Market opportunities for

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Market opportunities for new refineries 30
April 2004
8th African Oil and Gas Trade and Finance
Conference
Oskar Slingerland Director Business
Development Petroplus International NV
NOT AN OFFICIAL UNCTAD RECORD
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Disclaimer

• This presentation may contain market assumptions
  and forward-looking statements that are subject
  to risk factors. The expectations reflected in
  these statements are believed to be reasonable,
  but may be affected by a variety of variables
  which could cause actual results or trends to
  differ materially, including, but not limited to
  price and currency fluctuations, actual demand,
  industry competition, environmental risks,
  economic and financial market conditions,
  interest rates, legislative-, fiscal- and
  regulatory developments, approvals and cost
  estimates. Liability claims regarding damage
  caused by the use of any information provided
  will therefore be rejected.

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Contents

• Introducing Petroplus
• Restructuring of the refining industry
• Refining capacity on the African Continent
• The Critical Issues
• Upgrading the African Refining Sector
• Prospects for New Refinery Projects
• Conclusions

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Introducing PetroplusEuropean Refiner

• Europes leading independent refiner
• 3 Refineries, 240,000 Bpd capacity
• Europes 3rd largest independent storage operator
• 5 million cbm storage capacity
• LNG Import Terminal Milford Haven first of its
  kind in U.K.
• Petroplus the largest bunker Supplier in
  Rotterdam
• Frisol Bunkering 25 market share
• Key Figures
• Turnover 2003 Euro 6.1 Billion
• Product sales 2002 23 million ton
• 1000 Employees

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Restructuring of the Refining Industrystarted in
the US, currently in Europe and coming to Africa ?
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Refining Capacity on the African ContinentKey
figures

• /- 3,3 million barrel per day design capacity
• Average size 65.000 Bpd
• (Europe 130.000 Bpd)
• Half the refineries, (20 of capacity) is below
  60.000 Bpd
• Utilisation rate around 70
• (Europe gt90)
• Concentrated locations

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Refining Capacity on the African Continent
Strong concentration of refining capacity in
Africa .
Source EIA 1997
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Refining Capacity on the African Continent
Apparently matched by a similar concentration in
consumption
Source EIA 1997
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Refining Capacity on the African Continent
Supply Demand balance on the African Continent
More than 30 excess capacity to meet demand
but insufficient refinery throughput
Refinery throughput
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The Critical issues

• Yields dont match demand
• Regional imbalances
• Refining utilization rates are only 73
• Size of many refineries not economical
• 5. Products specs not up to future standards

Despite huge oil reserves and apparent sufficient
refinery capacity, Africa is a net importer
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Upgrading the African Refining sectorObstacles
and Measures

• Remove obstacles
• Change inland pricing mechanisms
• Abandon subventions
• Free market legislation
• Privatisation of the sector
• To increase Quality Refining Capacity
• closure of small refineries
• Renovation of existing sizable refineries
• Construction of new refineries

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Upgrading the African Refining sector Improving
existing assets

• Sweating existing assets ? to improve throughput
• Improving reliability and de-bottlenecking
  refineries
• Involves investment in human capital and some
  assets
• Upgrading refineries (meet specs and demand)
• An ongoing process worldwide !!
• US ? aromatics
• Europe ? sulphur content
• Africa ? lead content
• Opportunity
• Every year, a couple of refineries are closed in
  the world remaining units may have value
  elsewhere

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Upgrading the African Refining sector
Opportunities for new refineries

• Build new refineries
• Expensive big projects
• Economics to justify investments often very
  marginal
• (Generally upgrading existing facilities or
  importing is more profitable)
• Very difficult to finance
• Relocate facilities from USA Europe
• Cost savings of 30-50

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Conclusions

• If World Trend goes Africa Role for
  Independents
• Market Liberalization key condition for new
  refineries.
• Renovate existing capacity short term priority
• Used equipment (US/EU) interesting option
• New Plant
• Upgrading existing plants
• Example Case study
• Petroplus moving HDS unit to Antwerp refinery

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Case study Creating value within an existing
refinery

• Upgrade Petroplus Antwerp refinery
• to meet new Ultra Low Sulphur Diesel specs
• Move Desulphurisation unit from U.K. to Antwerp
• Saved 50 on replacement cost
• Increased total ULSD capacity in Antwerp by 133
  to 35 kbpd
• Structural refinery change
• significant increase in profitability
  flexibility

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Move of HDS unit from Milford Haven to Antwerp
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Shipping from United Kingdom ? Antwerp
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Arrival in Antwerp
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Dockside in Antwerp
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Approaching final position
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Petroplus SHARE OUR ENERGY
8th African Oil and Gas Trade and Finance
Conference
Oskar Slingerland Director Business
Development Petroplus International NV