North and South American Fuels Refinery Performance Analysis

Transcript North and South American Fuels Refinery Performance Analysis

Oil Refining Performance Overview South Africa vs Southeast Asia and Western Europe

SAPIA

November 12, 2013 Operating Years 2006–2012

Content

• • • Data Comparison Methodology Performance Comparison Data and Trends     Gross Margin Operational Availability and Utilisation Operating Costs Energy Usage and Costs   Maintenance Costs Personnel Work Hours and Costs Cost of Production of Transportation Fuels 2 Proprietary and Confidential © 2013 HSB Solomon Associates LLC www.SolomonOnline.com

Methodology Used in Comparative Analysis

Methodology

• • • • • Comparison of the performance of the South African oil refineries against   Southeast Asia – Competitive Peers Western Europe – Similar Age/History of Refineries Average (50 percentile) data used throughout  Note – 50% of the population have performed better than shown Trends shown for four studies – 2006, 2008, 2010, 2012 All comparisons based on US $ as the common currency  However, some indicators may have some minor exchange rate effects

South Africa in 2010 has an index of 100

Gross Margin

Gross Margin

200 180 160 140 120 100 80 60 40 20 0

Western Europe South Africa

2006 2008

Southeast Asia Southeast Asia has had tightening margins as additional capacity has come on line along with low economic growth.

Refinery Configuration Factor

130 125 120 115 110 105 100 95 90 85 80

Southeast Asia Steep increase in Southeast Asia refinery configuration factor due to increased number of high conversion refineries in Peer Group.

Less complex refineries are being shut down in Europe.

2006 2008 2010 Year

Western Europe South Africa

Operational Availability and Utilisation

Operational Availability (Turnaround Duration Annualised + Average of Study Year and Previous Year Downtime)

104 103 102

Southeast Asia Western Europe

101

South Africa

100 99 98 97

Improving Operational Availability in South Africa is key to improving performance against peer groups.

Process Utilisation (For Study Year Only – With Turnarounds)

130

Southeast Asia

120

Western Europe

110 100 90 80 2006

South Africa General increase in Utilisation in 2012 as the world economy recovers from the 2008/2009 downturn and uneconomic refineries are shut down.

Operating Costs

Operating Cost

120 100 80 60 40 20 0 2006

South Africa Western Europe Southeast Asia

2008

Operating Cost driven by energy costs, which tend to be in-line with crude cost, which rose US $30/bbl from 2010 to 2012.

Non-Energy Operating Cost

120 100 80 60 40 20 0 2006

South Africa Western Europe Southeast Asia

2008

South African refinery Non-Energy Costs driven by higher personnel costs, however 2012 shows little change from 2010.

Energy Usage and Costs

Energy Intensity Index (EII)

110 100 90 80 70 60 50 40 2006

South Africa Western Europe Southeast Asia

2008

Decline in Southeast Asia EII driven by increased number of modern refineries in Peer Group. Western Europe has improved by 1 EII number per study for the last nine studies.

Energy Cost

150 140 130 120 110 100 90 80 70 60 50 40 2006

Southeast Asia Western Europe South Africa

2008

South African decrease in the energy price for fuel is offset for the most part by a steep increase in imported electricity costs.

Purchased Electricity

250 200 150 100 50 0

Southeast Asia

2006

Western Europe

2008 Year 2010

South Africa

Maintenance Costs

Maintenance Cost (Labour + Materials)

120 100 80 60 40 20 0

South Africa Western Europe Southeast Asia Solomon studies show a strong relationship between maintenance costs and operational availability—poor operational availability usually results in high maintenance costs, however South African costs are driven by cost of labour.

Personnel Work Hours and Costs

Total Work Hours

120 100 80 60 40 20 0

South Africa Southeast Asia Western Europe

Personnel Cost

120 100 80 60 40 20 0 2006

South Africa Southeast Asia

2008 Year 2010

Western Europe

Inferred Cost of Labour

250 200 150 100 50 0

Western Europe

2006

Southeast Asia

2008 Year 2010

South Africa

Cost of Production of Transportation Fuels

IEA Data Shows Global Oil Demand Annual Changes Since 2010 (k b/d) Europe

281

North America

FSU

119 164 -181 -75 -270 -333 -488

Middle East

215 197

Asia

981 256

Latin America

49 663 389 168 154

Africa

104 109 2011 2012 2013 (Forecast) 4

Global Oil Demand Growth, M b/d

2011 0.85

1.0% 2012 2013 0.80

0.87

0.9% 1.0%

Source: http://omrpublic.iea.org/omrarchive/12dec12full.pdf

Worldwide Oil Products Trade Flow 2012 Thousand barrels per day

500+ 300+ 500+ 800+ 200 300+ 500 600 150+ 650+ 200+ 900 300 1,500 200+ 150 200 300+

Sources: IEA, EIA, and BP

2012 Fuels Study

Hundreds of refineries, representing more than 85% of the worldwide crude refining capacity, voluntarily participated in Solomon’s 2012 Fuels Study.

Methodology Calculation of Production Cost

Transportation Fuels Gasoline Jet Fuel Distillate Fuels

Raw Material Cost plus Cash OPEX minus By-Products Revenue divided by Transportation Fuels Volume equals Transportation Fuels Production Cost

Transportation Fuel Production Cost 2012 Study – Worldwide 2012

1 2 Quartile 3

2010

Transportation Fuel Production Cost 2012 Study – Worldwide Southeast Asia South Africa Western Europe

Oil Refining Performance Overview South Africa vs Southeast Asia and Western Europe

SAPIA

November 12, 2013 Operating Years 2006–2012