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Dr Kelemen BélaMOL Group Refining VP
2011. február 17. Veszprém
A MOL CSOPORTÉS HELYE A VILÁG OLAJIPARÁBAN
Oil industry - roots reach far back
3
Outline
► The driving force of the oil industry
► MOL Group – some highlights
► Upstream at a glance
► Downstream at a glance
Newhall Refinery California 1876;
1860. 15 refineries as a tea can 1. gasoline – air pollution2. Petroleum (75%) – the product3. Mazut- Heavy fuel oil - useless
capacity: 1-100 barrel/day
Beginnings of the refining industry
1910s: demand changes shapeFORD Model T, the turnaround point of mass motorization
• First assembly line production
• Produced from 1908 to 1927
• 16 500 000 cars sold total
• Only 93 minutes to assemble a car
• Price : $300 (about $3,400 in 2006 inflation-adjusted dollars
• In 1914, Ford, with 13,000 employees, produced about 300,000 cars while 299 other companies with 66,350 employees produced about 280,000 vehicles.
"Any customer can have a car painted any color that he wants so long as it is black." 5
Oil and military: a matrimony sealed by 2 world warsSince WWI, oil and politics go hand in hand
H.M.S. Queen Elisabeth, 1912 French tanks, 1917
WWII: the first globally fought war with internal combustion vehicles having the decisive role
Motorization in US and Europe
Growth of economy – growth of fuel consumption
Austria
China
Croatia
Czech Republic
Germany
Hungary
Italy
Poland
Romania
RussiaSerbia
Slovakia
Slovenia
0
100
200
300
400
500
600
700
800
0 5000 10000 15000 20000 25000 30000 35000 40000 45000
Cars/1000 habitants
GDP PPP
Car penetration curve
GDP/capita, ppp
(*) HEATING, SOLID FUELS, LUBRICANTS, ASPHALTS, PACKAGING
(30-40%)
CRUDEOIL
Distillation
Vacuumdistillation
LPG (4-5 %)
Naphtha (8-15%)
Kerosene (5-8%)
Fuel Oil(0-20%)
Gas treating
Gasoline reformulation
Desulfurisation
Residue Conversion
H2CrackingHeating Oil
Gasoline (30-40%)
Diesel
Coke & Bitumen(5-15%)
TRANSPORTFUELS
CHEMICAL FEEDSTOCK
OTHERS(*)
Tipical crude processing
9
Refining process: focus on motor fuels, yet flexibility is limited
Proved oil reserves at end 2008 (thousand million barrels)
Source: BP Statistical Review of World Energy 2009
~ 1250 thousand million barrels or 164 thousand million tons in total
Upstream global trends: massive demand boosts crude price
…and supply struggles to keep track, boosting prices and acquisition costs
Massive demand growth in Asia is expected to continue…
0
1
2
3
4
5
6
0
20
40
60
80
100
120
2005 2006 2007 2008 2009
Brent
Weighted avg. implied 2P reserve value
M&A implied reserve value has grown even more than crude price (USD/bbl)
78
79
80
81
82
83
84
85
86
87
Jan-0
3Ju
l-03
Jan-0
4Ju
l-04
Jan-0
5Ju
l-05
Jan-0
6Ju
l-06
Jan-0
7Ju
l-07
Jan-0
8Ju
l-08
Jan-0
9Ju
l-09
Jan-1
0
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Global demand growth in 2010 exceeded all expectations, growth set to continue (million b/d) Global supply has been almost flat for years (million b/d)
Source: EIA
Source: IEA Source: EIA
Source: Herold
China: past examples hint at a runaway demand increase (million b/d)
11
0
200
400
600
800
Free Partly Free Not Free
Bill
ion
Bar
rels
Complexity and risk are to increase in upstream generally
12
► IOCs and independents are pushed towards the immature frontiers of upstream activity
► Technological complexity and extreme conditions require significant R&D and operational excellence
► Increasing project number and decreasing project size leads to more and more complex operational structures
Deeper wells
4.42 4.70 5.59+26%
2003 2007
10.379.959.53
2000
+9%
• Deeper wells require more drilling services
• Deeper wells require additional tool changes throughout the well program (e.g., additional strings of casing, additional bits)
• Penetration rates decrease substantially at greater depths due to harder rocks and higher rock stresses
Deep Water
Oil sands
Heavy oil
Middle East IOR
Arctic
Increasingly capital intensive environments
1990
164
2001
+6%
89
1990
104
2001
-8%
245
1990
10
2001
-4%
14
R/P ratio
Mbbl
Projects/yr
…with shorter longevity
…which are smaller…
More projects per year…
Onshore
Offshore
Global average well depth‘000 feet
Deeper wells
4.42 4.70 5.59+26%
2003 2007
10.379.959.53
2000
+9%
• Deeper wells require more drilling services
• Deeper wells require additional tool changes throughout the well program (e.g., additional strings of casing, additional bits)
• Penetration rates decrease substantially at greater depths due to harder rocks and higher rock stresses
Deep WaterDeep Water
Oil sandsOil sands
Heavy oilHeavy oil
Middle East IOR
Middle East IOR
ArcticArctic
Increasingly capital intensive environments
1990
164
2001
+6%
89
1990
104
2001
-8%
245
1990
10
2001
-4%
14
R/P ratio
Mbbl
Projects/yr
…with shorter longevity
…which are smaller…
More projects per year…
Onshore
Offshore
Global average well depth‘000 feet
►The average political risk of upstream investment is expected to increase
► Access to acreage will presumably be limited
Freedom in countries with the 12 largest oil reserves
13
Oil macro challenges
World oil demand and supply change
-1
0
1
2
3
4
2001 2002 2003 2004 2005 2006 2007 2008 2009
Mill
ion
bb
l/day
Consumption growth Supply growth
Source: Platts, EIA
► Stricter EU environmental regulations
► Widening gap between high and low quality products
► Dieselisation in Europe
► Increasing crude price…
► …driven by demand shock and slow supply adjustment
► Soaring exploration and production costs
Advanced management approach needed
Oil price
GasolineGasoilHFO
USD/t
14
Outline
► The driving force of the oil industry
► MOL Group – some highlights
► Upstream at a glance
► Downstream at a glance
1515
16
Small in the world…
Size of the logos are according to companies’ revenue in 2007
…so USA consumes MOL’s yearly refinery production in a week
…on the other hand Shell is „only” 9 times bigger then us regarding refinery capacity
The four oil giant in order of 2007 revenue
MOL Group covers ca. 0.5% of World total oil consumption: 480 th bbl/d vs cca. 85 000 th bbl/d
1.2.
3.4.
5%0,6%
Refinery capacities in the World
Shell MOL Group (incl. INA) other
17
Strong in the region
FuelsLPGBitumenChemical prod.Fleet CARD
4 American countries 4 Asian
countries
4 African countries
MOL Group sales directions
North Africa
Total sold volume*
19.9 Mt
Share of products in sales volumes
71%
19% 6%4%
Fuels
LPG
Bitumen
ChemicalProducts
*INA 47,1% owned but fully consolidated; data include INA 2010H2 sales vols
2008 sales
Hungary55%
Croatia21%
Slovakia8%
International16%
Strategic evolution of Mol Group from 2000 onwards
More international, more diversified, more efficient
2000 2005 20152010
Becoming a leading regional downstream player
International E&P expansion
Financial stability amid the recession
E&P-led growth, Regional stronghold in R&M
EBITDA by region
EBITDA by segment
Total 2010 EBITDA:USD 2.4 bn
E&P61%
R&M26%
G&P13%
18
► Leading European low cost onshore producer *
► One of the lowest lifting cost among European USplayers **
► Outstanding exploration drilling success rate
► Proved track recorded of successful project execution from geological surveys till massive production at major projects
► In house drilling and oil service companies
Upstream► Top refinery assets with one of the highest net cash
margin in Europe for a decade***
► Proven track record in cutting edge asset development and leveraging DS profitability
► Optimized joint DS value chain with 5 refineries and 2 petchem units
► Exceptional distribution system to serve markets
► Continuous efficiency improvement programs with USD …mn saved via … GJ/tonne energy intensity reduction between 2005 and 2010 (at 2010 prices)
Downstream
19* Herold
More efficient
** WoodMackenzie study (2003-2009)
What we achieved in the last 5 years
USD/boe Unit Lifting costs
4,7 5,0 5,78,2 6,1
11,6 9,5 11,0 13,1 11,2
05
101520253035
2005 2006 2007 2008 2009
peers avg.
23,2 25,7
16,8
27,621,3
12,2 11,7 11,117,6
8,0
-505
101520253035
2005 2006 2007 2008 2009
peers* avg
Net income per unitUSD/boe
20
The success of MOL Downstream Platts Award
► Platts* Global Energy Award has remunerates the best energy companies for 10 years, in 18 categories in 2008
► International judge has selected the finalists and decided about the winner
• 50 % of group EBITDA comes from Refining and Marketing• Record high EBIT of RM (USD 935 mn)• Europe top refineries regarding NCM• Outstanding Petchem results
2007 – Outstanding performance in each field
• Improve refining capabilities - starting hydrocrack project• Two bio-diesel plants in production • 2nd generation bio-diesel research with universities• Biologically degradable polymers
• Unique group wide supply chain management• Continuous efficiency improvement in operation • Sustainable development approach embedded in daily work and on strategic horizon
Three pillars to achieve goals:• Organic growth – asset development• Acquisition – IES, Tifon, INA consolidation• Partnerships – Oman Oil Comp.; CEZ
Financial result
Operation excellence Strategic vison
Innovation
21
#1 among European refiners since several yearsAmong 99 European refineries, MOL's Net Cash Margin is the highest
Source: Lehman Brothers
Non-USA downstream profit per bbl (H1 2006)
0 2 4 6 8 10
Eni
Chevron
ExxonMobil
Total
Group
ConocoPhillips
BP
Shell
Repsol YPF
OMV
PKN
MOL
US$/bbl
2006
22
R&M in MOL Group and its current Business Structure
Upstream Gas & Power Downstream Petrochemicals
Slovnaft ( 98.4 %)
INA ( 47.16%)
TVK ( 94.9%)
IES (100%)
Tifon (100%)
Energopetrol (67% with INA)
Roth (75%)
MOL Románia (100%)
FGSZ Zrt (100%)
MMBF Zrt (62%)
MOL Energy Trade (100%)
MOL-CEZ Zrt. (50%)
International Expl. Co.-s
ZMB (50%)
GES (100%)
Geoinform Kft (50%)
MOL Austria (100%)
Group Supply Chain Management
CommercialRefiningLogistics DS Development
Integration of resources, harmonizing and optimizing activities in all time horizons
Slovnaft Ceska R (100%)Slovnaft Polska (98%)MOL Slovenia (100%)
Intermol (100%)Mineralkontor, München (100%)
DOWNSTREAM
Integrated portfolio based on 3 pillars
UPSTREAM NEW ENERGY
► 665 MMboe SPE 2P reserves
► 135.5 Mboe/day production
► Producing in 7 countries
► Exploration in 14 countries
► 70-year experience in CEE, international presence for 20 years
►Significant reserve and productionbase with further exploration potential in the CEE region
►Well-positioned player in the Middle East/Central Asia
► 5 refineries
► 470,000 bbl/day refining capacity
► 1600+ filling stations
► Extensive crude and product pipeline system
► Strong landlocked position with access to the Mediterranean region
► 2 plants in Hungary and Slovakia
► 880 kt ethylene capacity
► 1.2 Mt polymer capacity
► The largest integrated olefin and polymer player in CEE
E&P R&M Petchem Gas Storing & Power
► 1.9 bcm capacity of UGS
► EUR-base return on storage
► Good geographical position
► Evaluate possible enter to power business
► NEV projects
Gas Transmission
Crude to plastic integrationUnbundling
23
Gas value chain
Electricity supply
► TSO in Hungary
► 5,560 km high pressure gas pipeline
►Hungarian + international transit
► Good geographical position
24
Outline
► The driving force of the oil industry
► MOL Group – some highlights
► Upstream at a glance
► Downstream at a glance
Russia
25
Production activities in 7 countries
Croatia, HungaryReserves: 373.2 MMboeProduction: 91,950 boepd
Hayan BlockReserves:55.9 MMboe Production:4,110 boepd
CroatiaReserves:62.3 MMboeProduction:14,140 boepd
ZMB Reserves: 43.2 MMboeProduction: 14,970 boepdBaitugan Reserves: 63.6 MMboeProduction: 3,040 boepd Matjushkinskiy BlockReserves: 30.5 MMboeProduction: 2,040 boepd Surgut-7 BlockReserves9.1 MMboe
Tal BlockReserves:13.8 MMboe Production:1,400 boepd
CEE onshore
Syria
Other International
CEE offshore
Pakistan
EgyptRas Qattara, West Abu Gharadig, North Bahariya, Sidi Rahman Angola3/05 Block, 3/85 Block,3/91 BlockTotal reserves:10.6 MMboeTotal production:3,860 boepd
Note: preliminary, non-audited SPE 2P reserves and pro forma production. Reserves and production of non-consolidated projects are not highlighted
Kazakhstan
Pakistan
Russia
26
Exploration activities in 15 countries
FederovskoyeRecoverable resource potential*:50 MMboe
CroatiaINAgip, EdINARecoverable resource potential*:15 MMboe
Tal, Margala & Margala North, Karak BlocksRecoverable resource potential*:150 MMboe
CEE onshore
Syria
CEE offshore
Hungary, CroatiaRecoverable resource potential*:145 MMboe
Aphamia BlockRecoverable resource potential*:25 MMboe
Other International
Cameroon, Angola, Namibia, Egypt, Yemen, Oman, IndiaRecoverable resource potential*:500 MMboe
Kurdistan Region of Iraq
Akri-Bijeel, ShaikanRecoverable resource potential*:590 MMboe
Matjushkinskiy, Surgut-7 BlocksRecoverable resource potential*:160 MMboe
* working interest recoverable resources to be drilled in 2010-12Note: further potential from non-consolidated projects, service contracts and unconventional projects
27
Outline
► The driving force of the oil industry
► MOL Group – some highlights
► Upstream at a glance
► Downstream at a glance
Danube
Bratislava
Swechat
LitvinovKralupyIngolstadt
Bayernoil
Gdansk
Plock
Burghausen
Sisak
RijekaBosanski Brod
Novi Sad PancevoMantua
Porto Marghera
S.M. Trecate
Sannazaro
Cremona
Busalla
Arpechim
Onesti
Petrotel
Petrobrazi
Rompetrol
Tough refining environment in Central Eastern EuropeSupply areas of regional refineries significantly overlap
Group refinery
Competing refinery
Tough refining environment in Central Eastern EuropeSupply areas of regional refineries significantly overlap
Danube
Bratislava
Swechat
LitvinovKralupyIngolstadt
Bayernoil
Gdansk
Plock
Burghausen
Sisak
RijekaBosanski Brod
Novi Sad PancevoMantua
Porto Marghera
S.M. Trecate
Sannazaro
Cremona
Busalla
Arpechim
Onesti
Petrotel
Petrobrazi
Rompetrol
Group refinery
Competing refinery
Tough refining environment in Central Eastern EuropeSupply areas of regional refineries significantly overlap
Danube
Bratislava
Swechat
LitvinovKralupyIngolstadt
Bayernoil
Gdansk
Plock
Burghausen
Sisak
RijekaBosanski Brod
Novi Sad PancevoMantua
Porto Marghera
S.M. Trecate
Sannazaro
Cremona
Busalla
Arpechim
Onesti
Petrotel
Petrobrazi
Rompetrol
Group refinery
Competing refinery
31
Continuous improvement of technology to retain leadershipYield structure in the last 40 years, Danube Refinery
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1965 1975 1985 1995 2005 2008
LPG
Gasoline
Naphtha
Jet Fuel
Middle Distillate
Chemical other products
Base Oils
Fuel Oil
Bitumen
Others
Bratislava Refinery 1980 - 1992 - 2001
Long term tendencies justify move towards complexity and diesel
•GDP is the main driver of dieselisation•diesel growth potential unchanged as
• no real alternative in freight transportation;• Passenger car penetration is still growing; • Dieselisation of private car stock also
continues•Increasing role of biocomponents, but bio-blending has a limited impact on diesel, due to massive demand growth (+12 Mt till 2020)
• EURO V Motor Fuel Specifications in SEE as well• Tightening marine fuel specification (0.1% m/m% by 1st Jan 2015 in ECA*) is expected in the Mediterranean as well• Environmental regulations force power plants to switch to alternative fuels from fuel oil
Tightening product quality regulations punish heavyproducts and simple refineries
Stable diesel growth on strategic horizon in CEE
35000
40000
45000
50000
55000
60000
65000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Room for further projects both on mid term (Phase 2) and on strategic horizont (DR HCK)
Diesel deficit remains/grows in CEE even after planned refinery projects
Refinery supply
Bio Supply
Regional imbalance
World oil demand growth by products
-1000
100200300400
2015 2020 2015 2020 2015 2020 2015 2020
Word FSU + Asia OECD Rest
Light distillates (naphtha/mogas)Middle distillate (gas oils/ jet)Fuel oil
2.3% CAGR (2010-2020)
Complexity is still crucial and diesel oriented projects are supported both from global (crack spread) and local (market) point of view in CEE
World oil demand growth by products
33
34
2010-2012 CAPEX: USD 2.0 bn
Quality leadership in Europe
►Introduction of sulphur free motor fuels►EU2009 requirements fulfilled in 2005►Compliance with bio-fuel and environmental regulations
Improve efficiency and focus on environment►Introduction of SCM philosophy►Improving the efficiency of energy utilization►Modernizing waste water treatment►Reduction of CO2, SO2 NOx emission
Huge investments for proper answers Investments aim to improve product yield, quality and efficiency
Expansion / Yield Improvement
Clean Fuels
Efficiency Improvement
Compliance
Sustain Operation
LPG
NaphtaMotor Gasoline
Middle Distillates Fuel Oil Bitumen
OtherOther chemical products
Ref. yield, 2010 E Ref. Yield, 2012E Long Term Target
Solid basis with outstanding organic growth opportunities
Bratislava RefienryCapacity: 6.1 Mtpy (122 thbbpd)NCI: 11.5
Danube RefienryCapacity: 8.1 Mtpy (161 thbbpd)NCI: 10.6
SN PetrochemicalsEthylene Capacity: 220 ktpyPolymer Capacity: 435 ktpy
Rijeka RefienryCapacity: 4.5 Mtpy (90 thbbpd)NCI: 9.1
Sisak RefienryCapacity: 2.2 Mtpy (44 thbbpd)NCI: 6.X
Mantova RefienryCapacity: 2.6 Mtpy (52 thbbpd)NCI: 8.4
35
Refining
Logistics NetworkXxx depot in xxx countries XX km oil and yyy km product pipeline
Logistics Distribution
Wholesale20% regional market share22.1 Mt sales volumePresence in 12 countries, market leader in 4 countriesXx % captive market
Petrochemicals
Retail Network1600+ FS7 brands in 11 countriesXx Mt total fuel salesAvr. throughput: 2.8 Mlpy19 % captive market for REF
TVK PetrochemicalsEthylene Capacity: 660 ktpyPolymer Capacity: 765 ktpy
Yy Mt external sales volumeXx % captive market for refineries
• the key DS player of the region • proved track record to develop and operate the most efficient refinery assets • region-wide LOG and WS network serve the market• strong captive manket supported by RET and PET• integrated business model through the whole value chain to exploit group level synergies
Strong asset base operated on adjacent market
NaphtaMotor GasolineMiddle Distillates
LPGBlack prd. + Sulphur
MOL Group refinery yield (2011) and sales volume increase in Mt
2007 2008 2009 2010
22.1
12.113.1 15.6
30%
16%
4%6%
3%9%
22%
46%
10%
45%
Retail – 1641 filling stations in 11 countries
36• Fully consolidated companies
• Market share data as Q4
•Retail captive market (2008)
70%
30%
85%
15%
•MOL excl. INA •INA
► Regional network operates under multi-brand structure with 3 international (MOL, Slovnaft, INA), 4 country-specific (IES, TIFON, ROTH, EP) brands
► 3.6 Mt fuel sales in the region
► 3.0 ml/yr throughput/station as regional average in own network
•Supply radius
Country Filling station(Sep 2009) Market share
Croatia (INA) 43 + 437
Hungary 363
Slovakia 209
Italy 220
Romania 135
Austria 47
Czech Republic 28
Serbia 32
Bosnia and Herzegovina (INA) 64 + 44
Slovenia (INA) 12 + 6
Montenegro 1
37
Key Figures of R&M Business
MOL Group Downstream (2009)
Sales volume 19.9 million tonnes*(incl. petchem feedstock transfer)
Processed crude oil 16.8 million tonnes * from this domestic 1,05 million tonnes*
Other raw material 2.86 million tonnes*EBITDA 113.1 bn HUF / 565 million USD*Capital Employed 700 bn HUF / 3,5 bn USD**Headcount* ~ 6000 empl.*
* INA 47,1% owned but fully consolidated; data include INA 2010H2 data** w/o INA
38
Key Features of the Duna Refinery (2009)
Area: 800 acres
Distillation capacity: 8.1 Mt/year
Processed crude (2008): 7 Mt/year
Number of plants: 49
Nelson complexity index: 10.6
Share of light products* in output: 78 %
Mechanical availability of plants: 97,2 %
Annual energy consumption: 600 th MWh
Number of employees: 1359
*LPG, naphtha, gasolines, gasoils, JET
39
Extended Supply Chain – Seven Units Optimization Model
Improvement potentials
Bratislava Refinery
Danube RefinerySisak Ref
Rijeka Refinery
Mantova Refinery
Mitigated risk of captured regional market supply by Global SCM control – continuous market supply
Increased utilization of the local unbalanced unit capacities by optimized transfers between the 5 refineries and 2 Petchem units
Increased global capacities by harmonization of refinery’ turn-around, maintenance activity
Decreased logistic costs by harmonizing common assets (tanks, pipeline network, railcars, ports), and integrating the local distribution system
Optimisation of seasonal product surplus channelling by sea exit – IES/Porto Marghera, Rijeka
Global supply chain optimization instead of individual refinery’ local suboptimum - boosting annual sales
40
Thank you for your attention
Backup
421990
1994 New MTBE plant, FCC revamp
1996
1992
1997 Gasoline blending
2001
1999
2003
2005
Bio-ETBE, New GHDS FCC
HDS TAME, Hydrogen unit
LN Isomerization revamp,Reformate redistillation
Euro-IVlimits 2005-
Euro-IIIlimits 2000-
Restructuring of gasoline production
2000 Delayed Coker, Hydrogen unit
Euro-V limits, 2009-
Tempo gasolines
EVO99 gasoline
EVOneo gasoline
MOL gasoline quality development: proactive steps
New units and revamps in Danube Refinery
43
Key Drivers of MOL Competitive position
•Pipeline connection•Own pipeline in HU •Alternative Adriatic route
Diversifica-tion of alternative suplly sources
•Heavier, sour crude: Brent-Ural spread•Domestic production
Sustain Domestic crude oil production
•Top complexity•Outstanding white product yield
Hydrocrack project increase further mid. dist. YieldUpgrading INA refineries
• Significant inland premium•Control key domestic infrastructures
INA ensure sea connection
• Strict maintenance by SSC
On-site power plants will increse energy eff. and security
•Complex logistics system•HR capabilities
Depot system in key export markets
KEY
STR
ENG
THIM
PRO
VMEN
TS
Integrated supply chain management along the whole value chain
44
Wood Mackenzie MOL
0
2
4
6
8
10
12
Configuration Crude Cost Location Crude Delivery Efficiency ProductDespatch
SCM
Key Drivers of Competitive PositionRefinery configuration is the single biggest driver of refinery competitive position but crude cost, crude delivery & location remain key to overall refinery profitability
Delta Best refinery vs Worst Refinery
$/bbl
Worst
Best
• Support long term refinery development by optimization• Common optimization of Downstream and Petchem• Joint optimization of group refineries (transfers)• Common operational supply and distribution scheduling (daily optimization already)
Additional advantage applying Supply Chain Management philosophy
45
Biofuels – managing sustainable criteria for biofuels will be essential for fuel suppliers
Update low bioblend scenarios
(E5/10, B5/B7) to meet the
targets
10% GHG intensity reduction target will force all fuel suppliers in the EU
to sell biofuels with the best GHG performance
REN e% target will force fuel suppliers through national
legislation to sell biofuels to meet national obligations
Biocomponent need will increase from 0.4 Mtpa in 2008 to 1 Mtpa by 2013 for MOL
Diesel: Challenging value chain
FAME production in MOL joint ventures (Rossi, Meroco) by 250 kt/yearMost efficient, integrated FAME production capabilities in CEE
Gasoline: Large scale of available capacities
Mid-term supply contracts with local ethanol suppliers
► Develop and maintain balanced and integrated positions along the entire value chain
► Monitor further opportunities for a diversified generation portfolio potentially including renewable sources
Long-term vision for New EnergyExpand into power to be a winner of decarbonization and to fully exploit existing G&P assets
► Policy push to fight climate change will require decarbonized power generation
► Coal-to-gas switch is by far the cheapest decarbonization option (with gas being a bridging fuel)
New Energy strategy
► Strong E&P equity gas portfolio to be utilized in Hungary, Croatia and potentially in Northern Iraq
► Key infrastructure assets along the G&P value chain
► Excellent geographical position of MOL Group's core markets to serve as a gas hub
Macro trends: climate change Key strengths to build upon
46
Crude supply security managed by diversification
Key opportunities for MOL group:►Continuous supply of MOL and SLOVNAFT refineries from Russia ►Flexible management of stock transfers between the two refineries►Purchase of crude oil cargoes through Adriatic Pipeline for refinery optimization►Opportunity to further harmonize crude purchase with IES
► EU export expected to be stable► Opportunity to extend long term supply contracts
Burgas – Alexandropolis pipeline projectTotal capacity: 15-24-35 Mt/y in 3 phases
First oil: 2009
Baltic Pipeline System 1-2Current capacity: 75 Mt/y
Total planned capacity 150 Mt/yEstimated finish construction: end of 2008
Primorsk crude export 2006: 62,5 Mt
Black Sea crude export 2006: 49 Mt
AdriaIES
Pipeline crude export 2006: 62,8 Mts
Adria
Source : IEA 2005
North America
-2 Mt
Africa
- 8 Mt
Asia
- 2 Mt
Latin America
- 7 Mt
25F.S.U.
+ 32 Mt
Middle East
+ 10 Mt
Europe
- 23 Mt
3 3
2
1
1
3
21
2
2
2
2
3
2
48
Demand not at the same place as supplyMain Diesel Trade Movements in 2007 (million tons)
Demand not at the same place as supplyMain Gasoline Trade Movements in 2007 (million tons)
49
19North
America
- 31 Mt
Africa
- 8 Mt
Asia-Pacific
+ 4 Mt
Latin America
+ 6 Mt
6 4
3
4
FSU
+ 8 Mt
1
Middle East
- 8 Mt2
Source : IEA 2005
1
1
3
2
1
1
Europe
+29 Mt