The Bangchak Petroleum Plc. Analyst Meeting for 2Q10 performance Aug - - PowerPoint PPT Presentation

Analyst Meeting for 2Q10 performance • Aug 20, 2010

The Bangchak Petroleum Plc.

• Mr. Vichien Usanachote (SEVP‐Refinery Business)
• Mr. Surachai Kositsareewong (EVP‐Accounting &Finance)
• Mr. Yodphot Wongrukmit (EVP‐Marketing Business)

Contents

Performance 2Q10 Oil i d it ti tl k Oil price and situation outlook Marketing business highlight Other events and activities g g g

The information contained herein is being furnished on a confidential basis for discussion purposes only and only for the use of the recipient, and may be subject to completion or amendment through the delivery of additional documentation. Except as otherwise provided herein, this document does not constitute an offer to sell or purchase any security or engage in any transaction. The information contained herein has p y y g g y been obtained from sources that The Bangchak Petroleum Public Company Limited (“BCP”) considers to be reliable; however, BCP makes no representation as to, and accepts no responsibility or liability for, the accuracy or completeness of the information contained herein. Any projections, valuations and statistical analyses contained herein have been provided to assist the recipient in the evaluation of the matters described herein; such projections, valuations and analyses may be based on subjective assessments and assumptions and may utilize one among alternative methodologies that produce differing results; accordingly such projections valuations and statistical analyses are not to be

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among alternative methodologies that produce differing results; accordingly, such projections, valuations and statistical analyses are not to be viewed as facts and should not be relied upon as an accurate representation of future events. The recipient should make an independent evaluation and judgment with respect to the matters contained herein.

Performance Performance 2Q Q10 10

2Q10 performance integration Refinery & Marketing

2Q09 2Q10 2Q09 2Q10

2 23 2.88

1 68 5.16

2Q09 2Q10 2Q09 2Q10

2.23 2.88

1 2

MKM ($/Bbl)

1.68

1 2

Market GRM ($/Bbl) 2.58 0.24

1 2

FO Premium($/Bbl) Accounting GIM($/Bbl)

T lGRM C ib i MKM

5.64 0.62

1 2

GRM Hedging ($/Bbl) 1.69

Total GRM Contribution MKM

16.99

1 2

5.40 Inventory G (L) ($/Bbl) 15.30 5.04 2.33

7.37

4

‐0.98

1 2

y ( ) ($/ )

1 2

2Q10 2Q09

2Q10 performance outperform the market

2Q10 2Q09 Change% 1H10 1H09 Change%

(Unit : Million Baht)

2Q10 2Q09 Change% 1H10 1H09 Change%

Sale Revenue 32,970 26,852 + 22.8% 66,194 48,171 + 37.4% EBI TDA 1 163 4 021 71 1% 2 694 7 047 61 8% EBI TDA 1,163 4,021

• 71.1%

2,694 7,047

• 61.8%

Refinery business 768 3,635

• 78.9%

1,913 6,093

• 68.6%

Marketing business 395 386 + 2.3% 781 954

• 18.1%

Depreciation & Amortization (417) (251) (866) (468) Other FX and Impairment 89 173 237 (267) Financial Cost (220) (123) (419) (245)

Pre-tax Profit 615 3,820

• 83.9%

1,646 6,067

• 72.9%

Tax (177) (1,143) (457) (1,809)

Net Profit 438 2,677

• 83.6%

1,189 4,258

• 72.1%

EPS 0.37 2.39 1.02 3.80

Inventory Gain/(Loss) (233) 1,453

• 116.0%

(89) 1,274

• 107.0%

Adjusted EBI TDA 1,396 2,568

• 45.6%

2,783 5,773

• 51.8%

5

Refinery business 1,001 2,182

• 54.1%

2,002 4,819

• 58.5%

Marketing business 395 386 + 2.3% 781 954

• 18.1%

Factors affect 2Q10 performance

Fuel oil premium on export market slowed d Valued product proportion increased from running as a Complex Refinery f h PQI j down

2Q10 MOP FO/DB

= ‐6.7 $/Bbl, premium 0.9 $/Bbl

from the PQI project Gasoline crack spread still remain Gasoil crack spread increased

p

2Q09 MOP FO/DB

= ‐5.9 $/Bbl, premium 8.6 $/Bbl

Gasoil crack spread increased from 2Q09 since improving of

• il demand in industrial and

transportation sectors f ll i th l b l Hedging transaction limited due to market condition 35% (2Q10) following the global economic recovery Sales volume through Marketing B i i d condition, 35% (2Q10) from 51% (2Q09) on production run Business increased

65.2 KBD or 314 million liters/month (2Q10) 63.6 KBD or 307 million liters/month (2Q09)

6

Singapore’s oil price movement

D b i 95/D b i

USD/Bbl USD/Bbl

20 25 70 80 90 100

Dubai 95/Dubai

Outlook

3Q10/2Q10

Outlook

3Q10/2Q10

AVG.2Q10=78.04 AVG.2Q10=9.46 AVG.1Q10=75.78 AVG.1Q10=12.52

5 10 15 20 30 40 50 60

AVG.3Q09=68.02 AVG.2Q09=59.22 AVG.1Q09=44.28 AVG.FY09=61.82 AVG.FY09 =8.55

• 5

J F M A M J J A S O N D

• 10

20 J F M A M J J A S O N D

USD/Bbl

Y2009 Y2010

GO/D b i

USD/Bbl

AVG.2Q09 =9.58 AVG.1Q09 =10.69 AVG.3Q09 =8.84

• 5

15 20 Outlook

3Q10/2Q10 GO/Dubai FO/Dubai

Outlook

3Q10/2Q10

AVG.2Q10=11.29 AVG.2Q10=(6.73) AVG.1Q10=8.96 AVG.1Q10=(3.04)

(15) (10) (5) 5 10

AVG.2Q09 =(5.95) AVG.1Q09 =(6.69) AVG.3Q09 =(3.11) AVG.FY09 =(5.06)

(20) (15) J F M A M J J A S O N D

• J

F M A M J J A S O N D

7

AVG.2Q09=7.07 AVG.1Q09=8.81 AVG.3Q09=6.88 AVG.FY09=7.24

Refinery BU : 2010 base performance driven by PQI

Oil hedging position for Y2010

2009 2010 1Q10 2Q10 3Q10 4Q10

Hedged volume (Mbbl)

15.71 3.28 0.56 2.56 1.28 1.71

5 6 7 $/Bbl)

Oil hedging position for Y2010

FO Premium Y2010 FO Premium Y2009 Market GRM Y2009

(Mbbl)

15.71 3.28 0.56 2.56 1.28 1.71

Production run (MbbL)

28.91 33.53 7.77 7.33 8.51 8.74

Hedged position (%)

54% 10% 7% 35% 15% 20%

1 2 3 4 Base GRM ($ Market GRM Y2010

position (%) Realization (M$)

167.7 0.7 0.7 4.56 N/A N/A

3%

1Q 2Q 3Q 4Q

60 80 100

2009

2010 (Actual) 11% 12% 17% 21% 3% LPG Mogas Yield (%) (KBD) 2010 (Est.)

20 40 60

34% 17% 35% 50% Mogas JET Diesel Fuel Oil Production Y Crude Intake

• 1Q

2Q 3Q 4Q

17% Hydroskimming PQI 2010

8

Refinery BU : performance is still in good shape

2Q10 2Q09 1H10 1H09

M.Baht $/BBL M.Baht $/BBL M.Baht $/BBL M.Baht $/BBL Base GRM 1,287 5.40 1,147 4.26 2,708 5.47 2,849 5.37

• Market GRM

1,229 5.16 452 1.68 2,551 5.16 1,446 2.72 FO P i 58 0 24 695 2 58 157 0 32 1 403 2 64

• FO Premium

58 0.24 695 2.58 157 0.32 1,403 2.64 GRM Hedging 148 0.62 1,517 5.64 173 0.35 2,824 5.32 Inventory Gain/(Loss) (233) (0.98) 1,435 5.33 (89) (0.18) 332 0.63 Write Down (LCM)

• 18

0.07

• 942

1.77 Total GRM 1,202 5.04 4,117 15.30 2,792 5.64 6,947 13.08 Other Income 58 0.24 6 0.02 82 0.17 18 0.03 Operating Expenses (492) (2.06) (488) (1.81) (961) (1.94) (872) (1.64) EBITDA 768 3.22 3,635 13.51 1,913 3.87 6,093 11.47 Adjusted EBITDA 1,001 4.20 2,182 8.11 2,002 4.05 4,819 9.07

Key factors Key factors Crude Run (KBD) 80.5 83.9 83.4 82.7 Exchange rate (฿/$) 32.53 35.23 32.78 35.45 DB ($/Bbl) 78.04 59.22 76.96 51.8 95/DB ($/Bbl) 9 46 9 58 10 97 10 07

9

95/DB ($/Bbl) 9.46 9.58 10.97 10.07 GO/DB ($/Bbl) 11.29 7.07 10.13 7.98 FO/DB ($/Bbl)

• 6.73
• 5.95
• 4.91
• 6.39

FO premium ($/Bbl) 0.9 8.6 1.3 8.8

Marketing BU : potential to growth

3 rewards guaranteed our standard: d d f d ’ Market share through service station increased from 13 5% (Dec 09) Gasohol E20 market share ranked the 1st with 56.7% at

• Trusted Brand from Readers’ Digest
• Brand in Mind from BrandAge Mgz.
• Golden Service Station Award from

the Department of Energy Business from 13.5% (Dec‐09) to 14.3% (Jun‐10) jumped from the 4th to 3rd with 56.7% at Jun‐10 p gy 2Q10 Sales volume through service station growth by ‐3.0% (YoY) Marketing strategy for 2010 g y ( ) against market ‐5.3% g gy

• Increasing of Gasohol E20 service station up to 300 stations

before ending 2010

• Launching Super HSD (Euro IV standard) and distribute to

10

g p ( ) almost of marketing network

• Developing non‐oil business in service station

Marketing BU : MKM maintained but gain volume

2Q10 2Q09 1H10 1H09

M.Baht ฿/L M.Baht ฿/L M.Baht ฿/L M.Baht ฿/L Net Retail Margin 514 0.84 437 0.72 952 0.79 1,009 0.84 Net Industrial Margin 47 0.14 13 0.04 119 0.17 109 0.20 Total MKM 561 0 59 450 0 49 1 071 0 56 1 118 0 64 Total MKM 561 0.59 450 0.49 1,071 0.56 1,118 0.64 Other Income 215 0.23 254 0.28 414 0.21 448 0.26 O ti E (381) (0 40) (318) (0 35) (704) (0 36) (612) (0 35)

2.88 $/bbl 2.23 $/bbl 2.72 $/bbl 2.89 $/bbl

Operating Expenses (381) (0.40) (318) (0.35) (704) (0.36) (612) (0.35) EBITDA 395 0.42 386 0.42 781 0.40 954 0.54 Sale Volume KBD ML/Mo KBD ML/Mo KBD ML/Mo KBD ML/Mo

• Retail

42.5 205 42.0 203 42.1 202 41.7 200

• Industrial

22.7 109 21.6 104 24.9 119 19.3 93 Total Sale Volume 65.2 314 63.6 307 67.0 322 61.0 292

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Balance sheets ‐ Company only

Unit: Million Baht

Assets Short Term Loan + Due 1 yr Liabilities Cash Trade Accounts Payable 1,687 6 023

June 30,2010 Dec 31,2009 June 30,2010 Dec 31,2009

1,452 1,711 2,542 7 815

25 days

Inventories Long Term Loan Other Current Assets Trade Accounts Receivable Other Liabilities Trade Accounts Payable 13,568 4,911 6,023 15,028 1,468 6,357 13,625 1,943 5,501 12,970 3,783 7,815

17 days 47 days 25 days

Shareholders’ Equity Other Non Liabilities Current Assets Total Liabilities 27,069 880 Investments in Subsidiary 24,305 198 22,780 198 27,959 849 Common Share Premium on Share Capital Revalue Asset PPE 1,170 8,369 4,477 Investments in Subsidiary 27,109 198 27,711 98 1,170 8,369 4,290 Invest in Affiliated Company 173 80 Total Assets Leasehold Right Total Liabilities & Equity Other Non-Current Assets Retain Earning Total Equity 52 901 11,816 25,832 53 858 982 1,091 52,901 1,025 1,107 53 858 12,070 25,899

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Total Assets Total Liabilities & Equity 52,901

Book Value per share (Baht) 22.14 22.08

53,858 52,901 53,858

Stock performance and key indicators

Share price (1 Jan 2010 ‐ 18 Aug 2010) Share price (1 Jan 2010 18 Aug 2010)

VALUATION FIGURES

Share Price (12 month-high) Baht 15.90 Share Price (12 month-low) Baht 13 30

(As at 30 June 10)

BCP

• 2.68%

BCP-DR1

• 4 00%

Share Price (12 month low) Baht 13.30 Share Price (12 month-average) Baht 14.22 Share Price (Closing) Baht 13.70 EV M.Baht 30,087 BCP DR1 4.00% SET + 17.66% Energy + 4.92% EV to EBITDA* * times 4.94 P/E* * times 5.36 P/BV times 0.62

*Share price referred “BCP”

PROFIT RETURN RATIO

Net Profit Margin % 1.80

FINANCIAL POSITION RATIO

Current Ratio times 1.72

(As at 30 June 10) **EBITDA & earning excluded inventory effect for 12 months backward (For 1H10)

Earning per Share Baht 1.02 Return on Equity-ROE % 5.83 Return on Assets-ROA % 2.56 AR Day days 17.17 DSCR* (net CAPEX) times 3.34 D/E Ratio times 0.60 Net debt to EBITDA* times 2.14

13

*EBITDA excluded inventory effect for 12 months backward

Book Value per Share (BV) Baht 22.14

What’s moving on 2010

Marketing Business

Focusing on “B d ” f

Refinery Business

The year of efficiency i i “Brand awareness” for TOP 2 brand of choice in 2014 improving

• Solomon index evaluation
• Appointing KBC to further

studies of improvement program Low CAPEX investment in Gasoline EURO IV around

New Business

50$ million

New Business

Looking for maintain (S/T) and growth (L/T) so go QUICK and BIG Start construction of the 38 MW Solar Farm Acquire up to 16.4% stake holding in ASEAN Potash Target in 2010

Crude run 89 KBD (1Q/2Q/3Q/4Q : 86/81/95/95) Total Sales 100 KBD (MKB/FO Export/PTT : 66/19/15)

14

• d g

S

• tas

Mining Plc.

Total Sales 100 KBD (MKB/FO Export/PTT : 66/19/15)

Refinery Capacity Utilization Plan Refinery Capacity Utilization Plan

Refinery Capacity Utilization Plan Refinery Capacity Utilization Plan 2011 2011‐2014 2014 (KBD) (KBD) Refinery Capacity Utilization Plan Refinery Capacity Utilization Plan 2011 2011‐2014 2014 (KBD) (KBD)

Actual Actual Actual Actual Plan Plan Plan Plan We target to maintain refinery capacity utilization rate at We target to maintain refinery capacity utilization rate at 100 100 KBD KBD

15

Key Refinery Improvement Plan Key Refinery Improvement Plan

Operational Improvement Project Operational Improvement Project Operational Improvement Project Operational Improvement Project

Completion Date Completion Date

• Energy Efficiency Improvement Program

Energy Efficiency Improvement Program 2010 2010 Completion Date Completion Date

• Energy Efficiency Improvement Program

Energy Efficiency Improvement Program 2010 2010 Energy Efficiency Improvement Program Energy Efficiency Improvement Program 2010 2010

• Chemical Injection System for High TAN Crude

Chemical Injection System for High TAN Crude 2011 2011

• Solomon Benchmarking

Solomon Benchmarking 2012 2012 Energy Efficiency Improvement Program Energy Efficiency Improvement Program 2010 2010

• Chemical Injection System for High TAN Crude

Chemical Injection System for High TAN Crude 2011 2011

• Solomon Benchmarking

Solomon Benchmarking 2012 2012 C l ti D t C l ti D t C l ti D t C l ti D t

Environmental Improvement Project Environmental Improvement Project

Completion Date Completion Date

• EURO IV Project 2011

EURO IV Project 2011

• Tail Gas Treating Unit

2013 Tail Gas Treating Unit 2013 Completion Date Completion Date

• EURO IV Project 2011

EURO IV Project 2011

• Tail Gas Treating Unit

2013 Tail Gas Treating Unit 2013

• Tail Gas Treating Unit 2013

Tail Gas Treating Unit 2013

• Tail Gas Treating Unit 2013

Tail Gas Treating Unit 2013

16

Oil Price and Situation Outlook Oil Price and Situation Outlook

Macroeconomics Global Oil Market Factors to watch Crack spreads & refining margins

Macroeconomics Outlook : Slow But Steady Macroeconomics Outlook : Slow But Steady

refining margins

World GDP Growth Outlook (% World GDP Growth Outlook (%YoY YoY) ) World GDP Growth Outlook (% World GDP Growth Outlook (%YoY YoY) )

The worst is over The worst is over Recovery is slow but steady Recovery is slow but steady

Source : IMF, Jul 2010

18

We projected a moderate recovery of global economy throughout the rest of the year

Global Oil Market – Mixed Performance of Crude Prices in Mixed Performance of Crude Prices in 2Q Q10 10 Global Oil Market – Mixed Performance of Crude Prices in Mixed Performance of Crude Prices in 2Q Q10 10

Macroeconomics Global Oil Market Factors to watch Crack spreads & refining margins

$/BBL

100

• Strong Economic Data and Oil Demand

Growth from China & India

• Strong 1Q10 earnings
• EU leaders agreed on Greece rescue

k refining margins

80 85 90 95 100

Growth from China & India

• Colder‐than‐usual Winter Temperature in

US Europe and North Asia package

• Optimism over China’s plan on

Yuan’s Flexibility

Dubai

• 2Q10 earnings beat

analyst estimation

60 65 70 75 80 Dubai Brent WTI

2Q10 10 Highlight Highlight

40 45 50 55 60

• Europe debt crisis led to fear

that global oil demand will be sifted

• Portugal, Spain and Ireland

was downgraded

2Q10 10 Highlight Highlight Bullish Bullish Bearish Bearish

• Strong 1Q10 Earnings
• EU agreed on Greece

Rescue Package

• Portugal, Spain, Ireland was downgraded
• Poor US unemployment rate (peaked at

9.9% in Apr)

J F M A M J J A S O N D J F M A M J J A S

30 35 40

2009 2010

g p )

• Fear of 2nd Dip recession if Europe fails to

manage its debt crisis

19

Crude oil prices turned in mixed performance amid signals that economic growth is slowing in the US and China, the world biggest energy consuming countries.

19

Global Oil Market : Upward Revision of 2010 Oil Demand Global Oil Market : Upward Revision of 2010 Oil Demand

Macroeconomics Global Oil Market Factors to watch Crack spreads &

North America 2009 FSU Europe

177 121

Macroeconomics Global Oil Market Factors to watch refining margins

Middle East 2009 2010 2011 Asia

• 884

345

• 78
• 890
• 260
• 20

231 345 347

• 236

Latin America Africa

238 210 231 345 347

537 910 654

Mainly from Transportation Mainly from Transportation

• 5

238 210 3 41 114

Mainly from Transportation Mainly from Transportation Fuel Demand Growth Fuel Demand Growth

Global Oil Demand Global Oil Demand 2009 2009‐ ‐2011 2011 (MBD) (MBD) Global Oil Demand Global Oil Demand 2009 2009‐ ‐2011 2011 (MBD) (MBD) Global Demand Growth Global Demand Growth 2009 2009‐2011 2011 Global Demand Growth Global Demand Growth 2009 2009‐2011 2011 Source : IEA, Jun 2010

Year MBD %YoY 2009

• 1.2
• 1.5%

2010 1 8 2 1%

85 90

84.7 86.4 87.8

(MBD) (MBD) (MBD) (MBD)

Yearly demand rise will be driven by non OECD, mainly from China and Middle East, while OECD countries will see their year‐on‐year ti d li i

20

2010 1.8 2.1% 2011 1.3 1.6%

80

2009 2010 2011 consumption declining

Global Oil Market : Global Oil Market : Upward Revision of 2010 Oil Demand Global Oil Market : Global Oil Market : Upward Revision of 2010 Oil Demand

Macroeconomics Global Oil Market Factors to watch Crack spreads &

2010 2010 Regional Product Demand Growth (KBD) Regional Product Demand Growth (KBD) 2010 2010 Regional Product Demand Growth (KBD) Regional Product Demand Growth (KBD)

Macroeconomics Global Oil Market Factors to watch refining margins

21

We expect 2010 oil demand growth to be driven by, namely transportation and petrochemical sectors.

Global Oil Market : Non‐OPEC Supply and OPEC NGLs Rises This Year Global Oil Market : Non‐OPEC Supply and OPEC NGLs Rises This Year

Macroeconomics Global Oil Market Factors to watch Crack spreads & refining margins

World Oil Balance World Oil Balance 2007 2007‐2010 2010 (MBD) (MBD) World Oil Balance World Oil Balance 2007 2007‐2010 2010 (MBD) (MBD) Call on OPEC Crude Call on OPEC Crude 2007 2007‐2010 2010 (MBD) (MBD) Call on OPEC Crude Call on OPEC Crude 2007 2007‐2010 2010 (MBD) (MBD)

refining margins

• We see Non‐OPEC supply increasing by 500 KBD this year and the uptick in non‐OPEC supply is led

by Brazil, US, Kazakhstan and Columbia.

22

by Brazil, US, Kazakhstan and Columbia.

• We expect an increase of call on OPEC to 29.3 MBD this year

Global Oil Market : OPEC Still Injects Extra Barrels into the Market Global Oil Market : OPEC Still Injects Extra Barrels into the Market

Macroeconomics Global Oil Market Factors to watch Crack spreads & refining margins

Spare Production Capacity (MBD) Spare Production Capacity (MBD) Spare Production Capacity (MBD) Spare Production Capacity (MBD) OPEC Crude Oil Production and Capacity (MBD) OPEC Crude Oil Production and Capacity (MBD) OPEC Crude Oil Production and Capacity (MBD) OPEC Crude Oil Production and Capacity (MBD)

refining margins Others 1.3 Nigeria 0 6

Saudi Arabia 3.8

0.6 UAE 0.4

Kuwait 0.4

23

Idle production capacity is totally around 6 MBD at the moment, and mainly spare capacity is from Saudi Arabia

Global Oil Market : Fundamentals Slowed but Stock Was Built Ahead Global Oil Market : Fundamentals Slowed but Stock Was Built Ahead

Macroeconomics Global Oil Market Factors to watch Crack spreads & refining margins

US C d I t i (MB) US C d I t i (MB) US C d I t i (MB) US C d I t i (MB) C d I t i t C hi (MB) C d I t i t C hi (MB) C d I t i t C hi (MB) C d I t i t C hi (MB)

US Stocks currently remain high above 5‐year average amid signal that economic growth is slowing.

refining margins

US Crude Inventories (MB) US Crude Inventories (MB) US Crude Inventories (MB) US Crude Inventories (MB) Crude Inventories at Cushing (MB) Crude Inventories at Cushing (MB) Crude Inventories at Cushing (MB) Crude Inventories at Cushing (MB) US Gasoline Inventories (MB) US Gasoline Inventories (MB) US Gasoline Inventories (MB) US Gasoline Inventories (MB) US Total Distillate Inventories (MB) US Total Distillate Inventories (MB) US Total Distillate Inventories (MB) US Total Distillate Inventories (MB)

24

Global Oil Market : Product Stock Continues to Draw Global Oil Market : Product Stock Continues to Draw

Macroeconomics Global Oil Market Factors to watch Crack spreads & refining margins

Distillate stock in floating storage tends to draw down from the beginning of this year.

refining margins

25

25

Global Oil Market : More than Just Fundamental Global Oil Market : More than Just Fundamental

Macroeconomics Global Oil Market Factors to watch Crack spreads & refining margins

Despite implied signal of slow global economic growth funds still flow

NYMEX WTI NYMEX WTI vs vs S&P S&P 500 500 NYMEX WTI NYMEX WTI vs vs S&P S&P 500 500

refining margins

economic growth, funds still flow in equity & oil market

S&P 500 WTI

NYMEX WTI NYMEX WTI vs vs US Dollar Index US Dollar Index NYMEX WTI NYMEX WTI vs vs US Dollar Index US Dollar Index

Weaker greenback increased the appeal of dollar‐priced asset as an alternative investment dollar priced asset as an alternative investment

WTI

26

USDX

Key Factors to Keep An Eye On Key Factors to Keep An Eye On

Macroeconomics Global Oil Market Factors to watch Crack spreads & refining margins refining margins

Contagious of debt default on private and public sectors

Euro Euro‐ ‐zone zone Debt Crisis Debt Crisis

Key Key

US US Financial Financial Bubble Risk Bubble Risk

High inflation and asset price bubble risk in China may make Trading activities may move to

Factors Factors

Regulatory Regulatory Reform Reform in China in China

y Chinese policy maker raises interest rate and reserve ratio Trading activities may move to unregulated oversea market due to stricter rules on risky trade

Hurricane Hurricane Season in Season in GoM GoM

27

Although hurricane season started slowly, several big hurricanes are forecasted to hit GoM in next few weeks

Global Oil Market : More additions, More closures Global Oil Market : More additions, More closures

Macroeconomics Global Oil Market Factors to watch Crack spreads & refining margins

2010 2010 Refinery Capacity Additions and Closures (KBD) Refinery Capacity Additions and Closures (KBD) 2010 2010 Refinery Capacity Additions and Closures (KBD) Refinery Capacity Additions and Closures (KBD) 2010 2010 Asian Refinery Capacity Additions (KBD) Asian Refinery Capacity Additions (KBD) 2010 2010 Asian Refinery Capacity Additions (KBD) Asian Refinery Capacity Additions (KBD)

refining margins

• Closures only refer to announced shutdowns
• Approximate 700 KBD of net Asia

capacity addition is expected to come t i 2010 hi h i i l f

2010 2010 Asia Demand Growth (KBD) Asia Demand Growth (KBD) 2010 2010 Asia Demand Growth (KBD) Asia Demand Growth (KBD)

• n stream in 2010 which is mainly from

China and India.

• Asia demand grows 2% or 530 KBD in

2010

28

2010

Source : JBC, FACTS

Crack Spread & Refining Margin Outlook Crack Spread & Refining Margin Outlook

Macroeconomics Global Oil Market Factors to watch Crack spreads & refining margins

2010 2010 Singapore Cracked Margin Outlook ($/BBL) Singapore Cracked Margin Outlook ($/BBL) 2010 2010 Singapore Cracked Margin Outlook ($/BBL) Singapore Cracked Margin Outlook ($/BBL)

refining margins Cracking Margin Cracking Margin

We estimate Singapore crack margin will recover We estimate Singapore crack margin will recover

Topping Margin Topping Margin

29

g p g g p g from from 3Q Q10 10 onwards

• nwards

2Q Q10 3 10 3Q Q10 10

29