5

MIDDLE EAST JET FUEL CONFERENCE

(MEJET 2004)

12 – 13 MAY, 2004

JET FUEL TRADING IN THE GULF REGION

PRESENTED BY : ZAKARIA SULAIMAN

CONTENTS

•WORLD ECONOMIC GROWTH

•PASSENGER TRAFFIC

•WORLD AND GULF REGION DEMAND

•GULF PRODUCTION AND BALANCES

•GCC COUNTRIES EXPORTS OF JET/KERO

•JET/KERO BULK AND INTO-PLANE PRICES

SLIDE 1WORLD ECONOMIC GROWTH (%)

2000 2003 2005

USA 3.8 2.9 4.0

LATIN AMERICA 4.5 1.0 3.8

W. EUROPE 3.6 0.8 2.4

E. EUROPE 3.8 3.3 4.0

FSU 9.1 6.1 4.6

ATLANTIC BASIN 3.9 2.0 3.4

MIDDLE EAST 5.6 3.7 3.6

ASIA PACIFIC 4.6 3.9 3.7

TOTAL WORLD 4.1 2.5 3.5SOURCE : PEL

SLIDE 2WORLD ECONOMIC GROWTH (%)

BY COUNTRY

SOURCE : PEL

8.07.5

8.0 8.27.3

4.24.7

6.1 6.05.5

5.05.8 6.0

5.05.4

0

2

4

6

8

10

2000 2001 2002 2003 2005

%

CHINA INDIA VIETNAM

SLIDE 3PASSENGER TRAFFIC

PASSENGERS – KILOMETERS PERFORMED (BILLION)

SOURCE : ICAO

68

779

771

110

1,06

2

134

802

116

1125

141

76

873

852

124

1,17

0

150

817

72

0200400600800

100012001400

Africa Asia Pacific Europe Middle East N. America L. America

2003 2004 2005

SLIDE 4WORLD WIDE AND GCC PASSENGERS TRAFFIC

(MILLION)

SOURCE : ICAO

59 63 67

1,872 1,9471,800

0200400600800

1,0001,2001,4001,6001,8002,0002,200

2002 2004 2006

GCC WORLD WIDE

SLIDE 5WORLD DEMAND FOR JET FUEL/KERO

(MILLION BPD)

2000 2003 2005

ASIA PACIFIC 2.65 2.60 2.74

MIDDLE EAST 0.36 0.36 0.37

ATLANTIC BASIN 3.37 3.25 3.44

TOTAL WORLD 6.38 6.21 6.55

SOURCE : PEL

SLIDE 6GULF REGION DEMAND FOR JET FUEL/KERO

(MBPD)

2000 2003 2005

BAHRAIN 8.4 8.9 9.2

IRAN 184.0 168.0 158.0

IRAQ 32.0 35.0 50.0

KUWAIT 11.0 11.3 11.5

OMAN 4.0 4.9 5.3

QATAR 4.0 4.6 4.7

S. ARABIA 55.0 59.2 61.9

UAE 18.0 20.5 22.7

TOTAL GULF 318.0 312.4 323.2

SOURCE : FACTS

SLIDE 7GULF REGION PRODUCTS DEMAND

(MBPD)

2000 2003 2005

LPG 379 542 715

NAPHTHA 99 150 209

GASOLINE 698 832 929

KERO/JET 318 312 323

GASOIL 1,055 1,109 1,136

FUEL OIL 651 826 910

OTHERS 127 139 149

TOTAL 3,327 3,911 4,371

SOURCE : FACTS

SLIDE 8POTENTIAL ADDITION OF REFINING UNITS BY 2008

SOURCE : FACTS

COUNTRY CDU HDC FCC/RCC VBU COKING REFORM

BAHRAIN - 40 - - - -IRAN 538 2 75 28 - 154IRAQ 160 - 70 - - -KUWAIT 18 - - - - 18OMAN 116 - 75 - - -QATAR 140 - - - -S. ARABIA - - 100 - - -UAE 80 - - - - 27

TOTAL 1052 42 320 28 - 199

CUMUL. 7134 552 588 379 68 833

SLIDE 9PRODUCTION OF JET FUEL/KERO IN THE GULF REGION

(MBPD)

2003 2005 2008

BAHRAIN 52.0 48.1 55.0

IRAN 190.1 182.1 243.9

IRAQ 25.0 48.7 69.5

KUWAIT 193.6 194.1 212.5

OMAN 5.7 12.5 26.1

QATAR 19.3 20.8 33.0

S. ARABIA 185.0 209.0 249.1

UAE 124.5 141.6 160.4

TOTAL GULF 795.2 856.9 1,049.5

SOURCE : FACTS

SLIDE 10JET FUEL/KERO BALANCE IN THE GULF REGION

(MBPD)

________________________________________________

PRODUCTION DEMAND EXPORT

________________________________________________

2003 795 312 490

2004 798 319 498

2005 857 323 535

2007 948 332 616

2008 1,049 344 706

2010 1,052 358 693

SOURCE : FACTS

SLIDE 11GCC EXPORTS OF JET/KERO

SOURCE : GCC SECRETARIATE

32.9 52

.6

6.6

54.8

19.7

107.

4

6.6 19

.7

6.6

175.

3

61.4

50.4

8.8 17

.5

8.8

164.

4

41.6

32.9

11.0 24

.1

2.2

210.

4

50.4

35.1

020406080

100120140160180200220

Mid East/ Africa Far East Japan India Sub Cont Americas Europe/ Med

2000 2001 2002 2003

SLIDE 12BULK JET FUEL/KERO PRICES

SOURCE : PLATTS

32.3

25.9

26.4 30.7

28.3

28.0 33

.0

34.3

27.3

26.8 32

.735.5

28.8

26.7 33

.7

34.3

0

10

20

30

40

2000 2001 2002 2003

$/BB

L

AG SINGAPORE MED NWE

SLIDE 13JET/KERO FLOW FROM AG TO CIF NWE & S’PORE

(ARBITRAGE)

SOURCE : PLATTS

36.6

18.9

36.9

15.819.4

12.618.5

37.4

258.3

207.1 211.3

245.6

294.9

244.5230.2

282.4274.2

226.5 223.9

264

100

120

140

160

180

200

220

240

260

280

300

2000 2001 2002 20030

10

20

30

40

50

60

70

80

90

100$/ MT

SPREAD (CIFNWE - AG) SPREAD SPORE - AG) AG CIF NWE S'PORE

NWE

S’PORE

AG

SLIDE 14JET A-1 INTO PLANE PRICES

SOURCE : JET FUEL INTELLIGENCE

95.9

82.8

76.5 92

.7

74.4

67.1 79

.5

110.

1

102.

4

94.5

97.1

91.9

78.8

66.6

9492.7

102030405060708090

100110120

2000 2001 2002 2003

USC/

USG

London S'pore Dubai New York

SLIDE 15THE REASONS FOR HIGH INTO-PLANE

PRICES IN THE GULF REGION

1 - Gulf Region is a thin market in relation to the other major markets

2 - In US, Europe and Asia, volume is a price sensitive (more competition between airports in those major markets).

3 - Prices in major markets are more transparent than the Gulf. Jet Fuel is a commodity fuel whereas the Gulf is not.

4 - More players in the major markets than in the Gulf.

5 - Economic of refinery in the Gulf is tide to one source of crude i.e. M / E crude. Where in Europe, it is mostly influenced by North Sea/IPE Brent crude and in US by WTI / NYMEX.

6 - Refinery margins in the Gulf are poor relative to US, NWE or Far East.

SLIDE 16CONCLUSION

Middle East Jet Fuel availability will continue to grow during this decade due to the increase in refinery investment and additional condensate splitting projects.

Majority of Jet Fuel export will continue to move to European destinations even if price differentials sometimes does not support such movement.

Product movement has been mostly governed by price hedging mechanism from the Gulf into Europe. Those mechanism are tide to expectation of higher price prospective in Europe due to seasonal demand.