Oil and gas thailand 2011 v f

Oil & Gas Thailand 2011

อนาคตประเทศไทยอนาคตประเทศไทยอตุสาหกรรมนํา้มนัและแกส๊อตุสาหกรรมนํา้มนัและแกส๊

8th September 2011

ByBy

Pongpun Amornvivat

Corporate Commercial Planning ManagerThai Oil Public Company Limited

Thai Oil Public Company Limited

p y

Today’s AgendaOil & Gas Thailand 2011

อนาคตประเทศไทยอนาคตประเทศไทย้้อตุสาหกรรมนํา้มนัและแกส๊อตุสาหกรรมนํา้มนัและแกส๊

Global Oil MarketGlobal Oil Market

Thailand’s Oil MarketThailand’s Oil Market

Changing Landscape & Changing Landscape & Challenges for Thai RefineriesChallenges for Thai RefineriesChallenges for Thai Refineries Challenges for Thai Refineries

How to Stay in the GameHow to Stay in the Game

2








3


Oil Story – The Chronology of Black GoldGlobal Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

$/BBL Oil Prices and Major Events

150

$/BBL

BrentWTI

Oil Prices and Major Events

$147Fears over EU debt

2nd Bailout for Greece

110

130 Lehman Brothers showed $3.9bn loss

China imports petroleum products for Olympics

Japan Earthquake US Debt ceiling

dispute

90

$96 AIG received $85bn from US government

Dubai Debt Crisis

Greece debt woes,Credit rating cut

Severe winter

$84

$108 End of Gaddafi

70

GM, Ford & Chrysler asked for 25bln emergency Loan M t US t

Russia vs Ukraine Gas Dispute

BP Oil Spill MENA Tension

$84

IEA release60 mbbl

from SPR

S&P cut US rating

30

50

$34

emergency Loan

US spending in Jan09 rebounded by 0.6%

Most US corporate earning s in Q2’09 beat market expectation Fears over EU debt

from SPR

Q1’11BR: $106WTI :$95

Q2’11BR: $117WTI : $102

US rating

Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11

4

Overview of Global Oil Market

Oil Market Driver Global Oil Market Thailand Price Structure

Global Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

Oil Market Driver

NYMEX(WTI)

Thailand EconomicWorld Macroeconomic

ICE

Domestic Demand

Fundamental

(Brent)Tax/Fund

Marketing Margins

Non ‐ Fundamental

Platts(Dubai)

Platts(Gasoline and Diesel)

Thailand Retail Price(Gasoline and Diesel)(Dubai) (Gasoline and Diesel)

5

Growing Global Economy

Global Economy continues to grow in 2012‐2016Global Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

12%GDP Growth (%YoY)

…..

5 0% % % 4 7% 4 7%6%

9%China

India

2.9%

0 5%

5.0% 4.4% 4.5% 4.5% 4.6% 4.7% 4.7%

3%

6%

Japan

Thailand-0.5%

-3%

0%

Thailand

US

-6%

EU

World

-9%

2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: IMF World Economic Outlook 11 Apr 11, June Revision 6

Global Oil Demand Outlook

Global Oil Demand Outlook 2010/2011/2012


Thousands barrels per day

Europe

465 13

North America

295 179 79

FSU

‐109 ‐143 ‐49

Asia285232 275

Middle East

465

‐225

13

1449

927 921

232

Africa

55 33 125

302 196 243

Latin America

Source: IEA, Oil Market Report, August 2011

IEA Demand (mbd)

Growth(mbd)

2011 89 49 +1 20

EIA Demand (mbd)

Growth(mbd)

2011 88 19 +1 37

OPEC Demand (mbd)

Growth(mbd)

2011 88 14 +1 21

, p , g

2011 89.49 +1.20

2012 91.09 +1.61

2011 88.19 +1.37

2012 89.83 +1.64

2011 88.14 +1.21

2012 89.44 +1.30Source: OPEC, Oil Market Report August 11Source: IEA, Oil Market Report August 11 Source: EIA, Short Term Energy Outlook August 11

7

Looking Beyond: Expected Slower Growth

Global oil demand continues to grow but at a declining rate, with high h i i i d h i d l d ld


growth rate in emerging countries and stagnant growth in developed worldMiddle distillate products continue to outperform, supported by industrial demand Gasoline market remains under pressure on rising supply and sluggish demand due to higher fuel

ffi i & t ti f l t i hi lefficiency & penetration of electric vehicles

MBDGlobal Oil Demand GrowthGlobal Oil Demand Growth

11..55

22..88

11 2211..66 11 33 11 22 11 11 11 112 0

3.0

4.0MBD

Others

S.America11..22 11..33 11..22 11..11 11..11

0.0

1.0

2.0

ME

China

--00..66--11..00

-3 0

-2.0

-1.0 OECD

Total

-3.02007 2008 2009 2010 2011 2012 2013 2014 2015 2016

SOURCE: IEA Medium Term Report [Jun‐11] / IEA Oil Monthly Report [Aug‐11] 8

Rising call on OPEC crude

OPEC to fill up the gap to meet rising demand in the next 5 years


100MBD

p g p g yOPEC to raise production to match actual supply to balance the market

Demand

Growth Rate (MBD)

80

90Call on

OPEC Crude2016

Call on OPEC Crude

++66..33

2011-2016

DemandDemand

60

70

0 6

33.2 MBD

OPEC Crude2011

30.6 MBD

+1 5+1 5

++22..66

NGLNGL

OPECOPEC

50

60 +1.5+1.5

++22..22

NGLNGL

NonNon‐‐OPECOPEC

40Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2010 2011 2012 2013 2014 2015 2016

OPEC Crude

OPEC NGLs

Non‐OPEC Supply2010 2011 2012 2013 2014 2015 2016

Total Demand

SOURCE: IEA, Oil Market Report July 11 9

Tight OPEC Spare Capacity

Tight OPEC capacity due to a loss in Libyan supply


Tight OPEC capacity due to a loss in Libyan supplyOPEC spare capacity tightened from peak of 5 MBD to just 3.5 MBD due to production loss from Libya by 1.6 MBD, affected by the uprising.

33

35Million BBL

31

33

Total OPEC Production Capacity

1.05.1 3.5

27

29

Total OPEC Production Capacity

Total OPEC supply

25

27

7 8 9 0 1

2007

2008

2009

2010

20112007 2008 2009 2010 2011

Source: OPEC Oil Market Report August 11 10

Funds Flow Fueling Oil Prices Volatility

Funds Flow Driving Oil PricesGlobal Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

Oil becomes an investment asset class and hedge tool against US dollar weakness …

PRICE

11

Investment Flows

Investment flow dipped from record highGlobal Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

150350 000

$/bblPositions (1,000bbl/position)

Number of Contract WTI Prices

Non‐commercial players aggressively sold‐off oil contract futures on fears of global economic slowdown

130

150

300,000

350,000

90

110

200 000

250,000

70

90

150,000

200,000

50100,000

3050,000Jan‐08 Apr‐08 Jul‐08 Oct‐08 Jan‐09 Apr‐09 Jul‐09 Oct‐09 Jan‐10 Apr‐10 Jul‐10 Oct‐10 Jan‐11 Apr‐11 Jul‐11

Source: US CFCT 12

Other Factors

Other Factors to Impact Oil PricesGlobal Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

DisastersDisastersGeopolitical Risk & Fears of Supply DisruptionGeopolitical Risk & Fears of Supply Disruption

Regulations & PoliciesRegulations & Policies

Volcanic eruption/ Earthquake/ Flu pandemicMENA Unrest

Libya, Yemen and Syria

Central BanksQE3?, Interest rates policy, RRR

Weather/SeasonalWeather/Seasonal

Ni i Di t

Taxes & Subsidies on ‘Green’ energy projects

Flood / HurricaneNigeria Dispute

Fade‐out Nuclear Power Plant

Summer/ WinterIran nuclear sanction

13

Crude Oil Price Outlook

What the Others SayGlobal Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

Brent prices to be softer from the current level in H2‐11 due to “Debt Problem & Sluggish growth”Oil Price Forecast BRENT

Unit : USD/BBL Q3-11 Q4-11 2011 2012 2013

BofAML 110.0 102.0 108.6 114.0 -

Barclays 110.0 115.0 112.0 115.3 -

BNP Paribas 113.0 116.0 114.0 124.0 -

Citigroup 107.0 95.0 106.0 86.3 -

Credit Suisse 110.0 100.0 108.4 100.5 -

First Energy 110.0 115.1 111.8 113.8 115.0

Global Risk 110.0 107.0 108.5 112.3 -

Goldman Sachs 114.0 119.5 113.5 130.0 -

JBC Energy 110.4 104.5 109.3 105.9 106.9

JPM 112 0 115 0JPMorgan - - 112.0 115.0 -

Morgan Stanley - - 120.0 130.0 -

Soc Gen 114.2 113.3 112.6 115.2 119.0

UBS 105 0 95 0 105 7 95 0 95 0

14Source : Reuters Polls (31 companies) as of 26 August 11

UBS 105.0 95.0 105.7 95.0 95.0

Average from Reuters 109.7 105.1 109.5 107.9 110.4

Crude Oil Price Outlook

What We See??


What We See??We expects Brent to be average $111 in 2011 due to strong demand from Asia and the Middles East, limited supply from Libya and more fund flows

$117

$110 $112 $110120120

$/BBL$/BBL

$106$99

$8090

100

110

90

100

110

$66$73

$63

$80

60

70

80

60

70

802011 Brent $111

40

50

60

40

50

60

2006 2007 2008 2009 2010 1Q11 2Q11 3Q11 4Q11 20122006 2007 2008 2009 2010 1Q11 2Q11 3Q11 4Q11 2012

Latest Forecast Actual

15

Conclusion of Global Oil MarketGlobal Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

Oil demand growing steadily but at slower pace Oil demand growing steadily but at slower pace

OIL MARKETOIL MARKET

g g y p Non‐OPEC crude oil supply growing less than demand OPEC still playing a key role in controlling the market

g g y p Non‐OPEC crude oil supply growing less than demand OPEC still playing a key role in controlling the market

PRICE FORECASTPRICE FORECAST Short‐term: Expect Brent to trade in $95‐$115 rangeMedium to long term: Expect persistently high oil i t t i l di it l d b ti ht d il it

Short‐term: Expect Brent to trade in $95‐$115 rangeMedium to long term: Expect persistently high oil i t t i l di it l d b ti ht d il it

PRICE FORECASTPRICE FORECAST

prices at triple digits, led by tight crude oil capacity Oil prices to be volatile, led by market sentiment and macroeconomic conditions

prices at triple digits, led by tight crude oil capacity Oil prices to be volatile, led by market sentiment and macroeconomic conditions

16







17


Thailand Energy Dependency At A Glance


• Sign of improvement in energy consumption efficiencySign of improvement in energy consumption efficiency

• However, in 1H 2011, figure has bounced back to 1.3, implying that Thailand still relied

significantly on energy in driving the economyg y gy g y

Source : Ministry of Energy, NESDB & TOP PLC 18

Among the energy consumed, Oil & Gas accounts for 70% of total energy consumption


• Thai economy is addicted to Oil & Gas with 70% of total energy consumptionThai economy is addicted to Oil & Gas with 70% of total energy consumption

• Natural gas is showing significant growth

Source: Energy Policy and Planning Office (EPPO) / TOP PLC 19

Quick View of Thailand NG & Oil supply & demand


20

Thailand Petroleum Product Balance


• Before 1997 financial crisis, Thai petroleum demand grew robustly at 12.1% p.a. & Thailand was f f , p g y p

net importing nation at that time.

• However, since 1997, Thai petroleum demand growth has been very low at 0.5% p.a. on average

• More local supply was added on stream with new refineries changing Thailand to be a net export

nation

Source : Ministry of Energy, NESDB, TOP PLC 21

Local petroleum demand growth


Petroleum Demand Growth Key Factors affecting petro demand

S rging & olatile cr de oil price Surging & volatile crude oil price

Government policy on Biofuel &

Petro retail pricesPetro retail prices

Political Stability & tourists’

confidenceconfidence

Fragile global economy after 2008

economic crisiseconomic crisis

22Source : Ministry of Energy & TOP PLC

Thailand Petroleum Product Demand Outlook 2030


• Oil demand in the next 20 years is relatively low compared to historical figures owing toOil demand in the next 20 years is relatively low compared to historical figures owing to

the 3 main factors which are the rise in oil price trend, more alternative/renewable energy

and increased efficiency.

Thailand Petroleum Products Demand Outlook(Average Annual Growth Rate : AAGR)

ff y

( g )

Source : TOP PLC Estimate 23

Preview 15‐Year Thailand Renewable Development Plan


24

Aggressive Target on “Less Oil Dependency Policy”


• Based on actual figure 2011 7M, ethanol + Biodiesel + NGV have already replacedBased on actual figure 2011 7M, ethanol + Biodiesel + NGV have already replaced

mogas & gasoil around 16% or 11 mml/day

Source : Department of Alternative Energy Development and Efficiency, Ministry of Energy and Thaioil PLC estimate (2011) 25

In addition to government’s effort to promote alternative energy (biofuel & NGV), capped local LPG price also encourages surge in LPG demand in transportation sectordemand in transportation sector


Accumulated LPG vehicleLPG V hi lLPG in Transportation Sector

(‘000 unit) LPG Vehicles

400

600

800 649

LPG in Transportation Sector

As local LPG price is capped far below international price, it causes market distortion & encourage switching d d t d LPG f t t ti

0

200

2006 2007 2008 2009 2010

demand toward LPG for transportation usage

As of Jul-2011, LPG usage in transportation sector reach 5.23 mml/day or 7% of total mogas & gasoil demand

LPG usage in transportation as of /

LPG Station

Jul‐11, it’s at 5.23 mml/day

Source : DOEB, Ministry of Energy 26

Energy Policy : A Big ImpactGlobal Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

Example of Recent Changes in Oil Fuel Fund /Excise Tax Policies

• During December 2010 to April 2011, government used oil fuel fund to cap diesel retail price at below 30 Baht/Litre

• Then from April 2011 onward, excise tax removal has been used instead to maintain diesel price below 30 Baht/Litre

• On August 27 2011 government slashed oil fuel fund collection on ULG91/95 & Diesel causingOn August 27, 2011, government slashed oil fuel fund collection on ULG91/95 & Diesel causing retail price lower by 3 – 8 Baht/Litre overnight

• Later on August 31, 2011, government reduced oil fund collection on Gasohol 91,95 & E20 to maintain the attractiveness of Gasohol over normal Gasoline

27

Base on Regression Study, Recent Drop in Gasoline/Diesel Retail Prices due to temporary oil fuel fund removal would have positive effect on local petro demand

Gasoline/Gasohol

From regression analysis, every 1% drop in gasoline price will cause

Retail price of U91/95 edged down by 6‐8 B/Litre or by 17%

Gasoline/Gasohol

drop in gasoline price will cause gasoline demand to rise by 0.3% Thus, U91/95 demand are

potentially to rise by 5%.

Diesel

From regression analysis, every 1% drop in diesel price will cause

DieselRetail price of diesel reduced by 3B/Litre or by 10% p p

diesel demand to rise by 0.4% Thus, diesel demand is expected to rise by 4%.

Source: Energy Policy and Planning Office (EPPO) , TOP PCL 28

Conclusion on Thailand Oil Market


Thai Economy is addicted to Enegry in driving economic expansion

Thailand ill remain net petro e porting nations Thailand will remain net petro exporting nations as demand growth is relatively low

Thailand will be “Asian Alternative Energy Hub”

29

Conclusion on Thailand Oil Market


Thai Economy relies heavily on energy consumption in driving Econ Growth ( fl t d i E I t it f 1 3 d i 1H 2011)(as reflected in Energy Intensity of 1.3 during 1H‐2011)

Among energy consumed, Oil & Gas accounts for 70%. BUT in term of growth rate natural gas enjoys growth of almost 10% p a during the past 20 years while oilnatural gas enjoys growth of almost 10% p.a. during the past 20 years, while oil has growth of merely 2% p.a.

Surging crude oil prices together with aggressive government’s push for Surging crude oil prices, together with aggressive government s push for alternative fuel, has caused local petro demand being low & volatile and Thailand has been net petro exporting nations since 1997 (with currently export around 230 KBD of petro product)230 KBD of petro product)

As of 1H‐2011, ethanol + biodiesel + NGV has already replaced Mogas & Diesel of around 11 mml/day or 16% and if incorporating LPG, the replacement will rise to / y p g , p16 mml/day or 22%

Certainly, other government policies such as changing oil fuel fund / excise tax, promotion of mass transit system would inevitably have impact on local petro demand in the long run

30







31


New wave of refining capacity additionGlobal Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

As new supply is lagging growing demand, cracking margin will be healthy Product demand growth in ME & AP will outpace additional capacity during 2010‐2014 The wave of new ME refineries starting from 2015 will put pressure on refining business

KBDME Additional Demand

Refinery Addition Refinery Addition vsvs Demand Growth in AP & MEDemand Growth in AP & ME

2,000

2,500

3,000 ME Additional DemandAP Additional DemandTaiwanMEBreathing Period 3.2 MBD

3 9 MBD3 9 MBD

6.3 MBD6.3 MBD

500

1,000

1,500 VietnamAP OthersJapanIndia

3.9 MBD3.9 MBD

-1,000

-500

0ChinaME CDU Capacity AdditionAP CDU Capacity Addition

1,0002007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

SOURCE: FACTS Global Energy, Asia‐Pacific Databook, Spring 2011 (April 2011) 32

New players with high complexityGlobal Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

New refineries come with full cracking facilities

60%VDU/CDU Asian Pacific's Refinery

Existing refineries with low cracking ratio will be less and less competitive

Japan India

China50%

60% Asian Pacific s Refinery

ThailandIndonesia

Singapore30%

40%

Pakistan

Phili iMalaysia

South Korea

Taiwan

Australia

10%

20%

Philippine Vietnam

‐10%

0%

0 10 20 30 40 50 60CRACKING/CDU

SOURCE: Thai Oil, FACTS Asia Pacific Databook, Spring 2010 33

Pressured Refining MarginGlobal Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

Weakening refining margin on capacity surplus

10.00USD/BBL Singapore Gross Refining MarginSingapore Gross Refining Margin

6.00

8.00

2 00

4.00

0.00

2.00

-4.00

-2.00

Cracking Margin Simple Margin*Including internal fuel and loss

2004 2005 2006 2007 2008 2009 2010

34

Higher fuel efficient vehicles in the future

% penetration on new vehicles, 2020


Europe KoreaGlobal market North America

El t i100% = ~ 90 mn cars 100% = ~21 mn cars 100%= ~ 20 mn cars 100%= ~ 1 mn cars

Electricvehicle (EV)

Hybrid24

169 1

25 26

3 1

24

2016

3

25

410 1

InternalCombustion

8372 73 77

95

CombustionEngines (ICE)

67 72 7360 65

A : Government incentive battery cost ~200 USD/ kwh oil ~110 USD/ bblA : Government incentive battery cost ~200 USD/ kwh oil ~110 USD/ bbl

A B A B A B A B

A : Government incentive, battery cost 200 USD/ kwh, oil 110 USD/ bblB : No incentives, battery cost ~200 USD/ kwh, oil ~60 USD/ bblA : Government incentive, battery cost 200 USD/ kwh, oil 110 USD/ bblB : No incentives, battery cost ~200 USD/ kwh, oil ~60 USD/ bbl

SOURCE: McKinsey 35

Alternatives cutting demand for fossil

Biofuel demand grew over 6 times in the past 10 years


Biofuel demand grew over 6 times in the past 10 years Share of biofuel usage continues to grow consistently on the back of strong government support Global biofuel consumption will contribute 2.4% in 2016, most of which replaces gasoline usage

Growing share of Growing share of biofuelsbiofuels

4%

5%

90

100% of BiofuelTotal Oil Supply (MBD)

2%

3%

70

80

0%

1%

50

60

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

SOURCE: IEA Medium Term Report [Jun‐11] / IEA Oil Monthly Report [Aug‐11] 36

Overview of Thailand’s RefineriesGlobal Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

There are 7 refineries in Thailand with total refining capacity of 1,092 KBD and majority of production is on middle distillates (Jet & Gasoil) which match with country demand patternproduction is on middle distillates (Jet & Gasoil), which match with country demand pattern

SOURCE: PTIT Focus Special Annual Report 2004, except for capacity figure for RRC (Based on RRC Offering Memorandum) 37

AEC : Expanding Boundary

ASEAN Countries

2003Global Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

Countries

IndonesiaMalaysiaPhilippinesSingapore

: ASC :ASEAN Political‐Security Community

: AEC :ASEAN E i C it

1992AFTA g p

ThailandBruneiVietnamMyanmarLaos

ASEAN Economic Community: ASCC :

ASEAN Social‐Cultural Community

AFTAASEAN Free Trade Area

LaosCambodia

Promote and protect investment under National

Treatment

What is AEC?

Free Flow Free Flow of

Free Flow of Investment

Fast track services include ICT, Healthcare,Tourism, Air

Transportation Engineer

Lifting restrictions for capital mobility

Free Flow of Goods

of Servicesee o oCapital

Free Flow of Skill d L b

Eliminate Tariff

Transportation gArchitectAccountantDoctorNurseDentistof Goods Skilled LaborTariff

Construction

38

AEC & Logistic Link as “the Opportunity”Global Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

North-South

East-West

Southern

39

Conclusion of Future ChallengesGlobal Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

Demand growth in Asia Pacific and Middle East to outpace refining capacity addition from now till 2014 Demand growth in Asia Pacific and Middle East to outpace refining capacity addition from now till 2014

REGIONAL MARKETREGIONAL MARKET

New wave of new capacity from ME during 2015‐2018 to again pressure the industry The challenge of green trend

New wave of new capacity from ME during 2015‐2018 to again pressure the industry The challenge of green trendThe challenge of green trendThe challenge of green trend

Domestic refining capacity is 1.1 MBD while demand remains below 0.8 MBD

ll f f ddl d ll d

Domestic refining capacity is 1.1 MBD while demand remains below 0.8 MBD

ll f f ddl d ll d

LOCAL MARKETLOCAL MARKET

All refineries focus on middle distillate production to serve local demand AEC to open doors for ASEAN communities in 2015

All refineries focus on middle distillate production to serve local demand AEC to open doors for ASEAN communities in 2015p fp f

40







41


50 Years – A Long Road of Success

Development & Revenue Growth AGM Award + Board of the Year

+ Best CG + TQC


+ Best CG + TQC 2010

Upgrading + Expansion + Diversification + Oil Price42

TOP Group Business Structure

100% 100% 55% 100%PTT 26%J‐Power 19%

100%

30%

Thaioil (TOP)

Thai Lube Base(TLB)

Thaioil Power (TP)

Thaioil Marine(TM)

P d

Thaioil Ethanol(TET)

Thai Paraxylene(TPX)

100%

30%

Maesod Clean Energy(MCE)

Capacity : 275,000 barrels/day

Small Power Producer Program3‐on‐1 Combined Cycle

Sells Electricity/Steam to Group

Oil&Chemical TankersCapacity :153,000 DWT

Sugarcane Based EthanolCapacity : 200,000 lts/day

Padaeng35%

Mitr Phol 35%Lube Base Oil Capacity :Base Oil 270,000 tons/annumBitumen

Aromatics Capacity:Paraxylene 489,000 tons/annumMixed Xylene90,000 tons/annum

Sapthip (SAP)50%

Thaioil Marine International Pte Ltd.

100%

50%NYK Bulk &

Platformate1.8 million tons/annum

3 on 1 Combined CycleElectricity 118 MWSteam 168 tons/hour

PTT 20%56%

400,000 tons/annumTDAE65,000 tons/annum

Benzene 177,000 tons/annumToluene 144,000 tons/annumTotal 900 000 /

Sapthip (SAP)Cassava Based EthanolCapacity : 200,000 lts/day

50%

Ubon Bio Ethanol (UBE)21%

Cassava Based EthanolC i 400 000 l /d

TOP‐NYK MarineOne Pte Ltd. (TOP‐NYK)

50%Energy B.V. 50%

Crude Tankers :VLCCCapacity :281,000 DWT

BCP 21%Others 58%

Independent Power (Thailand) (IPT)

Thaioil Energy Services(TES)

Proceeds the business on various professional of management services

PTT 20%Thaioil 24% 100%

Thappline (THAP)

9% PTT 31%Others 60%900,000 tons/annum

Thaioil SolventThrough TOP Solvent (TS)

100%

1st Independent Power

Capacity : 400,000 lts/day

gMulti‐product PipelineCapacity:26,000 m.lts/y

Through TOP Solvent (TS)

Capacity :

1st Independent Power Producer Program2‐on‐1 Gas‐Fired,Combined CycleElectricity 700 MW

100%80.52%

Solvent distribute in Thailand

Sak Chaisidhi (SAKC)

Top Solvent Vietnam

Solvent distribute i i

PTT ICT Solutions(PTT ICT)

PTT Energy Solutions(PTTES)

Provides engineering technique consulting

20%PTT 40%

PTTAR 20%IRPC 20%

1

PTT Group 80% 20%100,000 tons/annum in Vietnam( ) technique consulting

services

43

Efficiency

OperationalOperationalExcellenceExcellence

FlexibilityReliability

44

More Efficiency – Reducing Energy LossGlobal Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

120

125

CEL Index(Lower = better)

110

115

105

110

95

100

902000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1H-2011

“Energy and Loss play a vital role in margin especially when oil price is high”

45

More Efficiency – Squeezed AssetGlobal Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

Gasoil Gasoil

108 %

Gasoil Gasoil

360oC

362oC106 %

Fuel oil Fuel oilPX Intake PX Intake

“Consistently squeeze the capability of existing asset”

46

Efficiency



47

High Flexibility – Refine New CrudeGlobal Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

Driven by high discount to typical crude

Evaluate key severe properties (e.g. TANs, Sulfur)

Identify methodologies for each crude typeIdentify methodologies for each crude type

Implement unconventional crude processing

8

12USD/BBL Arab Light‐Heavy Differential

4

8

“Moving towards more severe crude is the key to survive”

0

Jan‐00 Jan‐02 Jan‐04 Jan‐06 Jan‐08 Jan‐10

crude is the key to survive

48

High Flexibility – Refine New Crude

Sources of Crude Products


9%

4%

2%

13%14% 14%

3% 3%

Far East

Local

LPGPlatformate

Gasoline

Others

12%

19% 19%

16% 16%Gasoline

Jet

87%

72%

MiddleEast Diesel

37% 38%

FO

11% 11%

Q1/10 Q1/10 Q2/10 Q2/10Q2/10Q1/10

“Diversified crude sources while maintaining product yield”

49

High Flexibility – Capture Niche Market


Distillate Aromatic Extract

Treated Distillate Aromatic Extract

Purified

(DAE) (TDAE)

What does the market need ?

Cleaner products ?

Higher quality ?Higher quality ?

Specification changes ?

Market Driver

50

Efficiency



51

Improved Reliability – Less Outages


Risk IdentificationFailure diagnosis/DEM

Unconventional crude processing Equipment life assessment

Inspection/maintenance strategy

Furnace energy improvementMechanical seal improvement

52

Efficiency



53

Align Strategies by Operation ExcellenceGlobal Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

Update MarketMarket

Condition

MonthlyIdentify

Margin Gap

MonthlyQuarterlyChecking

Seek ImprovementSet Target

“Align commercial strategies and refinery operations”

54

Bottom‐up EngagementGlobal Oil Market Thailand Oil Market Changing Landscape Stay in the Game Conclusion

Looking Forward – KFALooking Forward KFA

Value ChainIntegration

Enterprise RiskManagement

Innovation

Integration

Reliability

Management System

Growth

PeopleManagementSustainable

Development

CostManagement

Work ProcessImprovement

Productivity and Efficiency

“C ti l i th th h 5 Y K F A S h ”

CustomerFocus

“Continuously improve the process through 5‐Year Key Focus Area Scheme”

55

TOP Group’s Core Enablement


HPO

CSR CG

Engineering Clean Energyg g gySustaining Green World

56

Ambitious Strategy Evolution

Refinery Flagship Asia Pacific’s Leader


e e y ags p s a a s eade

“Top quartile profitability”

Return Scale “Top quartile profitability”

Return Complex Scale Complex

Commodities SpecialtiesCommodities Specialties

Operational Excellence Business Excellence

57

Thank You

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