Does Australian oil refining really matter Des King

Does Australian oil refining really matter? Des King CEO & Managing Director Caltex Australia Limited American Chamber of Commerce 8 November 2007 1

Outline • World – energy demand growth – oil demand supply – refining capacity • Australia – refining – demand growth for fuels – growing fuel imports 2

World energy demand 2004 470 exajoules 3 Source: IEA World Energy Outlook 2006 An exajoule is 1018 joules 2030 715 exajoules

World energy supply 2004 470 exajoules 4 Source: IEA World Energy Outlook 2006 An exajoule is 1018 joules 2030 715 exajoules

Global oil supply forecasts AVERAGE OF OIL COMPANY ESTIMATES 5 Source: National Petroleum Council 2007

Oil supply sources Total oil supply 140 (MBD) Unconventional supply NGLs, conde nsate, Unconventional supply Gap (MBD) NGLs, condensate, in s, etc. a processing g g in s s e c gains, etc. ro p 6 Source: Chevron 84 - North America, Latin America, Asia-Pacific, and Europe 2005 Biofuels s quid i L o t Gas her XHO Ot Venezuelan XHO 12 - Middle East, West Africa, and FSU 0 - 16 - 2030 02005 Canadian X-Heavy Oil (XHO) 2010 2015 2020 2025 2030

World carbon dioxide emissions 7 Source: IEA World Energy Outlook 2006 Reference Case

Global refining capacity to remain tight Million barrels per day 100 Global refining capacity 80 60 Global refined product demand 40 20 0 1990 8 Source: P&G, IEA & PFC 1995 2000 2005 2010 2015

World overview • Energy demand will increase 50% by 2030 • Oil, coal and gas will remain dominant • Alternatives to conventional crude oil required to meet demand growth • Oil refinery capacity will remain tight medium term 9

Australian refining industry 10 Caltex delivers diesel to the Ashton Coal Project, Hunter Valley

Australia’s refineries Bulwer Is Kwinana Northern Territory Queensland Lytton Western Australia South Australia New South Wales Clyde Petroleum Products* Production: 34, 000 ML Demand: 43, 000 ML Product imports: 22% Kurnell Pt Stanvac Mobil Geelong CLOSED 11 Source : Australian Institute of Petroleum, DITR Altona Mobil CAPACITY REDUCED * Petrol, diesel and jet fuel

Australian product demand imports • Demand for petroleum products is increasing • Petrol • Diesel • Jet fuel 0 - 1%pa 4%pa 3 - 4%pa • Percentage of petroleum products* imported • 2006 -7 • 2015 • 2030 * Petrol, diesel and jet fuel 12 Source : Caltex estimates 22% 30 - 40% 50 - 70%

Regional supply and demand remains tight in medium term Million barrels per day 30 Asian Product Supply and Demand Forecast Asian Demand 25 20 Asian Supply 15 10 1988 1992 1996 2000 2004 13 As at January 2007. Source: BP Statistical Review (1970– 2006); East-West (2007); CAL Analysis 2008 2010

Jamnagar refinery, India 14

Refining location advantage US$2. 75/barrel Product imports US$5. 10/barrel freight Crude imports US$2. 35/barrel freight Source : Freight rates are for Caltex refineries for 1 H 07 (Caltex data). Crude oil and petroleum product sources are for total Australian imports (DITR data).

Australian greenhouse gas emissions • Total Australian GHG emissions 559 Mt CO 2 eq • Contribution of petroleum products • Petrol (motorists) 8% • Diesel (transport/industry) 8% • Jet/other fuels 4% • Refinery emissions 16 Source : Australia's National Greenhouse Accounts, National Greenhouse Gas Inventory 2005 1%

Other regulatory issues • Biofuels • Environmental requirements • Fuel price regulation 17

Does Australian refining really matter? • Energy security is emerging strategic issue for all Australian industry • Petroleum product imports are increasing – what level is the “tipping point” for insecurity? • Liquid fuel security can be achieved – but we have to recognise the problem and take it into account now 18