muir presentation

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© Copyright INFINEUM INTERNATIONAL LIMITED 2004. All rights reserved

Successful Growth in a Mature MarketSuccessful Growth in a Mature Market

Bob MuirVice President –New Business Development

Infineum International

© Copyright INFINEUM INTERNATIONAL LIMITED 2004

Who we areWho we are

? A leading developer of lubricant and fuel additive technologies

? Circa $1.5 billion global enterprise

? 50/50 joint venture between Shell and ExxonMobil

? 70 years history


Changing Changing IndustryIndustry

Slow demand growth

Global annual lube growth 0.5 % yr

The Lubricant & FuelAdditives Industry

Increased industry competition & consolidation

1992 - Ethyl purchases Amoco additives1996 - Ethyl purchases Texaco additives1998 - Lubrizol purchases Adibis1998 - Infineum gains approval1999 - Infineum operational

OEM mergers continue, industry structure

may change

0

10

20

30

40

50

60

1964 1980 1998

North-America Asia Europe

52

3019

No. of OEM’s

1989 - Fuel volatility limits set1990 - EPA sets S limits in Diesel1992 - Euro I emissions introduced 1996 - Leaded gasoline removed in US1996 - Euro II emissions introduced2000 - Fuel volatility limits set2005 - 30-50% reductions vs 2000 in HDD

Increasingly toughemissions legislation drives

specifications & costsShort product life cycles persist as engine test costs continue rising.development cost vs payback time becomes unsustainable forcing closer industry alliances

DevelopmentCosts

(kUS$)

1930 1960 1990 2010Year

Life Cycle of Formulations(Years)

10 years1000

3000

Difficult trading conditions

Customers under pressureforcing mergers & JV’s

1997 - BP-Mobil JV in Europe1998 - Shell & Texaco USA Mkting JV1998 - Pennzoil & Quaker State merge1999 - BP-Amoco: ExxonMobil;

Repsol YPF; TotalFina2000 - BP-Amoco-Castrol-Arco; TFE2001 - ChevronTexaco: BPCastrol/Aral:

Shell/DEA2001 - Shell/PQS


Technology Drivers Technology Drivers –– a Virtuous Circle?a Virtuous Circle?

Fuel additives, flow improvers, lubricity improvers, cetane

improvers, detergents Greater use of

non-conventionalbase stocks in

lubricants

Better cleanliness

Better fueleconomy

Longer oil drains

Reducedemissions

Longer serviceintervals

Change in base oils & additives

eg lower P, S, ash( low/medium SAPs)

Better durability

Fuel additivation &lube grade proliferation

Which result in:

Hardware changes

Cleaner fuels


HiHi--Tech Tech ‘‘MatureMature’’IndustryIndustry

……… but with inexorable environmental drivers

? Technologies complex and costly

? Markets large, risk averse

? ‘Growth Platforms’to consolidate opportunities


ULS Diesel China

NOVA 3Additives for ULS Fuels

LS diesel

East Europe

High T detergentscold flow

NOVA 2High T detergents/stabilisers

OEM Relationship

USA

Possible Growth Platforms:Possible Growth Platforms:Distillate Fuel/Refinery AdditivesDistillate Fuel/Refinery Additives

Mar

kets

New

Exis

tin

g

Existing NewCapabilities

Wax crystal ModificationPolymer designHarms testing


NBD Lessons LearnedNBD Lessons Learned

? Profitable growth opportunities can be created in mature businesses ? We can ‘know’the future

? Success founded strongly in Infineum competencies

? Challenges of new business requires, different skills and approaches, persistence and patience? Often challenges existing business model eg emission trading

? As projects advance, increased focus and dedication of resources is critical for early commercial success

? ‘Growth Platforms’provide a sound model for future success

The information contained in this document is based upon data believed to be reliable at the time of going to press and relates only to the matters specifically mentioned in this document. Although Infineum has used reasonable skill and care in the preparation of this information, in the absence of any overriding obligations arising under a specific contract to supply goods or services,: no representation, warranty (express or implied), or guarantee is made as to the suitability, accuracy, reliability of completeness of the information; nothing in this document shall reduce the user’s responsibility to satisfy itself as to the suitability, accuracy, reliability, and completeness of such information for its particular use; there is no warranty against intellectual property infringement; and Infineum shall not be liable for any loss, damage or injury that may occur from the use of this information other than death or personal injury caused by its negligence. No statement shall be construed as an endorsement of any product or process. For greater certainty, before use of information contained in this document, particularly if it is used for a purpose or under conditions which are abnormal or not reasonably foreseeable, it must be reviewed with the supplier of such information.

“Infineum”, "Dobanax”, “Paratac”, “Synacto”, “Vektron”and the corporate mark comprising the interlocking ripple device are trademarks of Infineum International Ltd. “Vistone”is a trademark of Exxon Mobil Corporation used under licence by Infineum International Limited.

? Copyright INFINEUM INTERNATIONAL LIMITED 2004. All rights reserved.