Wood Mackenzie Global Refining Seminar IP Week 2011 ... · PDF file Delivering commercial insight Wood Mackenzie Global Refining Seminar IP Week 2011, London, 22 February 2011 Atlantic

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Delivering commercial insight

Wood Mackenzie Global Refining Seminar IP Week 2011, London, 22 February 2011

Atlantic Basin Refining - A Changing Landscape Jonathan Leitch, Senior Analyst Oils Research, Wood Mackenzie

Refining Outlook Improves but Issues Remain Joe Gorder, Executive VP – Marketing & Supply, Valero

Capital Markets Perspectives Michael Hafner, Head of Energy – EMEA, Deutsche Bank

The SATORP Project - Development of Total Refining Activities in Saudi Arabia Daniel Lacombe, Jubail Refinery Project Director, Total

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Atlantic Basin Refining – A Changing Landscape

Jonathan Leitch Senior Analyst Oils Research Wood Mackenzie

Global Refining Seminar, IP Week, London 22 February 2011


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© Wood Mackenzie 3

Agenda

2 Atlantic Basin Pressures

Rationalisation3

Where are we now?1

Conclusions4


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© Wood Mackenzie 4

0

2

4

6

8

10

12

14

16

18

20

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Reg

iona

l ref

inin

g m

argi

ns*,

$/bb

l

0

10

20

30

40

50

60

70

80

90

100

Cru

de p

rice,

$/b

bl

2004 was the first boom year for

refining across the globe…

2004 was the first boom year for

refining across the globe…

…but regional trends then diverged, with

complexity in the US yielding huge reward

until the world changed in 2008

…but regional trends then diverged, with

complexity in the US yielding huge reward

until the world changed in 2008

US Gulf Coast

Singapore

NW Europe

Brent crude price

* WM composite light/heavy indicator margins

Global margin slump in 2009

Global margin slump in 2009

Global indicator Refining Margins, $/bbl

Global refining margins improved only slightly in 2010 - is this the beginning of a recovery?


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© Wood Mackenzie 5

Forecast Capacity and Demand, Nov ‘10 Forecast Capacity and Demand, Nov ‘09

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

2009 2010 2011In

crem

enta

l MB

d

Demand Growth Capacity Net Additions Net Change

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

2009 2010 2011

Incr

emen

tal M

Bd

Demand Growth Capacity Net Additions Net Change

“Tightening” of market, supporting margins

“Loosening” of market; weaker margins

“Tightening” of market, supporting margins

“Loosening” of market; weaker margins

Higher demand and deferred supply supported margins in 2010; storing up trouble for 2011


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© Wood Mackenzie 6

World Oil Demand, Million b/d

50

60

70

80

90

100

110

2000 2005 2010 2015

Global oil demand is already at pre- crisis levels …

Global oil demand is already at pre- crisis levels …

80

90

100

110

120

130

2007 2008 2009 2010 2011 2012 2013 2014 2015In

dex:

200

7=10

0

USA Europe Asia Other

Globally, 2010 demand is already at pre-crisis levels, but not in the Atlantic Basin….


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© Wood Mackenzie 7

*Thailand, Malaysia, and Singapore

Cars in Use per 1000 People Total Number of Cars in Use

-

50

100

150

200

250

300

350

400

450

500

1960 1970 1980 1990 2000 2010 2020

Uni

ts

Japan

South Korea

Taiwan

ASEAN High-Income*

ChinaIndonesia

India

Japan

Taiwan

China

India

ASEAN High-Income*

South KoreaIndonesia

0

20

40

60

80

100

120

140

1960 1970 1980 1990 2000 2010 2020

Mill

ion

Asian car fleet growth is already taking off – and future ownership potential remains considerable


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© Wood Mackenzie 8

Agenda


Rationalisation3

Where are we now?1

Conclusions4


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© Wood Mackenzie 9

0123456789

101112131415

2000 2005 2010 2015 2020 2025

Dem

and

(MB

d)

N.Am Diesel Europe DieselN.Am Biodiesel Europe Biodiesel

0123456789

101112131415

2000 2005 2010 2015 2020 2025

Dem

and

(MB

d)

N.Am Gasoline Europe GasolineN.Am Bioethanol Europe Bioethanol

Atlantic Basin Gasoline Atlantic Basin Diesel

Ref

iner

yB

iofu

els

Ref

iner

yB

iofu

els

In contrast, Atlantic Basin gasoline demand is in decline, although there is some upside for diesel refiners


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© Wood Mackenzie 10

The current Atlantic Basin business environment is certainly challenging….

Increased penetration of ethanol into the US

gasoline pool

Weak economic growthHigh Oil Prices

Carbon legislation in Europe

Emergence of long haul exporters

Declining heavy oil production

Over-capacity of refining

IOC’s divesting refining capacity

IOC’s exiting retail


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Agenda


Rationalisation3

Where are we now?1

Conclusions4


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Overall downstream results overwhelmed by the refining segment – where profitability has been devastated by the current downturn

Source: Companies

0

5

10

15

20

25

30

35

40

2005 2006 2007 2008 2009

Dow

nstr

eam

% R

OC

E

XOM CVX BP Shell TotalSource: Companies


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Announced Asset Sales

Announced Closures/Idled Capacity

Watch list for Announced closures/Idled capacity: 2.3 Mb/d

Out of which 1.3 Mb/d looks firm

Refining supply has declined, due to closures in mature markets and cancellation of projects…..

8.4

8.6

8.8

9.0

9.2

9.4

9.6

9.8

10.0

10.2

June 09 Nov 09 May 10 Nov 10

Fore

cast

Add

ition

al N

et C

apac

ity (M

Bd)

c.1Mbd reduction

Total New Capacity 2009 - 2015


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Significant increase in the number of assets for sale/sold and slated for closure – where do they lie on the Atlantic Basin NCM curve

Source: Wood Mackenzie

-$4

-$2

$0

$2

$4

$6

$8

$10

$12

$14$/bbl

ClosuresAssets for Sale, and Investment Opportunities2009 NCM


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Agenda


Rationalisation3

Where are we now?1

Conclusions4


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Conclusions

Demand growth is forecast on the back of increasing car ownership in emerging markets

The refining market in the Atlantic Basin will remain challenging

Demand may be declining in the Atlantic Basin but it is still a big market• However shrinking demand and increasing competition from imports is making it an increasingly

competitive market – the Atlantic Basin no longer dominates global refining

IOCs will continue to rationalise to focus on key refineries, which have the scale and efficiency to deliver appropriate returns, but are unlikely to exit refining altogether

There are some good assets available in the marketplace in what is very much a buyer’s market


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Jonathan Leitch Senior Analyst Oils Research

T + +44 (0) 20 3060 0469 E [email protected]

Jonathan Leitch is a Senior Analyst working on the Product Markets Service, based in London. Jonathan specialises in forecasting products prices and refining margins.

He joined Wood Mackenzie in 2008 after working as a research associate at another leading oil consultancy where he spent four years actively involved in analysis of the downstream markets. With a total of 19 years oil market experience, Jonathan has worked in trading for Rhein Oel/RWE Trading dealing with physical crude oil and futures and derivatives.

Prior to this he worked for Shell in crude oil operations and shipping.


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Wood Mackenzie Disclaimer

This presentation has been prepared by Wood Mackenzie Limited for delivery at the IP Week Conference. It has not been prepared for the benefit of any particular attendee and may not be relied upon by any attendee or other third party. If, notwithstanding the foregoing, this presentation is relied upon by any person, Wood Mackenzie Limited does not accept, and disclaims, all liability for loss and damage suffered as a result.

The information contained in these slides may be retained by attendees. However, these slides and the contents of this presentation may not be disclosed to any other person or published by any means without Wood Mackenzie Limited's prior written permission.


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Wood Mackenzie is the most comprehensive source of knowledge about the world’s energy and metals industries. We analyse and advise on every stage along the value chain - from discovery to delivery, and beyond - to provide clients with the commercial insight that makes them stronger. For more information visit: www.woodmac.com

3/2/2011 20

IP Week Downstream Session

February 22, 2011

3/2/2011 21

Safe Harbor Statement

Statements contained in this presentation that state the Company’s or management’s expectations or predictions of the future are forward–looking

statements intended to be covered by the safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934.

The words

“believe,”

“expect,”

“should,”

“estimates,”

and other similar expressions identify forward–looking statements. It is important to note that actual results

could differ materially from those projected in such forward–looking statements. For more information concerning factors that could cause actual

results to differ from those expressed or forecasted, see Valero’s annual reports on Form 10‐K and quarterly reports on Form 10‐Q, filed with the Securities and Exchange Commission, and available on Valero’s website at

www.valero.com.

21

3/2/2011 22

Valero Energy Overview

• World’s largest independent refiner

–

14 refineries

–

2.6 million barrels per day (BPD) of throughput capacity

–

Average refinery throughput capacity of 185,000 BPD

• One of the nation’s largest fuel retailers with nearly 5,800 branded marketing sites

• One of the largest ethanol companies in U.S.

–

10 large‐capacity and efficient plants with total of 1.1 billion gallons/year (72,000 BPD) of production capacity

–

All plants located in resource‐advantaged corn belt

• Approximately 20,000 employees

22

3/2/201123

Geographically Diverse Operations

23

3/2/201124

Simple Refining Margins Bottomed in 2009, Recovery Started in 2010

24

Gulf Coast LLS Margins

• Margins improving from strong global demand, particularly in emerging markets, and capacity

rationalization

• Recent cold weather and restocking from 4Q10 French strike in OECD countries helping distillate

demand and margins

per bbl

Source: Argus; 2011 year-to-date through February 3

3/2/2011 25

Continued Global Demand Growth Important to Refining Margins

• Refining is a global business – global demand growth matters to refiners everywhere

• Strong growth in emerging markets is leading the surge in global

demand, similar to 2003‐2005, estimated at 2.5 million BPD in 2010

25Source: Consultant and Valero estimates

3/2/2011 26

World Demand Favors Diesel

World DemandMMBPD

•

Diesel demand is expected to recover past prior highs and grow rapidly

•

Diesel demand has grown to become much larger than gasoline globally

•

Growing global diesel demand is an export opportunity for U.S. refineries

Source: Consultant, IEA, and Valero estimates

26

3/2/2011 27

Rationalization of Industry Capacity Continues

Source: Valero EnergyNote: 2011 and 2012 estimates include announced future capacity closures

MBPD

27

Source: Valero Energy

MBPD

• As we said previously, refining capacity continues to shut down in the industry, particularly marginal plants with upcoming capital requirements

3/2/2011 28

Note: Availability of world CDU capacity assumed to average ~94%; Historical CDU capacity data from the DOE; USGC 5/3/2 = 3*USGC Gasoline+2*USGC ULSD‐5*WTI

• Estimate global spare refining capacity fell from 7 million BPD of at end of 2009 to 5.7 million

BPD at end of 2010

MMBPD Margin/bbl

Golden AgeGolden Age

Global Spare Capacity Declined in 2010

28

3/2/2011 29

Strong Demand for Waterborne Light‐Sweet Crude Oils Creating Large Feedstock Discounts

29

$/barrel

3/2/2011 30

Gulf Coast Heavy Sour Coking Margins Leading the Recovery

30Source: Argus; 2011 year‐to‐date through January 31; see Appendix for details on refinery configuration assumptions

3/2/2011 31

U.S. Refinery Utilization Recovering

31

• U.S. refinery utilization is back near the long‐term average after falling to a 20+ year low in

2009

1970 –

2010 Average

Source: U.S. DOE ‐

EIA

3/2/2011 32

Atlantic Basin Trade Flows

32

GasolineDiesel/Jet

Intermediates

3/2/2011 33

U.S. Diesel Exports Continue to Grow

33

MBPD

Source: U.S. DOE, latest data November 2010

3/2/2011 34

U.S. Gasoline Exports Growing as Well

34

MBPD

Source: U.S. DOE, latest data November 2010

Note: Includes Finished Gasoline and Blending Components

3/2/2011 35

Independent Refiners Such as Valero Can Take Advantage of This Trend

351Based on 854 MBPD of average total U.S. gasoline and diesel exports from 1Q09 – Nov. 10

• Our large, complex refineries on Gulf Coast are competitive with

low‐cost operations and feedstocks

• Structural supply‐demand imbalance in Latin America and diesel‐shortage in Europe provide higher‐margin export opportunities

• Low‐cost natural gas is a competitive cost advantage versus other global refiners

3/2/2011 36

Portfolio Upgrading Remains an Opportunity – Economic Refining Investments

36

• Potential for significant earnings power and project returns• Projects developed based on our “bullish crude, bearish natural gas”

price outlook

• These projects represent over 75% of strategic capital spending in 2010 and 90% in 2011

1D&A = depreciation and amortization expense; See Appendix for price assumptions and project descriptions; 2estimated IRR is unlevered and could improve due to pending changes in tax laws regarding accelerated depreciation expense; 3Most of project commissioned in 2010

Refinery Project

Estimated

Completion

Date

Estimated Annual Op.

Inc. before D&A using

Base Case1

(millions)

Estimated

IRR2

using

Base Case

Estimated Annual Op. Inc.

before D&A using 2011

Fwd Curve

Prices1 (millions)

Memphis FCC Revamp 2Q113 $75 20% $86

St. Charles FCC Revamp 2Q11 $140 30% $135McKee &

Memphis New Hydrogen

Plants 1Q12 $105 39% $136

Port Arthur New

Hydrocracker 3Q12 $485 21% $620

Montreal New Products

Pipeline 4Q12 $55 12% $55

St. Charles New

Hydrocracker 4Q12 $325 16% $467

Total $1,185 20% $1,500

3/2/201137

Continuing to Make Our Refineries More Competitive

37

1st

QuartileIndustry

Rank

2nd

Quartile

1st

QuartileIndustry

Rank

2nd

Quartile

• Industry benchmarking survey shows Valero is continuing to improve on its competitive, low‐

cost operations–

2010 was Valero’s best companywide performance in five years

–

Corpus Christi refinery ranked as one of the best facilities on the Gulf Coast for costs

Source: Solomon Associates and Valero Energy Source: Solomon Associates and Valero Energy

3/2/201138

Continuing to Make Our Refineries More Competitive

38

1st

QuartileIndustry Rank

2nd

Quartile

1st

Quartile

2nd

Quartile

• Our goal is to be a 1st‐quartile refiner in industry benchmark surveys• Expect big reliability improvement after major 1Q11 turnarounds,

particularly for

Port Arthur coke drums and St. Charles FCC revamp

3rd

Quartile

3rd

Quartile

4th

QuartileIndustry

Rank

Source: Solomon Associates and Valero Energy Source: Solomon Associates and Valero Energy

3/2/2011 39

Marketing Growth Potential

• High valuations for convenience stores/fueling facilities are bringing retail marketing assets to market

–

ExxonMobil has sent out packages inviting marketers to bid on its stations in key metro

markets

• Offering 200 outlets for sale in Houston (84), Dallas (51), San Antonio (39) and Austin (26), greater Los Angeles area (350) , and Louisiana (33)

• C‐stores continue to grow–

The number of c‐stores in the U.S. grew 1.2% percent over the past year to 146,341 as of

Dec. 31, 2010 (NACS)

–

The industry remains widely fragmented and more consolidation is

expected as Big Box

retailers and some supermarket chains continue to add gas pumps to their sites.

–

The number of c‐stores selling motor fuel rose 1.7%, to 80.2%

• Grow in markets where system supply is available–

Branded marketing growth provides ratability and a margin lift above spot sales

–

Returns on capital are well above the cost of capital

39

3/2/201140

World Economic Outlook & Risks

40Sources: IMF, Valero MA Estimates

Trillion 2005 US $

Risks

•Euro Crisis•Inflation in Developing

Markets

•U.S. Unemployment &

Budget Deficit

• The world has survived 2009, the first decline in global GDP since 1992• 2010 Real GDP recovered to above the 2008 level

3/2/2011 41

World Oil Consumption ‐

High Prices Impact Demand

41

Oil Price (Real 2008 $/BBL)Global Oil Consumption Efficiency Improvement

3/2/201142

U.S. Vehicle Efficiencies Have Already Begun to Improve

42

Miles per Gallon U.S. New Vehicles Fuel Efficiency

Source: Transportation Energy Data Book, Valero Estimates•

New vehicles fuel economy are expected to see 15‐20% improvements in the U.S. and Europe by mid‐

decade•

EU law mandates 50 mpg equivalent for new vehicles by 2015 with a proposal for 65 mpg in 2020•

New rules in the U.S. will likely require 47‐62 mpg requirement for new vehicles by 2025 – proposal details

expected in late 2011

3/2/2011 4343Source: Valero and Consultant Estimates

MMBPD

Global CDU Capacity and Additions

3/2/2011 44

Biofuels

Growth Continues

44

Source: U.S. DOE, Valero estimates

• Biofuels

growth continues globally but it is expected to slow

–

Global biofuels

growth peaked at

nearly 400 MBPD in 2008

–

Growth over the next few years is

expected to be only about 200 MBPD –

70% is ethanol

• U.S. growth is also slowing as RFS2 requirements taper

–

Since 2002, U.S. ethanol demand has

grown an average of 90 MBPD/year

–

Through 2015 RFS2 requires demand

growth of only 40 MBPD/year

U.S. Ethanol DemandBGal/yr

3/2/2011 45

Regulatory Changes Continue And Are Becoming More Challenging ‐

California LCFS Example

45

2011 Standard2015 Standard

2020+ Standard

•

Carbon Intensity (CI) of CARBOB is already above the California LCFS so production creates a

deficit that must be offset by blending in low CI fuels

90% of U.S. ethanol with dry DGS so its CI is already above the standard

•

Standard encourages use of Brazilian ethanol or cellulosic ethanol (CI = 2) which is years

away from being produced in meaningful volumes

•

Ethanol blending remains limited to 10% and standard is on an energy density basis

3/2/2011 46

Independent Refining Remains a Viable Business Model Although Challenges Remain

• The outlook for the refining industry has improved

–

Most advantageous for high conversion facilities and niche locations running discounted crudes

–

Strong world demand growth has returned, led by diesel

–

Refinery closures have supported the market

• Independent refiners continue to have growth opportunities–

Global trade opportunities exemplified by U.S. products exports growth

–

Business growth opportunities include potential for increasing marketing presence and acquisition driven refining growth

–

Portfolio upgrading can lead to earnings growth –

refinery sales, project investment, cost reductions

• However, numerous challenges continue to confront the industry

–

Economic risks and high oil prices threaten demand

–

Supply growth continues from biofuels

and new refining capacity additions

–

Regulatory challenges persist – fuel economy, environmental, etc.46

3/2/2011 47

Thank You

Deutsche Bank

Capital markets perspectives

London, 22 February 2011

Michael HafnerLondon, 22 February 2011

Deutsche Bank

02/03/2011

49

11bLD0494

Analyst refining margin outlook

Two-speed demand growth

Refining arms race

Share prices and sector valuations

Capital markets’ role in ongoing sector evolution

Agenda

02/03/2011

49

11bLD0494

Deutsche Bank Michael HafnerLondon, 22 February 2011

02/03/2011

50

11bLD0494

Refining margin evolution

02/03/2011 2010 DB Blue template

50

Source: Deutsche Bank Research

Global refining margins recovered near to global long term average of US$4.5/bbl

11bLD0494


02/03/2011

51

11bLD0494

Expected refining margin development

NW Europe complex US Gulf Coast 3-2-1


51

Singapore complex

11bLD0494

Source: Deutsche Bank Research, Broker Research, Wood Mackenzie



52

Diverging demand growth

Crude oil demand by region (mbbl/d)

02/03/2011

52

(a) Excl JapanSource: Deutsche Bank Research

0

10

20

30

40

50

60

70

80

2010A 2015E

US OECD Europe Asia(a) Middle East LatAm Africa

+14%+15%

+22%

(3)%

(1)%

75.969.9

11bLD0494

+13%

+9%


02/03/2011

53

11bLD0494

Refining base comparison by region

02/03/2011

53

Source: Wood Mackenzie

Asia Pacific 172 142 29% 6.2

Europe 128 151 23% 6.6

FSU 51 148 9% 3.9

Middle East 37 190 8% 4.3

North America 151 137 24% 9.2

Total 620 138 100% 6.4

Region No of Avg CDU % of Avg WM refineries (kb/d) global cap complexity


02/03/2011

54

11bLD0494

Refining arms race

02/03/2011

54

Asia dominates with some 41% of upgrading capacity over the period expected to arise here

Source: IEA Medium Term Oil Market report 2010, Deutsche Bank estimates


02/03/2011

55

11bLD0494

OECD utilisation will force further closures

02/03/2011

55

Source: IEA OMR material is copyrighted by OECD/IEA, data used with the permission of IEA

11bLD0494



56

Share price performance by region

Last five years

02/03/2011

56

Note: Indices based on market cap weighted average of peersSource: Deutsche Bank Research, Capital IQ as at 11 February 2011

11bLD0494



57

Trading multiple evolution by region

Last five years

02/03/2011

57

Note: Indices based on simple average of peersSource: Capital IQ as at 11 February 2011

11bLD0494



58

Current trading multiples

TEV/EBITDA

02/03/2011

58

P/E

11bLD0494

Note: Indices based on median of peersSource: Deutsche Bank


11bLD049402/03/2011 2010 DB lue template

59

Company responses and capital markets’ role

Asset sales / financing

Financing operations through cycle

Industry consolidation

Portfolio management

Financing growth investment

Rosneft / PDVSA, Klesch / Shell, Keele Oy / Shell Sweden/Finland

Petrochina / INEOS

Delek / BP, Motor Oil / Shell

Statoil Fuel & Retail IPO

Essar Energy IPO, Petronas Chemicals IPO

Corporate initiative Selected examples

02/03/2011

59


02/03/2011

60

11bLD0494

Selected refinery sale/closure situations

02/03/2011

60

Stanlow Wilhelmshaven

Lindsey

Pembroke

Gdansk

Teeside

Gothenburg

Harburg

Arpechim

Reichstett

Dunkirk

Orlen Lietva

Milford Haven

Dunkirk

EUROPE N-America

Montreal

Eagle Point

Toledo

YorktownSuperior

Meraux

Somerset

Bakersfield

Bloomfield

Asia

Sodegaura

Kashima

Oita

Mizhushima Toyama

Chiba

Yokkaichi


02/03/2011

61

11bLD0494

Global Deutsche Bank Energy Team

02/03/2011

61

Toronto

New York

Houston

Sao Paolo

LondonMoscow

Mumbai

Johannesburg

Hong KongTokyo

Sydney

Melbourne

Beijing

Senior Bankers: 1

Rod O'Hara (D)

Toronto

Senior Bankers: 6

Alan Brown (MD)

Michael Hafner (MD)

Nigel Robinson (MD)

Andrew Congleton (MD)

Rajat Katyal (D)

Sascha Eckert (D)

London

Senior Bankers: 2Kotaro Ike (MD)

Junichiro Toriumi (D)

Tokyo

Senior Bankers: 2

Yash Kaman (MD)

Mayooran Elalingam (MD)

Hong Kong / Singapore

Senior Bankers: 1Jaideep Lakshminarayanan (MD)

Mumbai

Senior Bankers: 2Andrew Chulack (MD)William Donovan (D)

Moscow

Senior Bankers: 2

Kevin Latter (MD)

David Wilson (D)

Johannesburg

Senior Bankers: 8

Dan Ward (MD)

Terrance Neafsey (MD)

Rob Wheeler (MD)

Curt Launer (MD)

Tim Kisling (MD)

Gregory Sommer (MD)

Rick Moore (MD)

Petter Skantze (D)

New York

Senior Bankers: 7

Sten Gustafson (MD)

David Sisler (D)

Brian Jinks (D)

Matt DeNezza (D)

Mason McGurrin (D)

Lance Loeffler (D)

Scott Schoenherr (D)

Houston

Senior Bankers: 3Cameron Robertson (MD)

Alex Cartel (MD)

Damian Pearson (D)

Australia

Senior Bankers: 1Caio Costa (D)

Sao Paolo

Senior Bankers: 2Dan Chen (MD)

Angelo Zhang (MD)

Beijing

11bLD0494


02/03/2011

62

11bLD0494

Global Deutsche Bank Energy Derivatives Team

02/03/2011

62

Calgary

New York

Houston

Sao Paolo

London

Tokyo

Singapore

Dave Kendall (D)

Calgary

Claire Godard (D)

Ian Muir (D)

Jamie Trillow (D)

Christina Constandinou (VP)

Anjli Shah (A)

London

Ken Yamaguchi (D)

Xu Xiao (A)

Tokyo

Stuart Smith (MD)

Sankalp Shangari (VP)

David Ng (VP)

Roger Bell (A)

Jennifer Zhang (A)

Singapore

Doug Sherman (D)

Peter Wishart (D)

Ed Kevelson (D)

Amichay Greenstein (D)

New York

Nicole Jasper (MD)

Monique Aiken (VP)

Houston

Kleber Costa (D)

Sao Paolo

11bLD0494

Deutsche Bank

Appendix


11bLD049402/03/2011 2010 DB lue template

64

Indices

— BG— BP— Chevron— ConocoPhillips— Eni

Majors US R&M

02/03/2011

64

— Exxon Mobil— Repsol YPF— Royal Dutch Shell— Statoil— Total

— Alon USA— CVR Energy— Delek— Frontier Oil— Holly Corp

— Sunoco— Tesoro Corp— Valero Energy— Western Refining

— CEPSA— Lotos— Motor Oil— Neste

Euro R&M Asian R&M

— Petroplus— PKN— Saras— Tupras

— Essar— Bangchack Pet— Bharat Pet— Caltex Australia— Hindustan Pet— Indian Oil

— Petron Corp— PTT A&R— Reliance Industries— SK Innovation— S-Oil Corp— Thai Oil

Jubail refinery project Key features , project status

RG –0752

1

A refinery located close to the oils fields, ideall y situated to serve the Asian and Middle Eastern markets

OmanEAU

IranIrak

Qatar Jubail

Safaniya & Manifa oil fields (2 Mb/d)

KSA

RG –0752

2

Yemen

400 kb/d Arab Heavy capacityHigh complexity with full conversion, no heavy fuel s

Refining scheme geared to Diesel/Jet productionPetrochemical integration - 700 kt/a paraxylene

Camp for 25,000 persons

SATORPRefinery

Project Scope: the main site and two satellites

RG –0752

3

Port T/F

Coke Hand

13

Refined Product Berths

KFIPCoke

Handling Tanks

20132006 2007 2008 2009 2010 2011 2012

Long Lead Items

JV agreements negotiation

FEED

MOU signature

Project schedule: 8 years overall

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4

EPCC

Approvals, creation of the JV

IPO preparation (tbc)

Financing

Preparation of the JV operation

Mechanical completion

Initial discussions mid 2005 , signature of the JV agreements in June 2008, EPC contracts signed in July 2009, startup (oil in) in Q1 2013

Start upContracts award

The site in Q1 2011

Overall site

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513

One process unit

Financing of the project

Saudi Aramco and Total will each own 37.5% of the project, after the sale of25% to the public.

Planned financing structure (debt ratio 60-65%):� Equity - Hard equity

- Subordinated shareholders loans

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� Debt - Export credit agencies (ECA)- Commercial banks- Islamic banks- Saudi investment funds (PIF, SIDF)- Sukuks (finalized H1 2011)

- Senior shareholders loans (pari passu with banks)

The Jubail project: a few facts and figures

Project cost:� EPC contracts = 9.6 G$� Overall budget is 2.5 times that of a EPR nuclear power plant or 2 times that of the

High Speed train track from Paris to the German border

A few figures:� Main site 5 km2, temporary facilities 6 km2

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� Main site 5 km2, temporary facilities 6 km2

� More than 35,000 persons on site as of Q4 2011� 140-150 million working hours� ~100,000 tons of structural steel, 13 times as much as for the Eiffel Tower� Concrete volume is 3.5 times that of the Stade de France arena in Paris� 21,000 km of 2”+ pipes, 16,000 km of cables� 4,200 peaces of engineered equipment

Refinery scheme

Benzène

HDSBP

HDS Diesel

Jet

Essences

LAGO

HAGO

ParaxyleneHeavy naphtha

CCR

LPG

Benzène

PX

Benzene

HDSBP

HDS Diesel

Jet

GasolineKerosene

Paraxylene

CD

U

Light naphthaCCR

LPG

Naphtha ex DHC/MHC and Coker LPG ex MHC/DHC/Coker

Benzene

PX

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8

400 MBD

ArabianHeavy

HDSHP

Diesel

Distillation ss

vide

Propylène

Coke

Soufre Sulfur

All unitsCoker

DHC

MHC FCC

Alky

GO ex Coker

LCNHCN

LCO

HDSHP

Diesel

Distillation ss

videV

DU

Propylene

Coke

Sulfur Sulfur

RecoveryAcid gas

HydrogenSteamSteam

Reformer

Gas or LPG

Coker

DHC

MHC FCC

Alky

VR

LCNHCN

Merci شكرآۤ

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9

Thank You

Merci شكرآۤ

www.woodmac.com


Thank you for your interest in these papers recently presented at Wood Mackenzie’s Global Refining Seminar at IP Week 2010, London

Please be aware of the disclaimer on the following slide


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Wood Mackenzie Disclaimer

These presentations have been prepared by Wood Mackenzie Limited, Valero, Deutsche Bank and Total for delivery at Wood Mackenzie’s Global Refining Seminar IP Week 2011, London on Tuesday 22 February 2011. They have not been prepared for the benefit of any particular attendee and may not be relied upon by any attendee or other third party. If, notwithstanding the foregoing, this presentation is relied upon by any person, Wood Mackenzie Limited does not accept, and disclaims, all liability for loss and damage suffered as a result.

The information contained in these slides may be retained by attendees of the seminar. However, these slides and the contents of this presentation may not be disclosed to any other person or published by any means without Wood Mackenzie Limited's prior written permission.

Wood Mackenzie Global Refining Seminar IP Week 2011 ... · PDF file Delivering commercial insight Wood Mackenzie Global Refining Seminar IP Week 2011, London, 22 February 2011 Atlantic

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