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This presentation includes forward-looking statements. Actual future conditions (including economic conditions, energy demand, and energy supply) could differ materially due to changes in technology,
the development of new supply sources, political events, demographic changes, and other factors discussed herein (and in Item 1A of ExxonMobil’s latest report on Form 10-K or information set forth
under "factors affecting future results" on the "investors" page of our website at www.exxonmobil.com). This material is not to be reproduced without the permission of Exxon Mobil Corporation.
European refining competitiveness
October, 2015
Status October 2015
Tomorrow's Leaders SymposiumWorld Petroleum Council Youth of Europe
8th October 2015 Budapest, Hungary
2
Oil & gas remain critical for EU economy
Transportation
Industrial
Electricity
Generation
Res/Comm
Oil
Gas
Coal
Nuclear
Biomass
Other Renewables
EU Demand – By Section
Quadrillion BTUs
EU Demand - By Fuel
Quadrillion BTUs
ExxonMobil 2015 Outlook for Energy
3
Source: U.S. Department of Labor
Refining converts oil into many products
Crude Oil Input
Diesel
Gasoline
Refinery
LPG / Propane
Gasoline
Chemicals feed
Wax/Asphalt
Lubes/Other
Fuel oil
Aviation fuels
Diesel
Refinery
ExxonMobil 2015 Outlook for Energy
4
Source: U.S. Department of Labor
Refining converts oil into many products
Crude Oil Input
Diesel
Gasoline
Refinery
LPG / Propane
Gasoline
Chemicals feed
Wax/Asphalt
Lubes/Other
Fuel oil
Aviation fuels
Diesel
ExxonMobil 2015 Outlook for Energy
European refining industry is
important to energy security
6
EU transportation demand remains high
Light Duty
Aviation
Heavy Duty
Marine
Rail
Transportation Demand
MBDOE
ExxonMobil 2015 Outlook for Energy
7
-100
-50
0
50
100
150
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14
Gasoline Demand and Fuel trade OECD Europe (Mta)1
Mta
Mogas demand
Mogas exports: 37% of production (2014)
Jet+Diesel imports: 15% of demand (2014)
• Europe´s diesel demand continues to grow
• Growing commercial transportation
• Sustained passenger vehicles switch from gasoline to diesel
• Further decline in gasoline demand
• Favorable excise taxation led to ‘dieselisation’ of fleet
• Improved fuel economy of car fleet & biofuels impact
• Fuel oil demand declines
• Significant impact from Bunker Fuels Sulfur spec reduction (IMO)
Demand and regulations drive fuel imbalance
1 Source: IEA data for OECD Europe
• Fuel imbalance becomes ever more pressing issue for Europe
• Europe increasingly dependent on diesel imports from US, Middle East, Far East
• Challenge (and higher costs) to export growing gasoline surplus
• US shifting from significant gasoline importer to balanced situation
8
1 Western Europe and Med; Crude & Condy; Source: PIRA
• Excess global refining capacity
• New world-class export refineries in Middle / Far East
• Russian refinery exports shifting from feedstocks& heavy fuel oil to EU grade finished products
• US new competitors in EU Diesel market withlow energy & feedstock cost
• Leading to record low utilization of European refineries
Global supply patterns are hurting EU
Refining
72
74
76
78
80
82
84
86
88
90
10
11
12
13
14
15
16
1995 2000 2005 2010
Europe Capacity and Utilization 1
Capacity Actual runs UtilizationMBD %
9
• Energy is largest refinery operating cost
• EU refineries are world class in energy efficiency
• But faced with much higher energy cost than US
US refining industry has a competitive advantage
Energy cost as % of total cash cost 2
1 average prices from Nymex, ICE
2 Concawe study based on Solomon Associates data for industry averages Western Europe, United States
0%
10%
20%
30%
40%
50%
60%
70%
2000 2002 2004 2006 2008 2010 2012
US
EU
1
EU refining is facing increasing rationalization
pressure
1 Western Europe and Med; Cumulative from 2009
Sources: ExxonMobil assessment based on public information
European refining industry is not
globally competitive due to
higher energy and labor costs,
global change in demand and
supply patterns, and severe /
increasing regulatory burdens.
12
EU regulations add significant costs
Source: Concawe, Report no. 11/14, The estimated forward cost of EU legislation for the EU refining industry
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
10.5
11.0
11.5
12.0
Baselineopex
ETS IED REACH RED SLFD(MFD)
Esti
ma
ted
co
st
to E
U r
efi
ne
rs (
$/b
bl)
2020Low cost scenario
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
10.5
11.0
11.5
12.0
Baselineopex
ETS IED REACH RED SLFD(MFD)
Esti
ma
ted
co
st
to E
U r
efi
ne
rs (
$/b
bl)
2020High cost scenario
13
• Encourage market conditions for access to energy and feedstock at a
competitive cost.
• Guarantee a level-playing field amongst cost effective technologies.
• Energy taxation should be consistent and proportional to the energy
content.
• Allow internal market forces to work: avoid interventions that distort
free competition of assets in a global environment. Any subsidies
would have the opposite effect of ensuring a competitive EU refining
market.
• The EU policy framework should not cause unnecessary extra cost for
the refining sector.
• EU policies should be transparent, predictable and market based.
Policymakers can help sustain a globally
competitive EU Refining industry
14
• Oil is and will remain essential for European economies for the
foreseeable future.
• The refining industry, which is an essential and integrated part of many
European industries, is no longer globally competitive.
• Europe´s regulatory environment affects the competitiveness of
European refining industry compared to other regions.
• EU refining is facing increasing rationalization pressure.
• Some level of domestic refining capacity is highly desirable for security
of energy supply.
• Allow market forces to work and avoid interventions that distort free
competition of assets in a global environment.
Summary