of the tender process, including: (1) Reviewing the GOHK draft tender documents for commercial/legal issues and general comments, (2)Provide comments on the LPG Pricing Formula, (3)Help design a tender evaluation scheme; and evaluation criteria and (4) Review the tender documents for commercial issues. Shell Europe – LPG “Diablo” Project As part of a large SAP-IS/Oil implementation for Shell in Europe, PwC was engaged to work with the Italian affiliate and re-engineer the processes and configure the ISOIL software to strengthen control of the LPG business. Best practices from other companies and other industries were incorporated in the design and implementation of the software. Extensive training and workshops were conducted to increase acceptance of the new processes.

28. Relevant Citations - LPG Indian Oil Company Ltd. (IOCL) – LPG & Lubes Supply Chain Reengineering India's largest petroleum refiner and marketer, awarded PwC consulting a Business Process Transformation (BPT) and IT strategy planning project to cover the client's crude/product supply logistics, LPG and Lubricants, refinery management, wholesale product sales and distribution, and the finance and HR support functions. The LPG sub-project's aim is to define supply chain improvements and implement the systems needed to increase IOCL profitability, reduce product losses and improve product mix. The solution architecture included SAP-IS Oil and appropriate “Bolt-on’s” to meet the transportation optimization requirements.

29. Relevant Citations - Fuels Shell Europe – APS Evaluation Shell Europe recently started a multi- regional effort to improve supply chain decisions in Europe and Asia. PwC was retained to work with six regional teams to define new business processes for this supply chain orientation. The work scope covered: refinery planning & scheduling, primary distribution, supply planning, data management, the customer interface and demand planning. PwC acted as primary facilitator to help expedite the internal re-engineering project, set the guidelines for the business case, defined a solution (data) architecture and examined applicability of new supply chain software to improve Shell’s Europe and Asia supply decisions.

30. Relevant Citations - Fuels Star Enterprise – Crude Selection & Revenue Improvement Star Enterprise, the $6.0 billion joint venture of Texaco and Saudi Aramco, refines and markets petroleum products in 26 Northeastern states. PWC was selected to conduct a highly focused ten week reengineering “Assessment” of Star’s downstream crude & products supply processes. The objective of the Assessment was to identify revenue improvement projects as Star faced decreased refinery margins and increased competition in the market. The work was conducted with joint PWC & Star cross- functional teams and covered the entire supply chain: planning, crude selection & acquisition; product supply and trading; terminal administration, distribution and rack sales. The team enhanced the PWC CI/BPT Methodology with: off-site facilitated workshops with 60+ Star staff, management interviews, identification of 350+ issues, definition of a business model with key communication links and development of new performance measures. Reengineering design projects were carried out to capture benefits that were quantified in three priority areas: Improved crude selection & acquisition ($18.0 MM/yr), Improved distillate disposition ($9.0 MM/yr) and Development of a Star marine chartering capability ($1.5 MM/yr).

31. Relevant Citations - Fuels Koch Refining – KPI’s and Plant Performance PwC completed work at the Koch Corpus Christi refinery to develop a detailed conceptual framework for key performance indicators (KPI’s) to dramatically improve refinery operations at a unique facility with two operating units separated by a set of pipelines. PwC’s conceptual vision was to improve decision-making throughout the refinery by integrating real-time process information with a comprehensive set of KPI’s across the entire plant including: operations, planning, engineering and maintenance. The project objective is to identify and measure those KPI’s which contribute most to the net refinery margin; and define a senior management decision support process and technical infrastructure system to routinely provide the measures to all levels of refinery management.

32. Relevant Citations -Fuels Nynas Petroleum – Specialty Products Supply Chain Improvement Nynas is wholly owned by PDVSA (Venezuela) and Fortum (Finland). Based in Sweden , Nynas has been transformed in the last 15 years from a local integrated oil company into a European market leader and specialist in bitumen and naphthenic oils. Nynas has five small specialized refineries running a total of 90kbd, 90% of which is Venezuelan crude. PWC Consulting was awarded the initial Phase of the review of the Nynas operation, including refining, supply, planning, distribution, marketing, and support services. The project was an all encompassing review of Nynas performance through extensive assessment of current operations. This phase of the project identified both short and long term opportunities for improvement. Following the review a joint PWC/Nynas team established an implementation plan was established deliver a recurring benefit of 10% of net profits before tax. The implementation plan covered Supply Planning, Refinery scheduling, Supply/Demand Balancing, Secondary Distribution, Transforming the skills base, Designing and implementing a full performance management system from strategy to process to shop floor

33. Relevant Citations -Fuels Chevron Products – Proof of concept SAP-APO Chevron Products is one of the largest marketer of petroleum products engaged in refining, marketing, and transportation of petroleum products over much of the USA.Chevron purchases, sells, trades and transports crude oil, liquefied petroleum gas (LPG), liquefied natural gas (LNG), and refined and other products by vessels and pipeline; and owns interests in 11,500 miles of crude oil, natural gas and petroleum product pipelines. PwC evaluated APO to replace its legacy Demand Forecasting (DF) application and related interfaces to Stock Movement Information system (SMIS), which is part of the Supply Information System (SIS) application. We conducted a joint team APO gap analysis/proof of concept using actual business processes, business requirements and live data.

34. Relevant Citations - Fuels SUNOCO USA – APS Evaluation Sunoco is a USA petroleum refiner and marketer with interests in cokemaking. Operations include the manufacturing and marketing of a full range of petroleum products (fuels, lubricants and petrochemicals) and the transportation of crude oil and refined products. PwC was engaged by Sunoco to assist them in a vendor evaluation process for their primary (refinery to terminals) distribution planning and scheduling function. Sunoco had already short-listed three vendors - Aspen Tech, i2, and Manugistics - and PwC was engaged to assist in the vendor evaluation process and development of a business case for moving forward. Sunoco's main objective was to use a more structured approach to their selection and to gain access to external expertise provided by PwC

35. Resumes: Representative Subject Matter Experts Supply Chain Expert: Marty Stetzer - Director Marty has12 years consulting experience with energy companies including, supply chain management, E-commerce and IT systems strategy. Prior to PwC, Marty spent 18 years in industry operations with Esso in Asia, Superior Oil and Mobil, in supply, refining, logistics and marketing in variety of global locations. He specialises in Advanced Planning & Scheduling (APS) software, and has conducted numerous evaluation projects, developed thought leadership, presented at SCM industry sessions and published articles applying SCM techniques to the downstream oil industry. He has been Project Manager on numerous seven-figure information system strategy and supply operations reengineering projects. He has led large projects in Saudi Arabia, the UK and India APS Software Selection Expert: Wes Clavey - Director Wes has 20 years of experience in logistics operations and supply chain consulting with emphasis on the application of technology (Including solutions architecture) to improve decision making for both planning and execution. Experience in the application of supply chain management strategies and techniques to a broad range of industries (from hi tech to petroleum). His downstream supply chain work has been with clients such as Enron and Shell. Prior to joining PwC Wes worked in industry for Manugistics, Sysco Corp and Exxon Corp. He has both written and extensively spoken on the subject of SCM particularly in the area of Logistics.