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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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Agenda
2 Atlantic Basin Pressures
Rationalisation3
Where are we now?1
Conclusions4
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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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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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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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*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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Agenda
2 Atlantic Basin Pressures
Rationalisation3
Where are we now?1
Conclusions4
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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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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
2 Atlantic Basin Pressures
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
2 Atlantic Basin Pressures
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 19
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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
Deutsche Bank Michael HafnerLondon, 22 February 2011
02/03/2011
51
11bLD0494
Expected refining margin development
NW Europe complex US Gulf Coast 3-2-1
02/03/2011 2010 DB Blue template
51
Singapore complex
11bLD0494
Source: Deutsche Bank Research, Broker Research, Wood Mackenzie
Deutsche Bank Michael HafnerLondon, 22 February 2011
02/03/2011 2010 DB Blue template
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%
Deutsche Bank Michael HafnerLondon, 22 February 2011
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
Deutsche Bank Michael HafnerLondon, 22 February 2011
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
Deutsche Bank Michael HafnerLondon, 22 February 2011
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
Deutsche Bank Michael HafnerLondon, 22 February 2011
02/03/2011 2010 DB Blue template
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
Deutsche Bank Michael HafnerLondon, 22 February 2011
02/03/2011 2010 DB Blue template
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
Deutsche Bank Michael HafnerLondon, 22 February 2011
02/03/2011 2010 DB Blue template
58
Current trading multiples
TEV/EBITDA
02/03/2011
58
P/E
11bLD0494
Note: Indices based on median of peersSource: Deutsche Bank
Deutsche Bank Michael HafnerLondon, 22 February 2011
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
Deutsche Bank Michael HafnerLondon, 22 February 2011
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
Deutsche Bank Michael HafnerLondon, 22 February 2011
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
Deutsche Bank Michael HafnerLondon, 22 February 2011
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
Deutsche Bank Michael HafnerLondon, 22 February 2011
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
RG –0752
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
RG –0752
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
RG –0752
6
� 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
RG –0752
7
� 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
RG –0752
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
RG –0752
9
Thank You
Merci شكرآۤ
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