Refinery Planning & Economics

1. Refinery Planning & Economics

2. Topics 1- Oil Markets 2- Crude Oil Pricing 3- Refining 4- Refined Products Prices (Asia/AG) 5- LPG 6- Shipping

3. Oil Markets • Crude Oil Markers (Benchmarks) • World Refining Centers • Oil Movement & Trade Paths • Petroleum Trade Markets • Petroleum Stocks

4. Crude Oil Markers The Three Main Crude Oil Markers are: • West Texas Intermediate - America • Brent - Europe & Africa • Dubai - Asia/Pacific

5. Crude Oil Prices

6. Contango & Backwardation

7. NWE MED US ASIA WORLD REFINING CENTERS

8. BRENT WTI DUBAI OIL MOVEMENT & TRADE PATHS

9. Arbitrage • The Trade Between Geographical Areas to Earn Profit • The Arbitrage is Open When the Price in the Loading Port Plus Freight is Less Than the Price at the Discharge Port

10. Arbitrage Demand

11. $21/MT $14/MT $14 /MT $30 /MT Naphtha Arbitrage (Japan/MED) $228/MT $177/MT $200/MT “THE ARB IS OPEN” MAR ‘97

12. – $5/MT $7/MT $13 /MT $29 /MT Naphtha Arbitrage (Japan/MED) $200/MT $177/MT $176/MT $180/MT “THE ARB IS CLOSE” SEP ‘97

13. Saudi Aramco International Crude Oil Storage

14. Petroleum Stocks Reports American Petroleum Institute (API) • Weekly Report Covering the US Energy Information Agency (EIA/DOE) • Weekly Report Covering the US - Official International Energy Agency (IEA) • Monthly Report Covering OECD

15. API Report August 6, 1999

16. Stocks’ Impact On Prices $/BBL 1,000 BBL 18 400,000 16 14 350,000 12 10 300,000 8 6 250,000 4 2 0 200,000 5-Oct 7-Sep 3-Aug 27-Jul 14-Sep 21-Sep 28-Sep 12-Oct 19-Oct 26-Oct 10-Aug 17-Aug 24-Aug 31-Aug US Total Crude Stocks (API) WTI Cushing Mth1

17. Topics 1- Oil Markets 2- Crude Oil Market 3- Refining 4- Refined Products Prices (Asia/AG) 5- LPG 6- Shipping

18. Crude Oil Market • Evolution of Crude Oil Pricing • Crude Oil Value • Petroleum Oil Price Reporting • Crude Oil Contracts • Crude Oil Supply & Demand

19. Evolution of Crude Pricing • Posted Price: • Set by Governments of Producing Countries • Price Changes Infrequently & Varies by Producer • Netback Price: • Based on Product Prices Less Refining Fee • Guaranteed Refiners a Positive Margin • Market-Related Price: • Related to Published Quotation of a Marker Crude • Differentials Applied are Standard • Refining Margins are not Protected

20. Crude Oil Value Crude Oil Value is Related to the Value of the Refined Products • API • Sulfur Content Other Factors • Refinery Type (Configuration) • Paraffinic/Naphthenic

21. Oil Price Reporting • Who Report Oil Prices? • Platt’s • Petroleum Argus • London Oil Reports (ICIS-LOR)

22. Oil Price Reporting • How are Oil Prices Published? • Published Quotations Represent Fixed-Price Spot Transactions, Confirmed Bids & Offers and Market Talk. • Price Reporting Agencies have Different Bases for Trade Reporting, Freight Assessment and Freight Calculation

23. Platt’s Crude Oil Marketwire Report

24. Platt’s Crude Oil Marketwire Report

25. Contracts • Contract Types: • Term • Spot • Sales Types: • FOB Free On Board • CIF Cargo, Insurance & Freight • C&F Cargo & Freight • Others Lightering, ex-ship, ex-storage, …

26. Saudi Arabia Production: 8.3 MBD Consumption: 1.8 MBD Export: 6.5 MBD Far East: 48% Europe: 25% US 22% Others 5% 2000 Data

27. Saudi Arabia's 5-Year Crude Production Plan

28. Saudi Arabia's 5-Year Crude Production Plan (by Grade)

29. Top 10 Oil Production -2002 TOTAL WORLD: 73.94 Million BBL/Day

30. Oil Production -2002

31. Oil Production -2002

32. Top 10 Oil Consumption -2002

33. Oil Consumption - 2002

34. World Total Oil Consumption

35. Global Supply/Demand Balance

36. Proven Oil Reserve by country 2002

37. Proven Oil Reserve by region

38. Reserve/Production Ratio 2002

39. Organization of the Petroleum Exporting Countries (OPEC) • Founded in Baghdad in 1960 • Objective: To Coordinate and Unify Policies Among the Members in Order to Secure Fair and Stable Prices for Petroleum Producers OPEC COUNTRIES: IRAN, IRAQ, KUWAIT, SAUDI ARABIA, VENEZUELA, QATAR, INDONESIA, LIBYA, UAE, ALGERIA, & NIGERIA

40. OPEC PRODUCTION LEVEL

41. TOPICS 1- Oil Markets 2- Crude Oil Pricing 3- Refining 4- Refined Products Prices (Asia/AG) 5- LPG 6- Shipping

42. REFINING • Refined Products Supply/Demand • World Refining Capacity • Refined Products Applications • Refined Products Specifications • Regional Quality Variations Refined Products supply/demand figures are based on Purvin & Gertz report (March 2001 update) World refining capacity date are based on BPAmoco Statistical Review - 1999

43. World Supply & DemandRefined Products Deficit Surplus Thousand BBL/Day

44. World Supply & DemandRefined Products by Region Net Importer Net Exporter Thousand BBL/Day

45. World Refining Capacity

46. Refined Products Applications • Propane: Petrochemical Industry/Home • Butane: Petrochemical/Home/Gasoline • Naphtha: Petrochemical/Gasoline • Jet: Jet Fuel/Domestic Appliances • Gasoil: Automotive Fuel/Heating Oil • Fuel Oil: Bunker/Power/Industrial Boilers

47. Products Specifications • Naphtha • Naphthenic / Paraffinic • Gasoline • Octane Number (RON/MON) • Sulfur Content / Olefins Content • Gasoil • Sulfur Content • Cetane Number • Fuel Oil • Sulfur Content • Viscosity • Straight-Run vs. Cracked

48. Regional Quality Variations • End Use Requirement • Climate Conditions • Refinery Technology • Environmental Issues • Environmental Issues

49. Regional Quality Variations • Gasoline • Lead-Free • MTBE Concern • Benzene Content • Volatility • Diesel • 0.05% Sulfur • Fuel Oil • 1.0% Sulfur NORTH AMERICA

50. Regional Quality Variations • Gasoline • Lead-Free • Benzene Content • Following the US • Diesel • 0.05% Sulfur • Fuel Oil • 1.0% Sulfur WESTERN EUROPE