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SARAS GROUP
2013-2017 Strategy and Business Plan
20 March 2013
Operational Excellence – “Project Focus”
Agenda
2
Section 1 Overview
Section 2 Saras Business Model
Section 3
Section 4
Group Strategy and Business Plan
page 3
page 10
page 19
page 30
Section 5 Further Investment Opportunities page 40
Section 6 Disclaimer page 46
Section 1
Overview
3
Source: JBC
EU refining as an essential piece of the “oil value chain”
4
• Refining is an essential part of crude oil value chain
• It is not reasonable to imagine that Europe will become the only region without a refining industry
• Europe has always been short diesel, and it will continue to be even more so, because IOCs are exiting the EU refining sector
New crude productions need EU refineries as a reliable output
5
• Crude oil production is expected to grow remarkably in the coming years (Iraq, Caspian Sea, Kazakhstan, etc.), and these crude oils have a natural elective market: Europe and the Mediterranean Sea
• NOCs in those regions are well aware of the above trends, and they are looking with interest at the European downstream sector, in order to secure reliable outputs for their growing production
Source: JBC Research (Mar 2013)
Kazakhstan
Iran & IraqAzeri
Russia
Source: Argus (Feb2013)
Additional Developments in crude availability in Europe
6
• Russia, as stated by senior official recently in Houston, has very ambitious plans to increase production from existing fields and also through the development of new Arctic frontiers. The natural outlet for these crudes is Europe through the new export port of Ust-Luga on the Baltic
• The amazing increase in domestic US and Canadian crude oil productions is progressively displacing traditional supply sources such as Nigeria, West Africa, Algeria, Libya and in the future probably also Venezuela creating further opportunities for Med refiners
• On the “sour” crude supply in the MED we are currently missing Syria, Iran and Sudan. Also, Kurdistan production levels are temporarily reduced. When things will normalize, we expect strong improvements in the sour margin
Source: Argus (Feb2013)
+35% in 48 months
WTI vs. Brent, and LLS as a new benchmark
• Due to the “Cushing Syndrome”, towards the end of 2010, WTI discounts to Brent started to widen very significantly
• In 2012 however, the outlook has started to change (pipeline reversals, crude being moved by train, etc.)
• The above developments should progressively resolve the congestion in Cushing and bring the differential back to more normalized levels
Source: Argus
• The US Gulf sweet market will become progressively more related to LLS than to WTI
• For years LLS has been a blend of offshore sweet imports with domestic production
• Growing volumes of LLS have started to be available on a regular basis (200kbd of Bakken flowing into St. James; Eagle Ford moving into Louisiana; 650 kbd of sweet imports still moving into US Gulf coast)
7
Source: Platts
Market Volatility as challenge but also a source of opportunities
8
• The roles of crude oil producers, traders and refiners are evolving: the large swings in prices, volatility and demand trends require a proactive presence on the markets, balancing physical activities with trading opportunities
• Refiners can leverage on their natural “long” exposure to product crack spreads, creating additional value by trading around hedging positions
• It becomes necessary to have a comprehensive perspective on margin evolution and its fundamentals
Size and Complexity as key competitive advantages
9
• Further consolidation in the EU refining sector is expected, and this will increase the differential between simple refining configuration and highly complex and efficient players. Thanks to its ideal configuration, size, complexity and flexibility, Saras demonstrated that its refinery can regularly over-perform the market, even in the most difficult scenarios
• As a matter of fact, Saras refinery is unique: taking into consideration that building new refineries is impossible in Europe, Saras geographic location and its characteristics make it a very interesting partner for large crude oil producers (be it Russian, FSU, Middle Eastern, African, etc.)
3rd Highest Nelson Complexity Index (9.2) among large EU refiners (i.e. distillation capacity > 200kbd)
Section 2
Saras Business Model
10
11
Overview of Saras Businesses
Refining1
• One of the largest high complexity refineries in the Mediterranean Sea
• 300k barrels per day of refining capacity (about 15% of Italy’s refining capacity)
• 250 kb/d FCC equivalent capacity
• More than 80% of production is of medium and light distillates
Power Generation2
• The largest liquid fuel gasification plant in the world (IGCC)
• 575 MW of installed power -conversion of heavy refining residues into clean gas
• Electricity production of approximately 4.3 - 4.4 TWh
• Attractiveregulated tariff until 2021
Wind Energy4
• Wind farm with capacity of 96 MWin Ulassai(Sardinia)
• Pipeline for additional 200 MW wind parks
– Full authorisationfor wind park of 97.5 MW in Romania (permit upgrade to 120MW in progress)
Supply & Trading, Marketing
3
• ~150 crude cargoes supplied every year from wide range of crude sources
• Marketing activities in Italy and Spain
• 11% wholesale market share in Italy, 8% wholesale market share in Spain
• 114 retail stations in Spain
• Balanced and differentiated portfolio on sales, not only a FOB player
Other Activities5
• Presence in industrial engineering services for the oil sector
– Environmental monitoring and protection, industrial efficiency (Sartec, 151 employees)
• Gas exploration activities
– Two site permits for exploration in Sardinia (Eleonora and Igia)
Operating Model
� Site margin
� Trading margin
� Wholesale margin
� Inventory
� Production
� Operational availability
� Fixed costs (maintenance, operating & personnel costs)
NewCo Refining company(Industrial Supersite)
� Focused on operational excellence and technology exploitation
� Contractual agreements with crude oil owners
Supply & Trading
� Production planning (selection of crude types)
� Crude purchase
� Asset backed trading
� Crude oil inventory ownership
� Cargo Market
� Refined oil products inventory ownership
� Wholesale and Retail
Focus on Technology, Skills and Know-How
New Top management hired to lead the NewCo Refining Supersite, in order to energize and drive the change
Clear Ownership of Performances
Supply and Trading NewCo Refining Supersite
12
Commercially Driven Approach to Exploit Asset Potential
13
3 different conversion
cycles optimise crude
runs
Ability to process
large variety of crudes
Integration with Power Generation
and Petchem
Downstream integration to
access inland
markets
Large flexibility in
logistics and product specs
14
Today
Tomorrow
Positioning Across Refining Value Chain
Crude Supply Processing Sales
• Crude slate flexibility
• Crude trading
• Three different conversion cycles
• Commercially driven runs
• Inventory management
• Cash & Carry• Dynamic forward
trading
• FOB cargo market• DEL cargo market• Saras integrated
downstream system
• Arbitrage trading• Logistical positioning
for inland access
Co
mp
lex
ity le
ve
l
Continuously Investigating Further Opportunities
+ + +
Adapting to Changing Environment Across the Value Chain
+
-
Main Product Outflow Routes from Saras Refinery
15
Integratedflows with IGCC
~1.1 MM ton
Pipeline flow with Petchem:
~0.5 MM ton
Cargo to Saras Wholesale /
Retail System~2.2 MM ton
Inland Sardinia Market via
Truck:~1.1 MM ton
Well Integrated and Diversified Product Flows
IIIa
I
IV
Source: Saras 2012 data NB: Total Spanish sales equal to 1.6 MM ton
IIa
Integrated super-site flows
FOB & Delivered
Cargo Market
~9.4 MM ton
IIIb
IIbPower
to grid
Italian system1.5 MM ton
Spanish system (1)
0.7 MM ton
FOB sales6.4 MM ton
DEL sales3.0 MM ton
1.4 MM ton
-0.9 MM ton
Trading to
optimiseportfolio
0.4 MM ton
Saras Strong Positions Towards Inland Markets
16
Italian system
0.8
0
20112010
1.5 1.5
2012
1
2
Spanish system
0.91.8
2
4
2.51.8
20122010
1.3
2011
1.6
0
Local Supply
0.9
0.7 MM ton
Visco
Decal
Ravenna
Torre
Sigemi
Arcola
Barcelona
PalmaCartagena
Civitav.
Livorno
1.5 MM ton
Total sales1.6 MM ton
Local supply
Source: Saras 2012 data
North WestA
TuscanyB
LazioC
North EastD
Adriatic CoastE
CampaniaF
2015 Supply & Demand in Italy
17
Note: Balance based on 2015 estimated demand vs. expected supply (incl. EST development in SdB) Source: Wood Mackenzie, UP
Mt
2
0
-2Gasoline
2.0
Gasoil
-1.6
Mt
0,5
0,0
-0,5
-1,0Gasoline
0.4
Gasoil
-0.9
Mt
0
-2
-4
Gasoline
-1.1
Gasoil
-3.6
Mt
0
-1
-2
-3
Gasoline
-0.8
Gasoil
-2.1
Mt
0
-1
-2
-3Gasoline
-0.6
Gasoil
-2.4
Mt
0
-1
-2
Gasoline
--0.5
Gasoil
-1.8
From Own & Third-party Depots, Saras can ideally exploit domestic imbalances
Oil Refinery
Third party Oil Depots
Saras Group Oil Depots
A
D
E
B
C
F
2015 Supply & Demand Europe
18
� Diesel/gasoli deficit in Europe is expected to continue growing out to 2025, while gasoline and fuel oil will remain oversupplied
� NEW and mature economies in the MED have limited potential for demand growth, due to market saturation and efficiency improvements
� Middle East (Turkey in particular), North Africa and C&EE have astrong growth potential, because their current per-capita oil use is low. Once economic recovery starts to filter down to consumers’disposable incomes, demand will grow strongly
Source: JBC Energy
Saras central position in MED is ideal to supply North Africa & Middle East
Source: Wood Mackenzie
kb/dkb/d
Section 3
Group Strategy and Business Plan
19
Saras Group Business Plan 2013 – 2017
20
• Key assumptions behind the scenarios considered
• Evolution of Saras’ refining and power generation segments
• Improvements coming from new “Project Focus” initiatives
• Consolidated forecast financials on a “pro-forma” basis(1)
1. “Pro-forma” means that turnarounds’ effects have been annualised on a linear basis in the business plan horizon, both in terms of maintenance costs and reduced production
1. Real 2012
Business Plan Scenario – Brent Price
21
• Brent price evolution based on EMC Forecasts (dated Nov. 2012)
– Drop during 2013 – 2014 to 105 $/bbl (CAGR -3% nominal, -5% real)
– Growing trend from 2014 to 2017 up to 112 $/bbl (CAGR +2% nominal, +0% real)
Historicals Business Plan
65.472.6
97.0
61.5
79.5
111.3 111.6 110.0 113.0 112.0105.0107.8
101.4104.4103.7100.9105.7
0
50
100
150
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Brent, $/bbl
Real Brent(1)Nominal Brent
-3% +2%
2006 2007 2008 2009 2010 2011 2012
Business Plan Scenario – Refinery (I / III)
22
2.6
5.67.1
6.27.3
8.7
1.8 1.82.8 2.1
4.5 4.7
2.8 3.3 3.2
0.7 0.6 0.9(1.1)
2.1
-2
0
2
4
6
8
10
12
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Margin ($/bbl)
EMCSaras
Refining Margin – Historical Trend
Refining Margin – Business Plan
+2.4
Avg.
2.2
4.6
Avg. Premium vs. EMC equal to +2.4$/bbl:
3.64.4
5.3 5.45.7
3.64.2
5.0 5.0 5.2
1.22.0
2.8 2.9 3.1
1.21.9
2.6 2.6 2.8
0.0
2.0
4.0
6.0
2013 2014 2015 2016 2017
Margin ($/bbl)
Saras Real 2012 Saras Nominal EMC Real 2012 EMC Nominal
• Refining margin forecast from 2013 to 2017 based on EMC Forecast report dated Nov’12
– EMC estimates are the latest publicly available and Saras has historically reported the comparison between its own margin and EMC benchmark
• A premium of +2.4 $/bbl has been applied to the EMC margin to derive Saras margin
– Equal to the average premium realised by Saras vs. EMC from 2003 to 2012
• EMC Refining margin is expected to increase to3.1 $/bbl in 2017 from1.2$/bbl in 2013 (nominal terms)
• Saras refining margin is estimated to be 3.6$/bbl in 2013 vs.
– 5.7$/bbl nominal in 2017 (CAGR +12%)
– 5.2$/bbl real in 2017(CAGR +10%)
13.3
14.014.3
13.3
15.5
14.614.5
12
13
14
15
16
2006 2007 2008 2009 2010 2011 2012
23
• The positive impact of Project Focus initiatives implemented in 2012 has been included in the Business Plan
• Fixed costs are assumed to grow at inflation post 2014
MM ton
Avg.14.2
Refinery Runs• Average refinery runs from the
period 2006-2012 were equal to 14.2 MM tons
• 2013 throughput in line with historical average (at 14.3 MM tons) and afterwards it will increase up to 15.0 Mt in 2014, due to MHC2 revamping (+0.7 MM tons)
Throughput in
2013 equal to
14.3 MM ton
2014 – 2017Average
15 MM ton
Historicals Business Plan
Business Plan Scenario – Refinery (II / III)
221219236229237
186212
0
50
100
150
200
250
2006 2007 2008 2009 2010 2011 2012
€ MM
Avg.220
Fixed Costs
Fixed costs in
2013 equal to
€215 MM/y
Historicals Business Plan
1. Real 2013 24
135.7 128.2148.8
43.6 44.867.6
80.0 81.6 83.2 84.9 86.6
32.0 51.1
94.7
46.4
18.3
29.430.0
167.7179.3
243.5
63.1
97.0
110
81.6 83.2 84.9 86.690.0
0.0
50.0
100.0
150.0
200.0
250.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Capex (€ MM)
Historicals Business Plan
HSE and Maint. Capacity Growth
• The business plan assumes no
additional growth Capex from
2013 onwards
– In 2013, €30 MM Capex for
MHC2 revamping
• Maintenance and HSE Capex
amounts to €80 MM(1) per annum
from 2013 to 2017 (on average)
• Projected Capex incorporate the
optimisation of maintenance /
revamping cycles resulting from
Project Focus implementation
• Maintenance Capex assumed to
grow equal to inflation during the
business plan period
Average 2007-
2012 capex for
HSE and to
maintain capacity
equal to €95 MM
Completion of MHC2
revamping
No Additional Growth Investments are Required in the Business Plan Horizon as Historical Investments Have Made Saras Refinery Competitive for the Coming Years
Business Plan Scenario – Refinery (III / III)
Capex
1. Real 2012 25
• Electricity sale price assumed equal to CIP6 power tariff
• Prices calculated on the basis of the assumed composition of the reference basket as forecasted by EMC (Brent, Gasoil, Low Sulphur Fuel Oil)
• IGCC Fixed Costs assumed to grow only by inflation from 2014 onwards, with 2013 base level of €92 MM reflecting the improvements achieved through Project Focus
123.1 120.3 121.2 124.6 126.5120.7 115.7 114.2 115.2 114.6
0
50
100
150
2013 2014 2015 2016 2017
€/MWh
CIP6 Real(1)CIP6 Nominal
Business Plan Scenario – IGCC (I / II)
CIP6 Tariff (Electricity Sale Price)
Fixed Costs
9394103103102104104
0
20
40
60
80
100
120
2006 2007 2008 2009 2010 2011 2012
€ MM
Avg.101 Fixed costs
equal to
€92 MM in 2013
Historicals Business Plan
26
• The business plan assumes no additional growth Capex from 2012 onwards
• Maintenance and HSE Capexamounts to €15 MM(1) per annum from 2013 to 2017 (on average)
• The amount of projected Capexincorporates the optimisation of maintenance/revamping cycles resulting from Project Focus implementation
• Maintenance Capex assumed to grow equal to inflation over the business plan period
Business Plan Scenario – IGCC (II / II)
1. Real 2013
Capex
Capex (€ MM)
Historicals Business Plan
16.215.915.615.315.0
8.7
31.2
10.3
12.4
26.5
20.1
0
5
10
15
20
25
30
35
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Average 2007-2012
equal to €18.2 MM
27
Marketing:
• Italy: EBITDA improvements due to Project Focus initiatives (e.g. entry to bunkering market)
• Spain: Saras will continue to implement cost reduction initiatives, as well as the rationalisation of its client portfolio and of the working capital. Moreover, during 2013 the Group will complete the restructuring programme started towards the end of 2012, with the objective to achieve structural improvements to EBITDA of approx. €10 MM per year
Wind:
• Limited capital expenditure on the wind business during the business plan horizon. Various monetisation alternatives are currently under review, in particular with regards to new projects in the pipeline.
Gas Exploration:
• the Group presented in mid March 2013 the Environmental Assessment Procedure (V.I.A.), which stems from the permitting procedure required to start drilling activities in an area located in Sardinia (“Eleonora” project). According to geological estimates, it is expected to achieve an annual production of 70 up to 170 million cubic meters of natural gas, for a production period of more than 20 years.
Business Plan Scenario – Marketing, Wind and Gas Exploration
Overview of New Initiatives Included in the Business Plan
28
Gasoline Density
ZSM5 FCC
Gasoline HDS
Outlet Flow-metres
Direct Inflows
EE Incentives
EE Investments
En
erg
y
Eff
icie
ncy
Pro
du
ct
Yie
ld
Alkylation
6
8
10
11
12
13
9
7
DFT
Crude Trading
Cash & Carry
Bunker
WholesaleSu
pp
ly &
Tra
din
g 1
192
3
4
5
Slurry Filter14
Business Plan Impacton EBITDA (€ MM)
30 57 62
4 7
2 5
4 10
2 5
1 2
2 2
7
5
10
5
2
2
7 7
3 3 3
4
2013 2014 2015
2 5
3 5
1 2
1 3
1 1
5
5
2
3
2
- - 4
• Group EBITDA increases by approx. ~€185 MM from 2013 to 2015, of which ~€175 MM from refining segment (IGCC EBITDA reported is assumed flat)
• Group EBITDA remains flat from 2015 to 2017 (+€34 MM on a nominal basis) driven by constant EMC refining margins
• Working Capital will be rather volatile, as usual, due also to possible changes in commodity prices
614591583502399
0150300450600750
2013 2014 2015 2016 2017
1. Consolidation assumes IGCC EBITDA reported
Comparable EBITDA(1)
Capex
€ MM
€ MM
126 97 99101 103
0
40
80
120
160
2013 2014 2015 2016 2017
“Pro-forma” Consolidated Economics
29
Section 4
Operational Excellence – “Project Focus”
30
31
Saras Launched the Operational Excellence Program 3 Years Ago
So far Achieved Significant Results, More Yet to Come
A Project Conceivedto Pursue Excellence…
…Structured in ThreeWaves of Intervention…
As an independent refiner, Saras recognised that one of the main levers of value creation was pursuing operational excellence
Despite satisfactory operational performance, Saras deemed that there was additional room to improve efficiency
Wave 1 (2010)
“Start the Change”
• New organisation of the refinery• Focus on Asset Management• Energy savings (quick wins)• Product yield boost for 1st tier units
• Labor cost and HR restructuring• Reduction of refinery fixed costs• Giveaways reduction
Wave 2 (2011)
“Embed the Change”
• Commercial activities• Supply and trading• Extension of product yield activities to 2nd tier units
Wave 3 (2012)
“Enlarge the Change”
Strong Commitment by Both Saras Management and Employees• More than 25 workgroups and 120-150 resources directly involved
Three Main Areas of Impact of Current Initiatives
32
Refining Margin Enhancement
Cost Reduction
WC Reduction • Inventory reduction
• Maintenance cost optimisation
• Reduction of utilities costs
• Fixed cost optimisation (people related expenses and discretionary costs)
Supply & Trading
– Reduction of demurrage, optimisation of fleet costs, inventory management, etc.
Energy Efficiency
– Reduction of flare losses, reduction of fuel and steam consumption, etc.
Product Yield
– Yield optimisation on almost all refinery units, from toppings to HDS units
Summary of Main Initiatives
0,090,100,100,07
0,19
0,340,37
0,0
0,1
0,2
0,3
0,4
Baseline
>2010
2010 1H 2010 2H 2011 1H 2011 2H 2012 1H 2012 2H
Initiative Examples: Reduction of Flare Losses and Fixed Costs
33
Economic Impact: ~€13MM Saving per year(~40kton Fuel Gas Recovery)
Run Rate Flare
Losses: 0.09% ofTotal Processing
Reduction of Flare Losses
Flare Losses (% of Total Processing)
200
150
100
221
30
Fixed Costs (EUR MM)
300
2012
250
2011
219
32
2010
236
4
2009
229
2008
237
2007
186
2006
212
Fixed Costs (Annual Report)
Savings (Focus)
Base growth (inflation from 2006 figures)
Reduction of Fixed Costs
Impact of cost saving initiatives offsets 6 years of inflation
Initiative Examples: Reduction of Oil Inventories
34
Reduction in Total Oil Inventories
• Revision of scheduling and planning processes
• Implementation of tools to monitor and forecast inventory levels, to take timely corrective actions
• Optimisation of tank allocation
312327
520
454
71
76
1.382
1.250
479 393
0
300
600
900
1.200
1.500
Avg 2011 Avg 2012
Crude Oils Intermediates Finished Products Others
kton -132kt(-€100 MM)
Three Main Actions taken to Reduce Inventories
New Focus Initiatives Planned in 2012 Currently Being ImplementedHave approx. €60-€80 MM/y EBITDA Impact Target by 2015
New Focus Initiatives
(€62 – €82 MM/y)
35
Business Plan Includes Conservative Estimatesfor the Above Initiatives (i.e. the Lower-End of the Identified Range)
Energy Efficiency
(€22 – €26 MM/y)
Product Yield(€23 – €29 MM/y)
Refining(€45 – €55 MM/y)
• Improvement of refinery EII (Energy Intensity Index) thanks to:
– Optimisation of thermal integration between units
– Other minor investments
• Further yield improvements, e.g.
– composition of gasoline pool
– LSFO quality
Advanced Trading
(€12– €21 MM/y)
Commercial Business
Development(€5 – €6 MM/y)
Supply & Trading
(€17 – €27 MM/y) • Access and development of inland market; entry into specialty segments
– Further development of wholesale market
– Bunker
• Positioning in Asset Backed Trading to leverage refinery flexibility and price volatility, e.g.
– Exploitation of crack and crude volatilities
– Crude trading
Advanced Trading: €12 – €21 MM/y Additional EBITDA Thanks to Implementation of 3 Main Asset Backed Trading Initiatives
36
Additional Resources and Capabilities are Required to Support the Current Organisation in Order to Achieve Full Potential Benefits
Utilise storage capacity – became available through inventory optimisation initiative – to take advantage of contango (and backwardation) play• Value extraction from forward price curves• Leveraging on availability of logistics / tanks in refinery / depots
Volatility trading strategy on crack forward curves • Trading of short paper positions exploiting refinery long position as
natural hedge
Crude trading to exploit crude differential volatility• Increased presence on crude market and visibility on forward netback• Fully exploit production flexibility of the refinery
(Reverse) Cash & Carry
DFT(Dynamic Forward Trading)
Crude Trading
1
2
3
5 - 8
5 - 9
2 - 4
~12 – 21
1. EBITDA improvement by 2015
Benefits(1)
(€ MM/y)
Commercial Business Development: ~€5 – €6 MM/y Incremental EBITDA to be Achieved Through Bunker and Wholesale Growth
37
Entry to the bunker segment with the purchase, blending and servicing of bunker oil from Saras logistic sites• Partnership on Arcola and production and delivery integration with
Sarroch
Market share growth in Italian wholesale business through supply & servicing strategies
Bunker
Wholesale
4
5
3 - 4
~ 2
~5 – 6
Benefits(1)
(€ MM/y)
1. EBITDA improvement by 2015
Refinery: ~€22 – €26 MM/y of Incremental EBITDA As a Function of 3 Main Energy Efficiency Initiatives
38
Completion of initiative started in 2012 and launch of further small investments in 2013• Reducing refinery energy consumption and restoring steam optimal
balance
Maximisation of Direct Inflows Between Units to Reduce Fuel Consumption• Review of operational processes and debottlenecking
Optimisation of EE Incentives• Review of current practices, identification of new opportunities
EE Investments
Direct Inflows
EE Incentives
6
7
8
7 - 9
~ 5
10 - 12
~22 – 26
Benefits(1)
(€ MM/y)
1. EBITDA improvement by 2015
Refinery: ~€23 – €29 MM/y Incremental EBITDAAs a Result of 6 Main Product Yield Initiatives
39
Change in outlet flow-meters calibration policy
Reducing octane loss in gasoline hydro-desulphuring unit • reduction of HDS duty, revision of mercaptane specification on MCN
desulphured stream and technical revision of HDS turndown
Reduction of gasoline density • through optimisation of use of C4 blending
Optimisation of alkylation unit • to exploit high alkylate – butane differential
Improvement in FCC slurry quality • through introduction of mechanical filter
ZSM5 FCC11
Outlet Flow-Metres
13
Gasoline HDS
(U800)
12
GasolineDensity
(C4 blending)
10
Alkylation9
Slurry Filter14
~23 – 29
~ 7
2 - 3
5 - 8
~ 4
2 - 3
3 - 4
Benefits(1)
(€ MM/y)
Improvement of cracking gasoline octane• thanks to ZSM5 additive
1. EBITDA improvement by 2015
Section 5
Further Investment Opportunities
40
Energy Saving FCC Initiatives – Overview
41
• Substitution of FCC gas and blower compressors based on steam power with new electricity powered equipment
• “Dismantling” of current boiler and steam turbine present in the power station
Description
• Saving approx. 60 kton/y of fuel with a higher consumption of electricity of approx.195 GWh
• Saving on maintenance Capex on the power station
• Reduced environmental impact (reduced consumption of fuel)
Rationale
• Economics dependant on differential between fuel and electricity costsRisks Analysis
• Run rate benefits of approx. €17 MM /y at EBITDA level
• Gross Capex of approx. €65 MM, with Capex savings of approx. €31 MM(1)
• IRR = 25 %
• Discounted payback of 6.5 years
Preliminary Economics
1. Of which €15 MM in 2018 (beyond business plan time frame)
Energy Saving FCC Initiatives – EconomicsBased on current differential between fuel and electricity costs
42
EBITDA
Capex
2017
18
2016
17
2015
10
20142013
€ MM
2020
19
2019
18
2018
18
15
€ MM
202020192018201720162015
-15
2014
16
-30
2013
-20
Free Cash Flow
2019
12
2018
28
2017
12
2016
12
2015
-8-14
2014
€ MM
2020
13
2013
-20
IRR = 25%
Discounted Payback = 6.5 years
€65 MM
Capex
Business Plan Beyond Business Plan Horizon
€31 MMCapex Savings
Other Investment Options: Visbreaking and Steam Reformer
43
An improvement in current differential between heavy and light crudes could make investments that increase refinery flexibility to process heavy crudes an attractive opportunity
Implementation could progress leveraging on earlier activities
1. Revamping of Visbreaking with a new TAR stripping unit, improving operating efficiency of Vacuum 2 (avoiding stripping), and optimising IGCC conversion capacity
– Investment estimate of €170 MM
2. New hydrogen unit (Steam Reformer) of up to 35 kNm3/h hydrogen production, to fully exploit revamping of MHC2 potential and to minimise the negative effect of turn-aroundsand slowdowns of hydrogen producers (CCR, IGCC, Versalis) on diesel production 10ppm
– Investment estimate of €60 MM
Assessment of Long Term Value Creation with IGCC
44
1-2 trains can co-process different types of feedstock...
... such as biomass and waste (together with TAR)
Waste/Biomassto Energy
1-2 trains devoted to Hydrogen production and power supply to Sarroch site...
... allowing a step improvement of energy efficiency of the site with a limited investment
Hydrogen Production and Power Supply for Refinery
Usage of LS crude oil to produce Low Sulphur Fuel Oil…
… exploiting narrow “LSFO-Crude oil” differentials
In this option, 1 IGCC train should be shut down, without any relevant investment
Exploit Opportunities in Low Sulphur Fuel Oil Market
Favourable Economics: Specifically due to large availability of "cheap" heavy crude oils (and probably also more “sour”), with wide “heavy-light” price differentials and consequently high refining margins, and macro environment not depressing electricity prices
IGCC used as today
Potential Alternative Uses Thanks to IGCC Flexibility
30%
40%
50%
60%
70%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Ratio HSFO/GO [%]
45
IGCC plant allows Saras to take advantage of Mid-Term scenario for HSFO
Steam torefinery
Power to grid
IGCC simplified block diagram
TAR
OxygenHydrogen to refinery
Gasification Units
Gas turbine
SynGaspurification & H2 separation
Steam turbine
SynGas
• The value of TAR is a function of its viscosity, the price of GO, and the price of HSFO
Section 6
Disclaimer
46
Disclaimer
47
Certain statements contained in this presentation are based on the belief of the Company, as well as factual assumptions
made by any information available to the Company. In
particular, forward-looking statements concerning the Company’s future results of operations, financial condition,
business strategies, plans and objectives, are forecasts and quantitative targets that involve known and unknown risks,
uncertainties and other important factors that could cause the actual results and condition of the Company to differ
materially from that expressed by such statements