2007

1. MOL Supplier Forum 2007 MOL Group Procurement and Suppliers Csaba Kiss, MOL GCPO Budapest, November 14, 2007

2. MOL Supplier Forum 2007 Agenda • Intro • Why do we need Supplier Forum? • Procurement in MOL Group • Challenges & Tasks • Inner programs - External factors • Supplier Relationship(s)

3. MOL Supplier Forum 2007 Why do we need Supplier Forum? • to meet You at least once a year in a relaxed atmosphere, • to inform You about programs, initiatives and changes in our company, • to let You know the tasks and challenges we are facing, • to listen to Your issues, challenges and requests, • and last, but not least to award the best performers…

4. 1% GMC OPEX (69%) CAPEX (31%) MOL Supplier Forum 2007 Yearly Procurement Spend Pattern (2006) Including MOL, SN, TVK, US and Integrated SSC (percent) 9% CSP 10% Total spend (2006) PR 16% US Energy CSP – Corp.Serv. Procurement GMC – Gen.Mat. & Communicatons MMS – Maintenace Mat. & Services PR – Production Materials PP – Project Procurement US – Upstream Procurement 19% MMS* 21% PP 24% Energy * MMS including integrated SSC spend

5. Russia (2) Kazakhstan (1) Pakistan (1) Oman Yemen MOL Supplier Forum 2007 MOL Group Procurement – Location & Staff Sum: 176 FTE

6. Challanges & Tasks Inner Drivers Supplier relationship MOL Supplier Forum 2007 Challanges / Tasks – Inner drivers – Strategic partnership Energy Bio-fuels Hydrocrack UGGS UGGS - Underground Strategic Gas Storage Project

7. MOL Supplier Forum 2007 Challenges & Tasks • Electricity: • Prices increased cca. 30% according to previous year (base load product) • Bio-fuels (bio-diesel, bio-etanol): • EU & Hungarian Government regulation on application of renewable energy sources (plus better excise tax judgment): • From July 01, 2007  4,4 v% bio-ethanol in gasoil (benzin) • From January 01, 2008  4,4 v% bio-diesel in diesel • Danube Refinery new Hydrocrack plant(Project budget cca. 80 Bn HUF) • Capacity enlarging (plus 600 kT crude – from present 7.6 to 8.3 Million tons per year) • Increasing of „White product” proportion (plus 1.3 Million tons diesel per year) • Connecting new plants (Hydrogen plant, Desulphurization plant, etc.) • Reconstruction of related plants (ie.: Delayed Coker) • Underground Strategic Gas Storage Project (UGGS) (Project budget 66.5 Bn HUF) • Compressors (Beregdaróc, Hajdúszoboszló) – 7.6 Bn HUF • Coated pipeline (5 km DN1400, 194,5 km DN1000) – 20 Bn HUF • Engineering, procurement & construction – 38.9 Bn HUF) Supplies ongoing To be completed By 2010 Under Construction

8. Inner Drivers MOL Supplier Forum 2007 Challanges / Tasks – Inner drivers – Supplier relationship Challanges & Tasks Supplier relationship Electricity Code of Ethics Bio-fuels IBI Hydrocrack Contractor safety USGS PRP USGS - Underground Strategic Gas Storage Project IBI – Integrated Procurement Regulation PRP – Procurement Redesign Project - Category Management

9. Request Sourcing Contracting Procurement Goods Receipt Invoicing 2. Partnership 1. Selection Supplier Relationship levels MOL Supplier Forum 2007 New approach of Supplier Relationship Competition Common benefits Sustainable development Visibility / Transparency Integrated Procurement Regulations (IBI) (MOL Group level rules) Complex evaluation Integrity Equal chances Different level of Supplier Relationship

10. New approaches of Supplier Relationship: Procurement Redesign: Request Sourcing Contracting Procurement Goods Receipt Invoicing MOL Supplier Forum 2007 PRP – Procurement Redesign Project Business requirements, Value drivers Category Management Different types of Relationship Management Operationalising Strategic SRM System (SRM*) Competency Development Leadership, people and Behavioral Implications SRM = Supplier Relationship Management

11. MOL Supplier Forum 2007 Challanges / Tasks – Inner drivers – Strategic partnership Challanges & Tasks Inner Drivers Supplier relationship Electricity Code of Ethics New approaches of Supplier Relationship Bio-fuels IBI Hydrocrack Contractor safety The „soft” drivers USGS PRP USGS - Underground Strategic Gas Storage Project IBI – Integrated Procurement Regulation PRP – Procurement Redesign Project - Category Management

12. MOL Supplier Forum 2007 MOL Group Procurement – New approaches… • ”The changing project engineering talent supply will reshape the oil and gas business. • Contractors are changing: • bidding strategies and methods of performing contracts, and • relationship amongst contractors, • oil companies, vendors and subcontractors are evolving to include partnering, profit sharing and long-term commitments among other strategies” (Cambridge Energy Research Accociate, 2007)

13. MOL Supplier Forum 2007 The „soft” drivers of strategic Supplier relationship • Business & cultural alignment • Mission, vision, values, ways of working, complementary strategies, strong business insight and awareness of these. • Governance & executive commitment • Joint decision-making, easy access to top management, high quality leadership time, readiness to invest • Ethics, trust & communication • Open sharing of information, • Transparency on strategy and costing, • Ethical, principled and trusting leadership model • Day-to-day working relationship • Proactive, timely delivery, responsive, enthusiastic reaction to performance improvement recommendations • Growth potential • Clear return on investment (ROI) • Real scope for performance improvement and breakthrough opportunities, • Jointly profitable account

14. Our Vision Regional excellence by 2009 Challanges & Tasks Inner Drivers Supplier relationship

15. Thank you for your attention!