NOT AN OFFICIAL UNCTAD RECORDNOT AN OFFICIAL UNCTAD RECORD

A Risk Management A Risk Management CompanyCompany

We today have a direct presence in We today have a direct presence in 33 countries33 countries

with a staff of 1800 qualified with a staff of 1800 qualified personnel,personnel,

supported by a network of 97 supported by a network of 97 agents.agents.

Headquartered in GenevaHeadquartered in Geneva

Geneva : Group Headquarter

« To provide our Customers integrated risk management solutions through superior credit support, inspection, quality assurance, delivered world-wide by a team of professionals applying the best technology. »

Our Mission,Our Mission,

Our Our MissionMission

The ACE - AUDIT CONTROL & EXPERTISE Group

Our Risk Management Services,Our Risk Management Services,

Our Our ServicesServices

ACE Pre-Loan Survey (Due-Diligence)ACE Pre-Loan Survey (Due-Diligence)

ACE STF Training ServicesACE STF Training Services

ACE Monitoring Services (Inventory & ACE Monitoring Services (Inventory & Receivables)Receivables)

ACE Inspection ServicesACE Inspection Services

ACE Audit ServicesACE Audit Services

ACE Agricultural Credit Management ACE Agricultural Credit Management ServicesServices ACE Credit Shield (Insurance) ServicesACE Credit Shield (Insurance) Services

ACE Collateral Management ServicesACE Collateral Management Services& ACE Field Warehousing Services& ACE Field Warehousing Services

The ACE - AUDIT CONTROL & EXPERTISE Group

"Financing Oil Imports "Financing Oil Imports Using Integrated Risk Using Integrated Risk

Management Management Solutions"Solutions"

Oil Local Marketing Chain- Previously highly regulated -

Liberalization of the downstrea

m marketing

chain

Vertical integration of the Oil Marketing chain from the international level (Majors)

Intervention of

Majors & International banks

on the local

market

Strangulation of

Local Oil Importers

THE FACTSTHE FACTS

OIL FINANCING - MARKET CONSTRAINS

Lack of (or

Weak) Regulato

ry Mechanis

m

Since Oil or Product Finance is Since Oil or Product Finance is mainly mainly

A MULTI-STEP LOAN A MULTI-STEP LOAN MANAGEMENT…..MANAGEMENT…..

« TRANSACTIONAL » FINANCING

The BANKS, The INSURERS & ACE need to The BANKS, The INSURERS & ACE need to

know:know:Oil Specifications Market Environment (if it is a buyer or seller market)Logistics aspectsStorage and Refining CapacityTransportation availabilitySecurityTime CyclePrice MechanismsSelling Mechanism (Firm Offtake or Speculation)

EVALUATION OF THE TRANSACTION EVALUATION OF THE TRANSACTION TO BE FINANCEDTO BE FINANCED

The preparation of the terms of the facility agreement The preparation of the terms of the facility agreement requires full knowledge and in-depth understanding of requires full knowledge and in-depth understanding of

the Risks associated to the transaction.the Risks associated to the transaction.

« TRANSACTIONAL » FINANCING

PARTIES INVOLVED IN THE TRANSACTIONPARTIES INVOLVED IN THE TRANSACTIONThe bank/Insurer & ACE have to know the various The bank/Insurer & ACE have to know the various players involved in the transaction in order to players involved in the transaction in order to secure the collateral and remove the lien of the secure the collateral and remove the lien of the parties :parties : First Stage Buyers, Suppliers, Exporters Traders Transporters Refineries Tank Farm Operators Forwarders Shipping Agents Insurers Brokers

One objective only : One objective only : Completion of the Completion of the transaction in facilitating transaction in facilitating Repayment of the loanRepayment of the loan

« TRANSACTIONAL » FINANCING

The The ParticipanParticipan

tsts

COUNTRY - OIL IMPORT STRUCTURE

- 90/10 Principle -- 90/10 Principle -90% of Imports are done by 10% of Actors90% of Imports are done by 10% of Actors

1.1. Majors (International Integrated Oil Majors (International Integrated Oil Company)Company)Between 5 to 10 operating in the country,Very well equiped with logistic and infrastructures,They own their own terminal, tank storage and distribution outlets.2.2. Small ImportersSmall ImportersHigh number in operation,Very few or outdated logistic and infrastructures,Rarely possess terminal or tank storage and distribution outlets

COUNTRY - OIL IMPORT STRUCTURE

- 90/10 Principle -- 90/10 Principle -90% of Imports are done by less tan10% of 90% of Imports are done by less tan10% of

ParticipantsParticipants

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

10,000,000

In Tons

Majors Independent Importers

Group of Importer

Crude Oil & Products Imports 2002-2003

Crude Oil

Products0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

10,000,000

In Tons

Majors Independnt Importers

Group of Importer

Crude Oil & Products Imports 2001-2002

Crude Oil

Products

COUNTRY - OIL IMPORT STRUCTURE

Tank Farms,Tank Farms, Most storage facilities owned by the Majors. Very well equipped and allowing

good storage conditions when owned by Majors. Ill equipped when owned by small importers.

Refinery,Refinery, Old refining facility

Under-maintained and decaying processing machinery, with diminishing refining capacity. Output covers about 50% of Products internal demand.

COUNTRY - OIL IMPORT STRUCTURE

The The ChallengeChallenge

COUNTRY - OIL IMPORT STRUCTURE

Deregulation of Oil & Product Import Deregulation of Oil & Product Import Marketing ChainMarketing Chain Registered importers increased very quickly.

But most of them had, no own storage facilities.no prior experience of dealing in petroleum.Imports were segmented into small lots.

Effective regulatory mechanism was left to basic « Supply & Demand » rule. As a result, Small product import lots bypassed existing

storage facilities to go directly to retail pump stations.

Tax body was unable to control effectively the numerous and small imports.

Adulteration of products by mixing increased and further boosted by differential grade taxing.

Product standards varied drastically within the country.

Minimum safety standards were not met by newly created retail distribution network.

COUNTRY A – CHALLENGE

Liberalization of downstream petroleum marketing was prompted by the previously described situation to promote competition.

It resulted in serious changes to the importing structure….

The The proposedproposedSolutionSolution

SOLUTION

Field Tank Farm Receipt & Receivables Field Tank Farm Receipt & Receivables Financing Financing

coupled with, coupled with,

The idea would be to

Use in synergy Field Tank Farm receipt & Receivables financing with

Multilevel biotechnical and chemical cargo marking process - which applies unique DNA codes - allowing for unequivocal identity proof of ownership and source of Oil/Products cargo,

With permanent real time monitoring for Tank Farm storage through the use of an integrated IT graphic solution combining permanent sensor and ultrasonic measurement technologies with Web enabled reporting using ACESMART.

AN ACE RISK MANAGEMENT SOLUTION

1.1. DNA Cargo Tagging,DNA Cargo Tagging,2.2. IT Real Time Tank Storage Monitoring,IT Real Time Tank Storage Monitoring,3.3. near real time fully secured over the near real time fully secured over the

web reportingweb reporting

Wide Area Network, via IP: dial up, GSM, wireless, satellite or a combination of all, depending on conditions & existing infrastructureACE On-Site interventions for: -Marking / Tagging -Sampling & Analysis (Country Wide)

AN ACE RISK MANAGEMENT SOLUTION

Oil/Products Tank Storage or Refinery Complex

ACE On-Site Real Time monitoring network & sensorsACE Central Server

Pre-Operation Phase - ACE will

- Identify Tank Farm / Terminal - Survey Tank Farm / Terminal - Approved Tank Farm / Terminal Sub-Lease from owners Operate Tank Farm/Terminal

Pre-Operation Phase - ACE will

- Survey Refinery Process - Approve Refinery Facility Sub-Lease from owners Obtain Weaver & Consent from owners

Pre-Operation Phase - ACE will

- Identify Field Tank Farm - Survey Field Tank Farm - Approved Field Tank Farm Sub-Lease from owners Operate Field Tank Farm

ACE Integrated Risk Management Solution - Collateral

Management & Monitoring -

Concept

CR

UD

E O

IL

TANK FARMStorage

REFINING

PROCESS

TANK FARMStorage

TANK FARMStorage

TANK FARMStorageOPERATION PHASE

ACE will - Monitor Processing - Control Quantity out - Control Weight out - Control Quality out - Attend & Monitor Transport

OPERATION PHASE - ACE will

- Control Distributed Quantity - Control Weight Out - Control Distributed Quality

TRANSMIT TO FINANCIER

Delivery Documents.

OPERATION PHASE - ACE will

- Control Quantity and Weight In - Control Quality In - Approve/Refuse crude oil entry - If approved, DNA Tag oil cargoTRANSMIT TO FINANCIER Quality/Quantity/Weight Cert. Issued Tank Farm Receipt

OPERATION PHASE ACE will

- Control Quantity out - Control Weight out - Control Quality out - Attend & Monitor Transport

Pre-Operation Phase - ACE will

- Identify Tank Farm / Terminal - Survey Tank Farm / Terminal - Approved Tank Farm / Terminal Sub-Lease from owners Operate Tank Farm

Pre-Operation Phase - ACE will

- Identify Field Tank Farm - Survey Field Tank Farm- Approved Field Tank Farm Sub-Lease from owners Operate Field Tank Farm

ACE Integrated Risk Management Solution - Collateral

Management & Monitoring -

Concept 2

PR

OD

UC

TS

TERMINAL/TANK Storage

TANK FARMDistribution Storage

TANK FARMDistribution Storage

TANK FARMDistribution Storage

OPERATION PHASE - ACE will

- Control Distributed Quantity - Control Weight Out - Control Distributed Quality

TRANSMIT TO FINANCIER

Delivery Documents.

OPERATION PHASE ACE will

- Control Quantity out - Control Weight out - Control Quality out - Attend & Monitor Transport

OPERATION PHASE - ACE will

- Control Quantity and Weight In - Control Quality In - Approve/Refuse product entry - If approved, DNA Tag product cargoTRANSMIT TO FINANCIER Quality/Quantity/Weight Cert. Issued Tank Farm Receipt

The LEGAL Nature of ACE Risk Management Services

The Depositor relinquishes possession of the property;

This is the legal term describing the relationship when the ownership of personal property resides in one person and possession of it is in another.

ACE assumes « exclusive, continuous and notorious possession of the property ».

Two conditions are necessary for « Bailment » to exist,

BAILMENT CONCEPTBAILMENT CONCEPT

The depositor of the goods is known as the « Bailor »

The person engaged in storing the goods of others for compensation (I.e. the Collateral Manager) is known as the « Bailee »

Oil/Products Import Structure – Legal Agreements

- “All Risks” plus misappropriation.- Professional Indemnity, Fraud & Omission.- Political Risk (confiscation, expropriation, nationalization & Depossession).

CMA & CSS Agreements

Assignment of

Insurance

Sale & Purchase AgreementAssignment of Farm Tank Receipt & Proceeds

Procurement/Purchase Contract

ACEACE

Insurance Company

Distribution Network

Financing Bank (SPV)

Transporters

TANK FARM

Storage

REFINERY Process & Storage

Small Importers

TANK FARM

Storage

Transporters

SUPPLYER

Lease/Sub-Lease,

Weaver & Consent

Agreements

Transport, Weaver & Consent

Agreements

Refining/Storage or

Tolling Agreement

Transport, Weaver & Consent

Agreements

Lease/Sub-Lease,

Weaver & Consent

Agreements

Purchase,Weaver & Consent

Agreements

Oil/Products Import Structure – Product Vs Cash

Product Grade ACE Tank Farm Receipt

ACE crude Oil Tank Farm Receipt

Grading

ACETank Farm Receipt

CMA & CSM Fees

Transporters

Distribution Network

TANK FARM

Storage

REFINERY Process & Storage

Small Importers

TANK FARM

Storage

Transporters

SUPPLYER

Revenue Authority

ACEACETax & Duties

Transport Fees

Processing/Storage Fees

Storage Fees

Cash for Procureme

nt

Transport Fees

Storage Fees

Financing Bank (SPV)

Financing Bank (SPV)

Proceeds from Sales

Field Tank Farm Receipt Financing

Benefits of implementation for StakeholdersBenefits of implementation for Stakeholders1. To Tank Farm Operators/Refinery Reduce number of small counterparties. Eliminate bypassing of existing infrastructure. Constant monitoring of storage conditions and stored quantities.2. To Small Importers Reduced transactional obstacles (economies of scale). Reduced transactional cost (economies of scale). Access to Tank Farm financing (Field Tank Farm Receipts).

4. To Financing Institutions Securitized warrant based financing. Access to unratable and previously non-financed borrowers.

3. To Tax Authorities and Consumers No more tax evasion and increased cargo tracebility capacity. No more Fuel alduration. Improved Quality & Safety Standards country wide.

Near Real Time, On-Demand, Secured Near Real Time, On-Demand, Secured and direct access to reliable data...and direct access to reliable data...

Creates integrity & transparency in the transactionCreates integrity & transparency in the transactionResulting in Value Chain creation…Resulting in Value Chain creation…

We, at ACE, are know ready for this challengeWe, at ACE, are know ready for this challenge

ACESMART

ACESMART

ACESMART

COMPLETE VISUAL & FRIENDLY TO USE INTERFACE

Tank 9

JET FUEL A1JET FUEL A1

GASOILGASOIL

UNLEADED 95UNLEADED 95

UNLEADED 98UNLEADED 98

EMPTYEMPTY

HEAVY FUEL OILHEAVY FUEL OIL

MDOMDO

IFOIFO

(Headquarters) - Rue Richard-Wagner 11202 Geneva – Switzerland

Tel. : +41 22 919 91 11 Fax : +41 22 919 91 19

Email : ace.geneva@ace-group.net

www.ace-group.net

.... dedicated to Risk Management

ACE Services ....