Trends, Challenges, Opportunities Presentation to PEMEX Refining, Global Refining Trends, Challenges, Opportunities Presentation to PEMEX Refining, Strategic Planning Franz B. Ehrhardt November 22, 2018 Copyright© 2000 CASCA Consulting, L.L.C. All rights reserved
Copyright© 2000 CASCA Consulting, L.L.C. All rights reserved Contents Overview & Background Trends: Economic Technology Political Society Corporate How to win, Conoco examples Who will win How to create competitive advantages November 22, 2018 Copyright© 2000 CASCA Consulting, L.L.C. All rights reserved
Copyright© 2000 CASCA Consulting, L.L.C. All rights reserved Overview & Background Adequate Refining Capacity in the World Geographic Capacity & Product Imbalances Arbitrage Will Determine Product Flow Middle Distillate Short, Gasoline Balanced, Resid Long Shortfall of Upgrading & Conversion Capacity Significant Percentage of Outdated Refineries Very Large Capital Requirements to Reach World Class Heavy Crude Share will rise Margin Pressures from Capacity Maximization Mega-Mergers of Major Oil Companies Restructuring, Refinery Closures November 22, 2018 Copyright© 2000 CASCA Consulting, L.L.C. All rights reserved
Copyright© 2000 CASCA Consulting, L.L.C. All rights reserved Economic Trends No Economics for Merchant Refineries No Economics for Grass Roots Refineries Expansion and Upgrading Attractive Resid Producers Pay Penalty Wide Gap in Operating Costs, Margins, and Efficiency Optimization Cost Reductions & Productivity Improvements, Added Pressure from Mergers Heavy Crude Processing Still (Again) Attractive Petrochemicals Still Volatile, Wide Swings Crude Price Trend Flat to Light Increase High Investments in Environmental & Safety Projects November 22, 2018 Copyright© 2000 CASCA Consulting, L.L.C. All rights reserved
Copyright© 2000 CASCA Consulting, L.L.C. All rights reserved Technology Trends Bottoms/Resid Upgrading De-Sulphurization to Meet New Standards Heavy Sour Crude Processing Gasoline Reformulation Emission Reduction Energy Management Full Safety Integration Transfer of Technology and Operating Know-How November 22, 2018 Copyright© 2000 CASCA Consulting, L.L.C. All rights reserved
Copyright© 2000 CASCA Consulting, L.L.C. All rights reserved Political Trends Completion of Refinery & Marketing Privatization Encouragement of Foreign Investment and Technology Elimination of Crude & Product Subsidization Elimination of Earnings Guarantees Environmental, Occupational Health, & Safety issues High on Political Agendas Government to Government Deals November 22, 2018 Copyright© 2000 CASCA Consulting, L.L.C. All rights reserved
Copyright© 2000 CASCA Consulting, L.L.C. All rights reserved Societal Trends Rapid Increase in Public Environmental Awareness & Concerns High Pressure for Emission Reduction (Air, Soil, & Water) Increasing Demand for Remediation Public Demand for Clean Fuels Public Demand for High Safety Standards Completion of Refinery & Marketing Privatization November 22, 2018 Copyright© 2000 CASCA Consulting, L.L.C. All rights reserved
Copyright© 2000 CASCA Consulting, L.L.C. All rights reserved Corporate Trends Mega-Mergers Between Oil Companies Emergence of National Companies as Regional Players State Company - Major Company Mergers/Alliances More Players in Global Competition Rigorous Cost Reduction, Cost Optimization, Outsourcing, Productivity Improvement November 22, 2018 Copyright© 2000 CASCA Consulting, L.L.C. All rights reserved
How to Win - Conoco Examples Resid Upgrading With Delayed Coking, Proprietary Process Heavy Crude Conversion; Petrozuata Heavy Crude Processing Specialization Coke Specialization (Calcining) High Complexity/Conversion; Humber, Lake Charles Refinery Consolidation; Karlsruhe Expertise Consolidation; Partnerships in Petronas, Czech Republic Low Cost Operation, Cost Optimization Technical Support for Partners; Petronas; KNPC; Trinidad Highest Environmental & Safety Standards; USA Leader November 22, 2018 Copyright© 2000 CASCA Consulting, L.L.C. All rights reserved
Copyright© 2000 CASCA Consulting, L.L.C. All rights reserved Who Will Win Upper Range of Conversion, Complexity, & Resid Upgrading Lowest Cost, Highest Productivity Economy of Scale Full Logistics Capability Marketing Integration High Environmental & Safety Standards November 22, 2018 Copyright© 2000 CASCA Consulting, L.L.C. All rights reserved
How to Create Competitive Advantages (The Management Tools) Establish Objective Create Mindset Penetrate Organization Reward New Behavior November 22, 2018 Copyright© 2000 CASCA Consulting, L.L.C. All rights reserved