FINANCIAL MODEL TO EVALUATE REFINEY INVES

HYDROSKIMMING REFINERY

Refining capacity 10 MT/yr 200000 BD

Investment per barrel of ref ca 7000 $/bd
Total cost to construct a refinery 1400 $ millions

Input
Relative
to Brent $/bbl b/ton BD million tons
1.06 Sweet and very light crude oil $84.80 7.7 0 0
1 Sweet and light crude oil $80.00 7.4 0 0
0.97 Sour and light crude oil $77.60 7.2 120000 6.083333
0.89 Sour and medium crude oil $71.20 6.9 80000 4.231884
0.79 Sour and heavy crude oil $63.20 6.5 0 0
0.73 Sour and extra heavy crude oil $58.40 6.3 0 0
$75.04 200000 10.31522
Brent Crude oil $80.00 7.37 $589.60 $/MT

Total refining cost $5,477.92 $ millions

$531.05 $/MT

Refinery yields
Hydro Product
skimming Netbacks
LPG 2 $660.35
Naphtha 0 $589.60
Prem gasoline 15 $707.52
Reg gasoline 8 $683.94
Kerosene 7 $784.17
Gasoil 31 $766.48
Low Sulfur FO 0 $412.72
High Sulfur FO 33 $383.24
Coke 0 $80.00
Losses 4
total 100
Ref yield value $593.02 $/MT
Crude cost $531.05 $/MT
Refining cost $16.00 $/MT
Ref Profit $45.97 $/MT
Total Profit $474.16 $ millions

Working storage 45 days

Strategic Petro 45 days
Incremental Inv 20%
Income tax rate 30%
 Cashflow Table in million $
Year Investment Working Ref Income Dep Taxable Tax Cash
Capital Income Flow
1 $420 $0 $0 $0 $0 $0 -$420
2 $560 $0 $0 $0 $0 $0 -$560
3 $420 $0 $0 $0 $0 $0 -$420
4 $0 $1,351 $474 $140 $334 $100 -$977
5 $0 $0 $474 $140 $334 $100 $374
6 $0 $0 $474 $140 $334 $100 $374
7 $0 $0 $474 $140 $334 $100 $374
8 $0 $0 $474 $140 $334 $100 $374
9 $0 $0 $474 $140 $334 $100 $374
10 $280 $0 $474 $140 $334 $100 $94
11 $0 $0 $474 $140 $334 $100 $374
12 $0 $0 $474 $140 $334 $100 $374
13 $0 $0 $474 $140 $334 $100 $374
14 $0 $0 $474 $0 $474 $142 $332
15 $0 $0 $474 $0 $474 $142 $332
16 $0 $0 $474 $0 $474 $142 $332
17 $0 $0 $474 $0 $474 $142 $332
18 $0 $0 $474 $0 $474 $142 $332
19 $0 $0 $474 $0 $474 $142 $332
20 $0 $0 $474 $0 $474 $142 $1,683
$1,351
Internal Rate of Return 11%
Present value $204

Cost to build new refinery. Some latest examples. These might have changed since the financial melt down.

Ecuador 2007 Announcement to construct 300000 BD heavy sour crude refinery costing $ 4 billion or $13300 per BD
Kuwait Al Zour 2008 construction of non coking refinery with 615000 BD costing $12 to $15 billion. Or $19000/bd and $24000
Libya Zwara Refinery Foster Wheeler to construct a sophisticated 200000 BD refinery for $4 billion or $20000 per BD

Mozambic Refinery started the construction of the first refinery of 300000 costing $5 billion to come on stream in 2010 or $170
Second refinery with a capacity of 350000 BD costing $ 8 billion or $27000/bd
E REFINEY INVESTMENT

CATCRACKING REFINERY

Refining capacity 10 MT/yr 200000 BD

Investment per barrel of ref ca 11000 $/bd
Total cost to construct a refinery 2200 $ millions

Input

million tons $/bbl b/ton BD million tons

Sweet and very light crude oil $84.80 7.7 20000 0.948052
Sweet and light crude oil $80.00 7.4 30000 1.47973
Sour and light crude oil $77.60 7.2 40000 2.027778
Sour and medium crude oil $71.20 6.9 40000 2.115942
Sour and heavy crude oil $63.20 6.5 20000 1.123077
Sour and extra heavy crude oil $58.40 6.3 50000 2.896825
71.16 200000 10.5914

Total refining cost 5194.68 $ millions

$490.46 $/MT

Refinery Yields
Cat Product
Craking Netbacks
LPG 3 $660.35
Naphtha 0 $589.60
Prem gasoline 23 $707.52
Reg gasoline 14 $683.94
Kerosene 8 $784.17
Gasoil 33 $766.48
Low Sulfur FO 0 $412.72
High Sulfur FO 13 $383.24
Coke 0 $80.00
Losses 6 $0.00
total 100
Ref yield value $643.78 $/MT
Crude cost 490.4619 $/MT
Refining cost $20.00 $/MT
Ref Profit $133.32 $/MT
Total Profit $1,412.07 $ millions

Working storage 45 days

Strategic Petro 45 days
Incremental Inv 20%
Income tax rate 30%
 Cashflow Table in million $
Year Investment Working Ref Incom Dep Taxable Tax Cash
Capital Income Flow
1 660 $0 0 0 0 0 -660
2 880 $0 0 0 0 0 -880
3 660 $0 0 0 0 0 -660
4 0 $1,281 1,412 220 1,192 358 -226
5 0 $0 1,412 220 1,192 358 1,054
6 0 $0 1,412 220 1,192 358 1,054
7 0 $0 1,412 220 1,192 358 1,054
8 0 $0 1,412 220 1,192 358 1,054
9 0 $0 1,412 220 1,192 358 1,054
10 440 $0 1,412 220 1,192 358 614
11 0 $0 1,412 220 1,192 358 1,054
12 0 $0 1,412 220 1,192 358 1,054
13 0 $0 1,412 220 1,192 358 1,054
14 0 $0 1,412 0 1,412 424 988
15 0 $0 1,412 0 1,412 424 988
16 0 $0 1,412 0 1,412 424 988
17 0 $0 1,412 0 1,412 424 988
18 0 $0 1,412 0 1,412 424 988
19 0 $0 1,412 0 1,412 424 988
20 0 $0 1,412 0 1,412 424 2,269
$1,281
Internal Rate of Return 26%
net Present value $3,585

melt down.

on or $13300 per BD
on. Or $19000/bd and $24000/bd
on or $20000 per BD

me on stream in 2010 or $17000/bd

 Coking Refinery
Refining capacity 10 MT/yr 200000 BD
Investment per barrel of ref ca 15000 $/bd
Total cost to construct a refinery 3000 $ millions

Input

million tons $/bbl b/ton BD million tons

Sweet and very light crude oil $84.80 7.7 0 0
Sweet and light crude oil $80.00 7.4 0 0
Sour and light crude oil $77.60 7.2 50000 2.534722222
Sour and medium crude oil $71.20 6.9 40000 2.115942029
Sour and heavy crude oil $63.20 6.5 40000 2.246153846
Sour and extra heavy crude oil $58.40 6.3 70000 4.055555556
66.72 200000 10.95237365

Total refining cost 4870.56 $ millions

$444.70 $/MT

Coking Product
Netbacks
LPG 4 660.35
Naphtha 0 589.60
Prem gasoline 24 707.52
Reg gasoline 19 683.94
Kerosene 9 784.17
Gasoil 31 766.48
Low Sulfur FO 0 412.72
High Sulfur FO 0 383.24
Coke 5 80.00
Losses 8
total 100
Ref yield value $638.35 $/MT
Crude cost 444.7036 $/MT
Refining cost $25.00 $/MT
Ref Profit $168.65 $/MT
Total Profit $1,847.09 $ millions

Working storage 45 days

Strategic Petro 45 days
Incremental Inv 20%
Income tax rate 30%
 Cashflow Table in million $
Year Investment Working Ref Income Dep TaxableTax Cash
Capital Income Flow
1 900 0 0 0 0 0 -900
2 1,200 0 0 0 0 0 -1,200
3 900 0 0 0 0 0 -900
4 0 1,201 1,847 300 1,547 464 182
5 0 0 1,847 300 1,547 464 1,383
6 0 0 1,847 300 1,547 464 1,383
7 0 0 1,847 300 1,547 464 1,383
8 0 0 1,847 300 1,547 464 1,383
9 0 0 1,847 300 1,547 464 1,383
10 600 0 1,847 300 1,547 464 783
11 0 0 1,847 300 1,547 464 1,383
12 0 0 1,847 300 1,547 464 1,383
13 0 0 1,847 300 1,547 464 1,383
14 0 0 1,847 0 1,847 554 1,293
15 0 0 1,847 0 1,847 554 1,293
16 0 0 1,847 0 1,847 554 1,293
17 0 0 1,847 0 1,847 554 1,293
18 0 0 1,847 0 1,847 554 1,293
19 0 0 1,847 0 1,847 554 1,293
20 0 0 1,847 0 1,847 554 2,494
1,201
Internal Rate of Return 27%
Net Present value $4,849
Key Assumptions

1. Product ratios to Brent crude oil

LPG 1.12
Naphtha 1
Premium gasoline 1.2
Regualar gasoline 1.16

Kerosene 1.33
Gas oil 1.3
Low Sulfur Fuel oil 0.7
High Sulfur Fule Oil 0.65
Coke 80
IEA OIL Market Report

1998 1999 2000 2001 2002 2003 2004 2005

NWE Brent-Cra 1.58 0.7 3.37 2.05 0.75 2.34 3.77 4.67
Singapore Duba 0.09 -1.25 0.56 -0.2 -0.56 0.75 1.16 0.33
USGC Mayan-C 3.51 1.72 4.55 6.46 2.23 3.84 8.97 14.76

2008 estimate based on the first three months

16

14

12
NWE Brent-Crack
10 Singapore Dubai-
Hydro
USGC Mayan-Coking
8

0
1998 1999 2000 2001 2002 2003 2004 2005 2006
-2
Source: IEA Oil Market Report
-4

1998 1999 2000 2001 2002 2003 2004 2005

Mayan-Coking 3.51 1.72 4.55 6.46 2.23 3.84 8.97 14.76

US GULF COAST Mayan-Coking Refinery Profitability ($/Bbl)

18
16
14
12
10
8
6
16
14
12
10
8
6
4
2
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
 2006 2007 2008 2009
3.71 4.78 4.84
-2.37 -1.49 -2.55
14.75 15.29 10.01

4.84 10.01 -2.55

NWE BrentSingapore USGC Mayan-Coking

Jan-08 1.9 -3.8 6.81
Feb-08 3.42 -3.74 10.76
Mar-08 3.76 -2.36 11.72
Apr-08 6.59 -1.39 15.45
May-08 6.55 -4.44 15.97
Jun-08 4.47 -5.75 11.66
Jul-08 3.11 -4.28 2.09
Aug-08 4.67 -2.96 4.74
Sep-08 8.93 1.16 21.98
Oct-08 6.18 -0.5 6.5
Nov-08 4.94 -2.77 9.14
Dec-08 3.57 0.22 3.15
Jan-09 4.37 1.68 5.31
Feb-09 3.39 -0.72 4.47
Mar-09 0.83 -3.44 2.34
Apr-09 1.25 -2.04 0.94
May-09 1.96 -3.02 -1.54
2004 2005 2006 2007 2008
Jun-09 0.98 -5.08 0.67
Jul-09 0.65 -2.67 -0.62
rket Report Aug-09 0.49 -2.82 -0.31

2006 2007 2008 2009

14.75 15.29 10.01

ery Profitability ($/Bbl)

4 2005 2006 2007 2008 2009
USGC Mayan-Coking

25

20
NWE Brent-Crack
Singapore Dubai-
15 Hydro
USGC Mayan-Coking

10

-5

-10 Source: IEA Oil Market Report

k
i-

oking
 1994 1995 1996 1997 1998 1999 2000 2001
Brent(dated) 15.82 17.02 20.67 19.09 12.72 17.97 28.5 24.44
WTI(1st m Adj) 17.21 18.42 22.16 20.61 14.39 19.31 30.37 25.93
WTI-Brent 1.39 1.4 1.49 1.52 1.67 1.34 1.87 1.49

Premium Unlead 19.76 20.77 24.16 24.04 17.55 21.94 36 29.82

Unleaed 18.66 19.74 22.96 23 16.53 20.86 34.41 28.83
Napththa 16.96 17.79 21.25 20.97 14.33 18.34 29.09 23.69
Jet/ker 20.89 21.53 27.01 24.53 17.09 22.04 36.98 30.82
Gasoil 19.81 20.46 25.92 23.4 16.17 20.12 34.38 29.16
LSFO 14.28 16.04 17.86 15.78 11.96 15.05 23.74 19.52
HSFO 12.94 14.7 16.2 14.52 10.12 14.37 21.42 17.79

Premium Unlead 1.25 1.22 1.17 1.26 1.38 1.22 1.26 1.22
Unleaed 1.18 1.16 1.11 1.20 1.30 1.16 1.21 1.18
Napththa 1.07 1.05 1.03 1.10 1.13 1.02 1.02 0.97
Jet/ker 1.32 1.26 1.31 1.28 1.34 1.23 1.30 1.26
Gasoil 1.25 1.20 1.25 1.23 1.27 1.12 1.21 1.19
LSFO 0.90 0.94 0.86 0.83 0.94 0.84 0.83 0.80
HSFO 0.82 0.86 0.78 0.76 0.80 0.80 0.75 0.73

1994 1995 1996 1997 1998 1999 2000 2001

Brent 15.82 17.02 20.67 19.09 12.72 17.97 28.5 24.44
Premium 19.76 20.77 24.16 24.04 17.55 21.94 36 29.82
Gasoil 19.81 20.46 25.92 23.4 16.17 20.12 34.38 29.16
LSFO 14.28 16.04 17.86 15.78 11.96 15.05 23.74 19.52

Product prices vs Brent in Rotterdam ($/bbl

90

80

70 Brent
Premium
60 Gasoil
LSFO
50

40

30

20

10

0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
 20

10

0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Product cracks with respect to Brent

1994 1995 1996 1997 1998 1999 2000 2001

Premium 3.94 3.75 3.49 4.95 4.83 3.97 7.5 5.38
Gasoil 3.99 3.44 5.25 4.31 3.45 2.15 5.88 4.72
Naphtha 1.14 0.77 0.58 1.88 1.61 0.37 0.59 -0.75
LSFO -2.88 -2.32 -4.47 -4.57 -2.6 -3.6 -7.08 -6.65

Product cracks with respect to Brent ($/bbl)

20 Premium
Gasoil
15 Naphtha
LSFO
10
5
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
-5
-10
-15
-20
-25
 2002 2003 2004 2005 2006
25.02 28.83 38.27 54.52 65.14
26.16 31.06 41.49 59.69 66.02
1.14 2.23 3.22 5.17 0.88

29.09 35.46 47.94 63.97 74.17

28.57 34.87 47.27 62.82 72.87
24.23 29.99 41.47 52.45 62.23
29.24 35.83 50.25 71.8 81.25
27.81 33.99 46.83 67.7 77.47
21.81 25.79 25.02 39.18 45.51
20.65 23.37 23.91 36.21 45.18

1.16 1.23 1.25 1.17 1.14

1.14 1.21 1.24 1.15 1.12
0.97 1.04 1.08 0.96 0.96
1.17 1.24 1.31 1.32 1.25
1.11 1.18 1.22 1.24 1.19
0.87 0.89 0.65 0.72 0.70
0.83 0.81 0.62 0.66 0.69

2002 2003 2004 2005 2006 2007 2008

25.02 28.83 38.27 54.52 65.14
29.09 35.46 47.94 63.97 74.17
27.81 33.99 46.83 67.7 77.47
21.81 25.79 25.02 39.18 45.18

Rotterdam ($/bbl)

002 2003 2004 2005 2006 2007 2008

002 2003 2004 2005 2006 2007 2008

2002 2003 2004 2005 2006 2007 2008 2009

4.07 6.63 9.67 9.45 9.03 0 0 0
2.79 5.16 8.56 13.18 12.33 0 0 0
-0.79 1.16 3.2 -2.07 -2.91 0 0 0
-4.37 -5.46 -14.36 -18.31 -19.96 0 0 0

t to Brent ($/bbl)

002 2003 2004 2005 2006 2007 2008