Middle Eastern Clean Fuels Demand Developments and how

Middle Eastern Clean Fuels Demand Developments and how KNPC is preparing for the future 20 th World Petroleum Congress ( 4 th – 8 th December 2011 ) Refining in Kuwait : Strategies & Challenges Bakheet Al-Rashidi Deputy Managing Director Planning & Local Marketing 26. 12. 10 1

Middle Eastern Clean Fuels Demand Developments and how KNPC is preparing for the future Presentation Outline Refining in Kuwait – An Overview Long Term Strategic Plan - 2030 Major Challenges and Opportunities Refinery Projects - Mega Investment Plan 1

Middle Eastern Clean Fuels Demand Developments and how KNPC is preparing for the future Refining in Kuwait Mina Abdulla Refinery view 2

Middle Eastern Clean Fuels Demand Developments and how KNPC is preparing for the future Subsidiaries of KPC KUAWAIT OIL COMPANY KUWAIT NATIONAL PETROLEUM COMPANY KUWAIT AVIATION FUELLING KUWAIT FOREIGN PETROLEUM EXPLORATION COMPANY Domestic PETROCHEMICAL INDUSTRIES COMPANY OIL SECTOR SERVICES COMPANY OIL DEVELOPMENT COMPANY International KUWAIT OIL TANKER COMPANY KUWAIT PETROLEUM INTERNATIONAL KUWAIT GULF OIL COMPANY Kuwait Petroleum Co. was established in 1980, fully owned by the State of Kuwait 10 specialized Subsidiaries operate in Kuwait and across the world Strong player in Western Europe & Far East’s Oil & Product markets 3

Middle Eastern Clean Fuels Demand Developments and how KNPC is preparing for the future KNPC Core Business Refining & Local Marketing arm of KPC Established in 1960, focused on Marketing initially Operates three complex Refineries, as a Profit centre Refining capacity : 936, 000 BPD Manages and Operates five Marine Export facilities 5, 500 employees Turnover crossing US $ 30 billion, Net Profit US $ 1. 8 billion MINA ABDULLAH REFINERY (1978) SHUAIBA REFINERY (1968) 270 M BPD 200 M BPD MINA AL-AHMADI REFINERY (1984) 466 M BPD LPG / GAS PLANT KNPC LOCAL MARKETING 3 Trains x 560 MMSCFD 39 Filling Stations 28, 000 TPD Lube Plant 4

Domestic Middle Eastern Clean Fuels Demand Developments and: how KNPC is preparing the future Refining Responsible forfor satisfying Fuel Feedstock supply Domestic Refining demand Fuel demand LNG imports 500 MM SCFD Natural Gas 1. 5 Billion SCFD Gas processing 3 X 560 MM SCFD Gas for Power Generation Oil sector requirements (KNPC, KOC, PIC) Crude Oil 2. 5 MM BPD Kuwait Energy Balance Fuel Oil & Gasoil for Power Generation Refining Ministry of Electricity and Water (MEW) 1900 Bil BTU/d Transportation & industrial (domestic & international) Domestic : 400 M BPD Export : 500 M BPD 936, 000 BPD 5

Middle Eastern Clean Fuels Demand Developments and how KNPC is preparing for the future Current Refining Yields Crude processed, M BPD Gas Oil wt% Wt. % 40 35 880. 8 33. 4 825. 3 30 25 30. 3 31. 0 877. 9 896. 7 29. 9 27. 0 28. 2 M BPD 1000 906. 3 862. 2 28. 6 26. 7 711. 5 674. 0 892. 2 28. 1 900 800 700 24. 8 23. 1 20 29. 3 901. 9 Mogas wt% Fuel Oil wt% 25. 3 24. 1 24. 9 22. 8 22. 1 23. 4 23. 3 600 18. 7 15 500 10 400 5. 3 5 4. 5 5. 6 4. 7 4. 8 5. 2 5. 3 5. 8 0 300 2001 -02 2002 -03 2003 -04 2004 -05 2005 -06 2006 -07 2007 -08 2008 -09 2009 -10 2010 -11 KNPC has maintained Maximum Crude Throughput over the years, API ~ 30. 5, Sulfur ~2. 7% KNPC has high complexity Refineries : 10. 7 Configuration Factor is better than peers (Middle East : 7. 7, W Europe : 9. 5, as per Solomon Study 2010) Fuel Oil production is optimized for supply commitment to local Power Generation sector

Middle Eastern Clean Fuels Demand Developments and how KNPC is preparing for the future KNPC – Profitability KNPC vis-à-vis Singapore - Benchmark Refining Margin 10. 0 KNPC Margin, $/Bbl 8. 0 Singapore Dubai Margin, $/Bbl 6. 0 4. 0 2. 0 0. 0 -2. 0 2003 -04 2004 -05 2005 -06 2006 -07 2007 -08 2008 -09 2009 -10 2010 -11 KNPC has developed Refining Margin ($/Bbl) as one of its Key Performance Indicator (KPI) KNPC is better than Singapore Refining Margins – a benchmark for Dubai (Sour) Crude processing KNPC optimizes its operations in line with prevailing international prices to maximize its Profit

Middle Eastern Clean Fuels Demand Developments and how KNPC is preparing for the future Long Term Strategic Plan – 2030 Challenges & Opportunities Mina Al-Ahmadi Refinery view 8

Strategic Middle Eastern Clean Fuels Demand Developments and how KNPC is preparing for the future Directions : Domestic Refining & Gas Processing 1. Grow Refining capacity up to 1. 4 million BPD locally 2. Meet local & international Fuel demand for Transportation and Industrial sectors 3. Maximize domestic processing of Heavy / Sour crudes – according to upstream heavy crude availability profiles 4. Achieve Operational Excellence through enhancing complexity 5. Integrate with Petrochemicals to improve overall margins 6. Provide required Gas Processing capacity according to upstream Gas availability profiles 9

Middle Eastern Clean Fuels Demand Developments and how KNPC is preparing for the future Major Strategic Challenges 1. Meeting fast growing local Power demand 2. Processing of expected increase in Heavy / Sour Crude production in domestic Refineries 3. Meeting International & Local Fuel Demand with stringent Specifications 4. Enhancing integration with Petrochemicals 5. Mobilizing Manpower with enhanced local expertise and capability to execute and operate Mega Projects

Growing Middle Eastern Clean Fuels Demand Developments how Power, KNPC is preparing for the future demandand from Transport & Industrial Feedstock supply Domestic Refining Domestic Fuel demand LNG imports B SCFD Gas Growth Maintain Gas processing Gas for Base case - 4 th and 5 th Trains : 4 Billion SCFD Energy Balance Power Generation High Low++ (nuclear) 2, 500 1, 500 M BPD Heavy Crude Mogas 450 Growth 300 B BTU/d 3, 500 Low Fuel Oil & Gasoil for Power Generation KNPC, KOC, PIC requirements M BPD Power Generation sectors High Most likely Refining Base case: CFP and NRP : 1. 4 MM BPD 150 11 Low Fuel demand of Transportation and Industrial sectors

Key Middle Eastern Clean Fuels Demand Developments Products Specifications and how KNPC is preparing for the future Upgrading Refineries to meet the future products specifications (Euro-IV) Products Plan (# 2823 E) Gasoline (92, 95 & 98 UL grades) • Sulfur, ppm (max) • Benzene, v% (max) • Aromatics, v% (max) • Olefins, v% (max) 10 1 35 18 Gas Oil (# 4056) • • • 10 51 4 /-7 345 OC 0. 845 Sulfur, ppm (max) Cetane Index (min) Cloud point , OC (max) Distillation, @ 95% OC (max) Specific gravity Bunker Fuel Oil • Sulfur, wt% (max) 1. 0 12

Middle Eastern Clean Fuels Demand Developments and how KNPC is preparing for the future Refinery – Petrochemicals Integration Petrochemicals Propylene PC Exports Polypropylene Ethane Gas Refineries & Oil & Gas Crude Production Gas Plants Ethylene & Polyethylene Propylene rich stream Full Range Naphtha H 2, C 4, Light Naphtha Benzene & Para xylene Current Integration level would be enhanced with increased operational flexibility and additional feed-stocks, to improve Refining Margin and achieve cyclical profitability performance 13

Middle Eastern Clean Fuels Demand Developments and how KNPC is preparing for the future Refinery Projects – Mega Investment Plan 14

Middle Eastern Clean Fuels Demand Developments and how KNPC is preparing for the future KNPC – Growth Opportunities July 2018 Aug. 2017 Mar. 2017 Sept. 2016 Oct. 2015 June 2015 Nov. 2014 Sept. 2014 4 th Gas Train Clean Fuel Project 5 th Gas Train LPG Tank Farm Sulphur Handling Post CFP & NRP Total Refining capacity : 1. 4 MM BPD AGRPs Jan. 2014 New Refinery Project New Depot at Matla Post & Gas Train Total capacity : New TGT- 4 th MAA Value Chain Optimization 5 th 4 Billion SCFD Estimated Capital spending ~ US$ 40 Billion 15

Middle Eastern Clean Fuels Demand Developments and how KNPC is preparing for the future KNPC - Oil Refining & Gas Processing Capacities 16

Middle Eastern Clean Fuels Demand Developments and how KNPC is preparing for the future KNPC - Oil Refining & Gas Processing Capacities Post CFP & NRP 615 MBPD MAB 454 MBPD MAA 346 MBPD MAA Gas Plant Gas Trains : 5 (3 x 560 + 2 x 1100 MM SCFD) Total KNPC: 1415 M BPD 17

Middle Eastern Clean Fuels Demand Developments and how KNPC is preparing for the future Final Remarks 18

Middle Eastern Clean Fuels Demand Developments and how KNPC is preparing for the future Final Remarks Aligned with Mission & Vision-2030 : • KNPC will continue to build the Infrastructural & Human capitals and integrate various processes to deliver 2030 Refining Vision in most economic and sustainable manner while maintaining High HSE standards • Kuwait's Domestic Refining Sector is well placed to meet the future domestic and International Clean Fuels Demand • The implementation and continuous monitoring of progress towards Vision-2030 would enhance the KPC/KNPC competitiveness globally and would benefit Global Economy and Society as a whole • Integration is our way to Globality – “Think K” 19

Middle Eastern Clean Fuels Demand Developments and how KNPC is preparing for the future Thank You 20