USA conference April07 nis - Saras S.p.A. · SARAS 2 Disclaimer Certain statements contained in this presentation are based on the belief of ... Microsoft PowerPoint - USA conference

SARAS SpA

CHICAGO

NEW YORK

BOSTON

14-16 APRIL 2007

2SARASSARAS

Disclaimer

Certain statements contained in this presentation are based on the belief of the Company, as well as factual assumptions made by any information available to the Company. In particular, forward-looking statements

concerning the Company’s future results of operations, financial condition, business strategies, plans and objectives, are forecasts and quantitative targets that involve known and unknown risks, uncertainties and other important factors that could cause the actual results and condition of the

Company to differ materially from that expressed by such statements.

3SARASSARAS

Saras in brief

CORE BUSINESS

Gasification&PowerDeep conversion unit560 Mw

Marketing3 million tons per year(25 million barrels)

REFINING300,000 bl/dhigh complexity diesel oriented

Saras is a pure play refiner

• 300,000 bl/day supersite

� high complexity (Nelson 9.6) and conversion capacity (#1 in Europe)

� integrated with petrochemical

• Diesel oriented (yield > 50%),

� total middle distillates yield greater that 80%

• Very low fuel oil production (~5%)

� Gasification plant converting the heavy bottoms

into clean gas then used in a CCGT

• Ability to run “unconventional” difficult crudes

that normally trade below parity

• Strategically located in the middle of the Med

• Track record of superior margins:

� Stabilization of returns through processing

contracts and power generation from a regulated

asset (CIP6)

• Marketing activities based in the high diesel demand regions of Italy and Spain

4SARASSARAS

Saras in brief

Ind.Serv&IT

Power

Generation

€ 220 ml

Marketing

€ 25 ml

Refining

€ 324 ml

OTHER ACTIVITIES

Wind84 Mw

Joint venture

Industrial services and IT

2006 2006 GroupGroup EBITDA: EBITDA: €€ 568 ml568 ml

2006 2006 WindWind EBITDA: EBITDA: €€ 25 ml25 ml

Investing also in renewable energy

• 84 Mw wind farm in the south of Sardinia

�70% Joint venture with Babcock&Brown

�other projects in the permitting phase

• Industrial services and IT supporting Group activities

5SARASSARAS

Track record of superior margins

The EMC benchmark is published on the company website and updated weekly

6.5

8.7

6.65.6

7.76.5

5.67.1

6.2

4.2 3.6

3.4

3.6 4.0

4.5

3.63.6

3.73.9

6.6

3.7

5.3 5.64.1 4.7

2.8 3.0

4.7

2.8

10.710.1

12.1

10.39.6

12.2

109.2

10.810.1

1.61.90

2

4

6

8

10

12

14

16

Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 2005 2006

Refining Margin IGCC Margin EMC Benchmark total

2005 2006

6SARASSARAS

World Refining context

0

2

4

6

8

10

12

14

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Q1/0

7

2007

2008

2009

2010

60

64

68

72

76

80

84

88

92

Med crack spread (*) Refining Capacity World Oil Demand

million bbls/day$/bl

(*) 2/3 ULSD crack spread vs Brent + 1/3 Unleaded Gasoline crack spread vs Brent

Source: Saras elaboration on BP statistical review and EMC data for forecast

7SARASSARAS

World Refining context

Steady growth of demand, focused on light and middle distillates

Need for sophisticated (and expensive) secondary units to be built alongside new distillation capacity in order to meet the severe product quality specifications

New build costs up significantly

� Shortage of skilled manpower

� Construction capacity limited

ENERGY COMPASS Dec06: Kuwait’s Al-Zour refinery could be scrappedRising costs could doom Kuwait’s proposed Al-Zour refinery, which may be scrapped after bids submitted in December were much higher thanKuwait National Petroleum Co. (KNPC)envisaged….. …But when the nine bids for thefour packages were submitted on Dec. 17,Project Director Ahmad al-Jeemaz said theywere “way above” expectations.

Bulk of new capacity for the next years in high growth markets (developing countries)

Supply growth from “opportunistic” players challenged by increasing costs and threats of shifting economics

Announcements of projects being delayed (Valero, Conoco, Sunoco, KNPC, ExxonMobil, IPIC)

ENERGY COMPASS Feb07: ExxonMobil and state Qatar Petroleum (QP) haveshelved their Palm natural gas-to-liquids(GTL)project in the Mideast Gulf state, after more than adecade of planning and engineering anddevelopment work.Qatari Energy Minister Abdullah al-Attiyah saidhigh costs forced cancellation of the 154,000 b/dcomplex. Project inflation had pushed the price tagfrom an initial $7 billion in 2004 to more than $15billion, according to industry sources.

tight supply/demand balance to continue

ENERGY COMPASS Apr07: Fujairah refinery

Abu Dhabi’s International Petroleum Investment Co. (Ipic) may scale down a planned refinery in the UAE amid concerns that partner ConocoPhillips will pull out because of soaring costs. Conoco Chief Executive Jim Mulva said this week that “there is a question whether it will go forward, and if we will

participate.” A pre-feasibility study for the Fujairah refinery came in recently with a cost of around $11 billion, up from original estimates of $5 billion- $6 billion…..

8SARASSARAS

Major trends in Med crude market

Mediterranean Europe: crude demand and supply

Source: Purvin&Gertz

• Supply of indigenous crude in the Med is constantly increasing

• The Med is becoming a net crude exporter

• The Med crude slate is forecast to become sweeter and lighter, an exception to world average

• The Med is expected to become a “crude-buyers” market

The right place to be for complex and flexible refiners

coastal refining centressour gradessweet grades

9SARASSARAS

• In western Europe Diesel represents 25% of total oil products demand and 50% of transport fuels

• 70% of Diesel demand comes from the commercial transport sector

• New registrations show a continuous growth of diesel-powered cars at the expense of gasoline-fuelled vehicles

• Future diesel growth will also be

influenced by the switch of non-road diesel (now used for instance in the

agricultural sector) to 10 ppm sulphur specification (i.e. road diesel) that

probably will be required by EU legislation sometime after 2010.

• Potential regulatory switch from bunker fuel to gasoil for tankers

Major trends in Med products markets

Mediterranean Europe: diesel and gasoline balance

Source: Purvin&Gertz

Deficit of diesel growing by about 2.5 million tons per year while surplus of gasolinegrowing by about 1.5 million tons per year

10SARASSARAS

Processing contracts

Saras is also a provider of refining services through processing contracts

A processing contract is an agreement to process third party crude oil under predetermined

conditions (i.e. product yields, processing fee, storage and delivery terms).

Saras’ processing contracts are grade specific and focused on certain families for which Saras has

specific need/interest.

Profit Share

Optimization

Base Fee

Advantages of processing:

� Access to special crude oils otherwise difficult

to acquire

� Long term stability of supply

� Synergies from optimal blend of crude oils and

optimization of production

� Reduced working capital

� Stabilization of returns (equivalent to a put

option on the refining margins)

Approximate split of the value for third party runs

11SARASSARAS

Growth strategy

Organic growth – 2007/2009

2-3 $/bl margin improvement through a series of medium size and low risk projects (debottolneckings, improvements/adding to existing units)

returns linked to multiple market variables

CAPEX approx EUR 600 million of which half is maintain capacity

lower risks of cost overruns than sector peers

External growth

IN OUR CORE BUSINESSES

� M&A opportunities in Refining, Marketing, Oil logistics (depots, pipelines,..)

IN RELATED SECTORS

� WIND : pipeline of projects in the permitting phase

� BIODIESEL: 200,000 tons/year plant operational from 2008 (investment 35 m€ /IRR>20%)

� GAS EXPLORATION: committed max 10m€ for seismic tests

BASIS FOR INVESTMENT

� high fire-power: NFP/EBITDA 0.38 at end 2006

� Stringent investment criteria:

• PROJECT IRR AFTER TAX ~ 20%

• No growth for growth’s sake

• EPS accretive from day 1