1. 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

2. 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

3. 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Significant Percentage of Outdated Refineries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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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
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10. 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

11. How to Create Competitive Advantages (The Management Tools)
Establish Objective
Create Mindset
Penetrate Organization
Reward New Behavior
November 22, 2018
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