1. John Cooper, Director General Brussels, 1 March 2016 “Global Competition and the Role for Europe’s Refineries”

2. 6 th EU Refining Forum, 1 st of March 2016 Page 2 Forum overview Balancing Policy Objectives Fitness Check Addressing Climate Change Competitiveness – Getting a complete picture Energy Costs ETS Reform Transport Decarbonisation

3. 6 th EU Refining Forum, 1 st of March 2016 Cost build-up for EU refineries vs non-EU export oriented refineries Page 3 Product freight to EU* EU-only Regulatory NOTE: *Product freight to EU - $ / bbl of product delivered to the EU **ETS – estimated av. impact on EU refineries in phase IV - Assumed identical crude cost 7.2 $ / bbl 2.8 $ / bbl COMPETITIVE DISADVANTAGE 4.4 $ / bbl  Generic Middle-East refinery, 250 kbd  $ / bbl of crude  Generic EU refinery, 200 kbd Source: Solomon Associates, Concawe 1.72$ / bbl 1.6 Labour 1.6 Labour 1.1 Maintenance & Other 4.5 Energy 0.5 Maintenance & Other 0.7 Energy IED 1.45 ETS**0.27 Crude cost ≈2.0

4. 6 th EU Refining Forum, 1 st of March 2016 EU refineries at competitive disadvantage vs non-EU export oriented refineries Page 4 Unit: $/bbl Refinery assumptions: - EU generic refinery 200 kbd; - Middle East/Russia/US generic 250 kbd *Crude assumptions: -Middle East, EU, US – identical crude cost; -Russia (source: JBC) IEDETS Source: Solomon Associates, Concawe, EIA, JBC 2.0 COST BUILD-UP 1.72 1.72* * ** Estimate of US compliance costs Product freight to Europe

5. 6 th EU Refining Forum, 1 st of March 2016 Expected evolution of ETS cost for EU refineries from phase II to phase IV Page 5 Source: Concawe & WoodMackenzie (1)Source: Concawe, based on Linear Reduction Factor 1.74% per year & impact of CSCF, assuming total EU refining throughput at 650Mt/y (2)Source: Concawe, based on the 15 th July 2015 COM proposal for ETS revision Linear Factor 2.2% per year é estimated impact of CSCF, assuming EU refining throughput at 600 Mt/y, 0.5% yearly improvement in carbon efficiency and cost of ETS certificate at 30€/ton (3)Note that in Phase II surplus allowances to the estimated value of 750 M€ were allocated (source: JRC draft refining fitness check report)

6. “G LOBAL AND EU E NERGY C HALLENGES & TRANSPORT ISSUES ” Indicative Carbon Costs in Transport & Power Sector Cost in $/Tonne Carbon mitigated or reduced Transport Power Efficiency Fuel switching in power Renewables in power CCS* 1 st Gen Advanced Biofuels Transport Electrification $500+ * Economy-wide carbon price range Reforestation* * Carbon sequestration will increase the available carbon budget Bar width indicates scope of decarbonisation available $80 $20 Focus of vehicle efficiency policies Focus of transport energy GHG policies Focus of Power Generation GHG policies A true market in GHG reduction would support the next lowest cost technologies Page 6

7. “G LOBAL AND EU E NERGY C HALLENGES & TRANSPORT ISSUES ” The Refining Forum is strongly appreciated as a key part of the dialogue between Commission and Industry and should continue on a permanent basis The Refining Fitness Check should be refreshed on a regular basis and used to assess the global impact of new regulations on the competitiveness of the ref industry Strong competitiveness challenges remain for the sector Energy costs are expected to continue to be the biggest element of international competitive disadvantage ETS costs will rise as a result of Phase IV adding to the competitive disadvantage, and necessitating full carbon leakage protection European energy strategy should recognise the longer term role of refineries, petroleum fuels and petchem products We should keep Europe’s fuels and other strategic oil products refined in the EU Transport decarbonisation strategies should take consideration of cost of carbon abatement and offer flexibility to avoid highest cost approaches Conclusions Page 7

8. FuelsEurope 165, Boulevard du Souverain 1160 Brussels - Belgium T: +32 2 566 91 00 www.fuelseurope.eu THANK YOU FOR YOUR ATTENTION This document was presented by FuelsEurope Contact: John.Cooper@fuelseurope.eu