Global Petroleum Market Outlook Changes on the Horizon Prepared for 2009 Energy Buyers' Conference Miami Beach –October 26

2009 Energy Buyers' Conference 2 Agenda  Product Demand  Heavy Crude Supply  Residual Fuel Markets

2009 Energy Buyers' Conference 3 The U.S. has undergone a large drop in refined product demand Year-to-Year Change, Million Barrels per Day GDP %

2009 Energy Buyers' Conference 4 Higher prices, more efficient vehicles and bio- fuels will all limit petroleum demand U.S. Gasoline Supply, Million B/D High Prices & Recession Impact Status Quo Price Impact Vehicle Efficiency Impact Impact on U.S. gasoline is dramatic but high prices and efficiency gains affect most products and markets

2009 Energy Buyers' Conference 5 While demand is dropping, new crude and conversion capacities will be added to the global refining industry Announced Projects (Most Likely + Probable) Project cancellations and delays are lagging changes in demand Million B/D, Year to Year Change

2009 Energy Buyers' Conference 6 Distillation capacity utilization is expected to remain low without capacity rationalization Percent

2009 Energy Buyers' Conference 7 With declining gasoline demand, refiners will need to reconfigure to make more diesel Atlantic Basin Demand, Million Barrels per Day Note: Diesel includes all No.2 Distillate and Gasoils (on-road, off-road, and heating gasoil)

2009 Energy Buyers' Conference 8 Challenging Outlook for Refining  Product Demand  Heavy Crude Supply  Residual Fuel Markets

2009 Energy Buyers' Conference 9 Heavy Mexican crude has been a U.S. refining stable but has declined significantly Million Barrels per Day

2009 Energy Buyers' Conference 10 Reduction in vacuum residue from crude runs is creating ‘spare’ coking capacity Year-on-Year Change in Crude Vacuum Residue Content Million Barrels per Day

2009 Energy Buyers' Conference 11 U.S. heavy crude supplies will continue shifting from Latin America to Canada U.S. Heavy Crude Runs, Million Barrels per Day Note: Figures include heavy sour and high TAN crude types.

2009 Energy Buyers' Conference 12 Challenging Outlook for Refining  Product Demand  Heavy Crude Supply  Residual Fuel Markets

2009 Energy Buyers' Conference 13 World marine bunker demand has been increasing as overall residual fuel demand declines Residual Fuel, Million Tons Percent Bunker

2009 Energy Buyers' Conference 14 IMO sulfur regulation timeline % Sulfur, max Study in 2018 determines availability of LS fuel and start date for 0.5% S limit

2009 Energy Buyers' Conference 15 Most immediate regulations relate to ECAs  Current (S)ECAs established in the North Sea and Baltic Sea  U.S. EPA has submitted a ECA request to the IMO in conjunction with Canada  California has issued a Marine Notice that only distillate fuels can be used within 24 n.m. from July 2009  ECAs likely to be adopted in other areas  Norway  Portions of Mediterranean?  Straits of Melaka?  South Korea?

2009 Energy Buyers' Conference 16 Reduction of bunker fuel emissions is a complex inter-industry issue  Facing complex regulatory environment  Uncertain ECA and global regulation schedule  NOx, PM and perhaps CO 2  Fuel cost can affect competitiveness  Values security of supply and quality assurance  Resistant to capital expenditures and added complexity of scrubbers  Bunker has traditionally been a low-value by-product  Difficult to envision investing to improve bunker quality  Concerned with timing and magnitude of investment required  Has concerns with stranded investment risk  Needs clear signal from fragmented shipping industry on fuel requirements Shipping IndustryRefining Industry  Who invests? What fuel quality is needed?

2009 Energy Buyers' Conference 17 Purvin & Gertz study is based on a scenario analysis to understand impact on refining industry  Scrubbing of stack gases, while not commercially available, has the potential to significantly reduce compliance cost Degree of scrubber adoption will have a direct effect on refiners The uncertainty of this variable examined through two scenarios:  Fuels Compliance – Stringent and disruptive case for refining, suppliers and bunker consumers Significant refining industry impact  Scrubber Compliance – Broad scrubbing adoption key ship types and routes which moderate need for fuel quality improvements Moderate refining industry impact

2009 Energy Buyers' Conference 18 Refinery Production Options and Risk

2009 Energy Buyers' Conference 19 In Fuels Compliance Scenario, bunker fuel quality shifts radically as ECA and global IMO regulations take effect US PADD I Bunker Projection Thousand Barrels per Day Fuels Compliance Scenario (1) Includes low-sulfur residual fuels, low quality distillates and other fuels for ship main engines

2009 Energy Buyers' Conference 20 Will large scale adoption of onboard after treatment (scrubbing) be the solution?  High sulfur bunker consumption is relatively concentrated in the global fleet  Investment returns appear good depending on route, vessel class and fuels pricing Percent of Vessels Percent of Global RFO Demand

2009 Energy Buyers' Conference 21 Potential to shift price relationships  Currently, LSFO-HSFO spread is small compared to diesel- HSFO  Adding LS spec to bunker fuel will increase LSFO-HSFO spread  Increases diesel demand and raises diesel prices  LSFO might move from being a “HSFO plus” product to a “diesel minus” product  Impact on price relationships extends beyond bunker fuels  Crude sweet/sour differentials  Refinery processing margins Cost of Production Current Situation HSFO LSFO HSFO LSFO MGO/MDO Compliance Scenario

2009 Energy Buyers' Conference 22 In summary...  Atlantic Basin refining markets are in chronic oversupply  Diesel will be primary profit driver  Weaker growth in heavy crude  Bunker quality changes - more distillate demand

2009 Energy Buyers' Conference 23 This analysis has been prepared for the sole benefit of PGI’s intended recipient of this presentation. Any third party in possession of the analysis may not rely upon its conclusions without the written consent of Purvin & Gertz. Possession of the analysis does not carry with it the right of publication. Purvin & Gertz conducted this analysis utilizing reasonable care and skill in applying methods of analysis consistent with normal industry practice. All results are based on information available at the time of review. Changes in factors upon which the review is based could affect the results. Forecasts are inherently uncertain because of events or combinations of events that cannot reasonably be foreseen including the actions of government, individuals, third parties and competitors. NO IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE SHALL APPLY. Some of the information on which this analysis is based has been provided by others. Purvin & Gertz has utilized such information without verification unless specifically noted otherwise. Purvin & Gertz accepts no liability for errors or inaccuracies in information provided by others. About this presentation…

2009 Energy Buyers' Conference 24