pemex day ny_industrial transformation

7/25/2019 PEMEX Day NY_Industrial Transformation

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PEMEX Investor Day New YorkDecember 4, 2014

A Turning Point: Defining the Future ofMidstream and Downstream Activities

Alejandro Martnez Sibaja

Pemex-Gas General Director


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Content

Strategic Assets

Integrating the Value Chain

Main Projects

Production Objectives

Collaboration, Association & Divestitures


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Downstream Rankings

Pemex Downstream is ranked among the largest producers in the world in dif

the value chain.

Pemex is the 9th

producer of gasoline

Mexico is the 5th

largest consumer market forgasoline

Pemex i

producer o

Source: Pemex Statistical Yearbook, Forbes and ICIS Top 100 Chemical Companies.


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Domestic Sales 2006 - 2013

Gasolines,17,358

Diesel, 6,919

Natural Gas,5,896

Fuel Oil, 3,390

LPG, 4,131

Petrochemicals,1,903Jet Fuel, 1,480

Others, 696

Gasolines,31,669

Diese

LP

Jet Fuel, 2,773Others, 981

USD MM


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Downstream Infrastructure

Cadereyta

Monterrey

Madero

Tula

Minatitl

Salamanca

Guadalajara

Cd. Mxico

Camargo

Reynosa

Poza Rica

Cosoleacaque

San Martn

Matap

Arenque

Burgos

Production Capacity

Refining Atmospheric distillation capacity 1,690 Mbd

Gas Processing Sour Nat Gas 4.5 Bcfd Cryogenic 5.9 Bcfd Condensate Sweetening 144 Mbd Fractioning 568 Mbd Sulfur Recovery 3,256 t/d

Petrochemical 13.55 MMt nominal per year

Infrastructure

Refining 6 Refineries Fleet: 21 tankers Storage of 13.5 MMb of Refined Products 14,176 km of pipelines

Gas 70 Plants in 11 Gas Processing Centers 12,678 km of pipelines

Petrochemical 8 Petrochemical Plants


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Gasoline Balance 2006-2013

Gasoline market has shown a compound annual growth rate (CAGR) of 2.7% between 2006 an

PEMEXs own production has declined 0.6% over the same period.

This trend led to an increase in imports (CAGR 8.4%) representing 31% of demand in 2006 and

2013.

204308 340 329

379 405 395

456 456 451 472424 400 418

732769

798 798 803 800 804

-

100

200

300

400

500

600700

800

900

2006 2007 2008 2009 2010 2011 2012

PEMEX Supply

Demand


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451386

447 422 536791

1,089

-

1,000

2,000

3,000

4,000

5,000

6,000

2006 2007 2008 2009 2010 2011 2012

Natural Gas Balance PEMEX Gas Market,2006-2013MMcfd

PEMEX

Deman

Imports

Domestic market for natural gas has shown great dynamism in recent years, due to lower price

market in USA and Canada, and its environmental benefits.

The increasing trend in demand coupled with a decrease in domestic supply in recent years has

increase in import volumes of natural gas.


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Petrochemical Production 2006-20131Thousands Tons2

1,4041,859 2,202 1,962

2,282 2,306 2,473

2,7482,607

2,604 2,6952,831 2,750 2,775

1,0891,085

1,058957

1,042 923 1665,241 5,551

5,864 5,614

6,155

5,980 5,414

2006 2007 2008 2009 2010 2011 2012

Methane derivatives Ethane derivatives Aromatics and derivatives

1. Main petrochemicals chains2. Includes petrochemicals produced by Pemex-Petrochemicals, Pemex-Refining, and ethane and sulfur produced by Pemex-Gas and Basic Petrochemicals. January


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Content

Strategic Assets


Main Projects




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Transport1

Processing

Delivery

Imports

Storage

Raw

Materials

The Energy reform implies that all market players may participate in all segments of the value c

Open and regulated market under the principles of asymmetric regulation and unbundling.

1. The new law creates the CENAGAS, responsible for the transportation of natural gas (PEMEX will be another participant).


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Integrating the Value Chain: Key Dates

Until 2015, import permits onlyfor PEMEX, Productive

Companies and its

Subsidiaries.

From 2016, propane & butaneopen to imports.

From 2017, open market forgasoline and diesel imports.

Propawill b

mark

2017

Gasowill b

mark

2018

Transport

Processing

Delivery

Imports

StorageRaw

Materials

CENAGASOperation, 2015.

PEMEX becomesservice user.

There are key dates for some segments of the value chain


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Market

(EconomicAgents)

Production(Supply)

Infra-structure

Pricesand

Rates

Commercial(Demand)

PEMEX creates value through the consolidation of the value chain of industrial proces

an open and regulated market. This will be achieved through:

New Downstream Framework

Cost efficiency and strategic pricing policies

Assessment of infrastructure to maximize bu

and returns

Diversify marketing by geographic area

Strategic alliances with private companies in

environment

High performance of human resources


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Industry Transition

Only (PEMEX)

RegulatoryFram

ework

Rigid

Flexible

Market prices Private property,

associations, PEMEX Free product access Social projects

Regulated Prices State property PEMEX obligated to

provide products Product access through

PEMEX

Regulatory guidelines:

New focus: relevant mar

Business strthe industry

Multiple

Enterprises

TRI1

Current

Future

Road to transition

I. Terms for firsthand sales (CRE)

II. Retail prices, transit of "regulated" free-market

III. Regulated tariffs for transport, storage anddistribution (CRE)

III. Permits access to industry segments

IV. Open access in logistics systems (C

V. "Adequate" energy supply (SENER)

1. TRI: Downstream


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PEMEX

Exploration &Extraction

Downstream

SPE Oil Treatment

Refining

Gas & Petrochemical Processin

Import & Export

First-Hand Sales

Marketing

Sales & Distribution

Logistic

State Productive Enterprise aim

economic value and profitability for th

by improving its productivity, maximand contribute to national developmen

Cogeneration& Services Fertilizers

Ethylene

Given market conditions

greater operational flexib

new subsidiaries_1/comp

an array of services, from

sale of fertilizers.

1. The fertilizers business line will be under the umbrella of the PEMEX Productive Enterprise; meanwhile the Ethylene Subsidiary will be part of the dow

PEMEX as a State Productive Enterprise (


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Value proposal to the marketBusiness Organization

A renewal of the Mission and Vision of Downstream

Value generation analysis by market segment, identifying "key segments

Growth and profit improvement based on target markets

A business model for every market

Maximizing sustainable value

Reformulate the overall flow in decision-making

Execution and development of new business models

Cost structure analysis to identify target markets" and "vulnerabilities

Performance indicators to measure segments of participation

A new perspective (based on value generation) in:

CAPEX Investment

Alliances

Value proposal


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Content

Strategic Assets


Main Projects




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Project Development Strengthening

BusinessProcess

Management

Executive Business Process

Projects Development

Business portfolio focuses on substantive areas of

profitability, attending relevant industry markets

PEMEX will participate only where it genera

Elaborate the Business Plan focused on economic

Align projects to the strategy Promote coordinated execution of projects

Project Development Institutional System which:

Uses international best practices

Promotes effectiveness in capital manageme

Supports efficient assignment of investment r

Optimized Business Portfolio

D t B i P tf li


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Downstream Business Portfolio:Main Challenges

Challenges Main P

Gas

Processing

Expand gas pipeline network

Capture trading opportunities

Finish Los Ramo

Transoceanic Co

propane, gas and

Refining

Increase operational

efficiency Infrastructure for better fuels

Investments in su

(Project Gulf-Cen Refineries reconfi

Clean fuels projec

Petrochemicals

Integrate value chains:

ethane, methane and

aromatics

Fertilizers strate

Ethylene oxide a

glycol projects

Modernization of

Cogeneration Take advantage of PEMEXs

power cogeneration potential Cogeneration pro


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Refining Transport & Storage Gulf-Center

Project GulfC

Tuxpan- Arco Norte24, 2

23

Arco NorteTula18, 1

8

Arco NorteRegin

Centro

16, 1

8

Arco Norte - Apizaco14, 8

64

Regin Centro

Cuernavaca

10,

78

MT(2)Tuxpan25

3

CAB(3)Arco Norte 1,506

Tula45

3

TAR(4)Apizaco 17

TAR Regin Centro 29

TAR Cuernavaca 19

New pipeline

Debottlenecking

Import project

Gulf-Center

[XX] Capacity in Mbd

(XX)

ApizacoReginCentro

Tuxpan

Tula

CABArco Norte

Cuernavaca

24

18

16 14

10

Salamanca

Morelia

Guadalajara

Aguascalientes

Quertaro

San LuisPotos

Irapuato[280]

[100] [80]

[167]

[35]

(195)

(175)

(1,500)

(295)

Capacity in Mb1. Estimated diameters. New pipeline project under analysis.

2. MT: Maritime Terminal3. CAB: Pump & Storage Station4. TAR: Storage and Distribution Terminal

The required infrastructure for this system will be implemented through two

projects:

Import Project Gulf-center by PMI (paid via a built-in contract molecule to

import a minimum volume of 125 Mbd). Projects Tula-Salamanca, debottlenecking and storage in Bajo Terminals.


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Revamping Pemex Refineries

Objectives Investme

plants to

by produ

distillates

Increase

receive m

volumes

Strategic

fuel oil to

Operations

Salamanca

2018, and S

Tula

Salina Cruz

Salamanca


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Refining: Clean Fuels Projects

To address changes in specifications for distillate fuels Ultra Low Sulfur (ULS) in accordance w

the Mexican market, a set of projects is developed for the six refineries at the National Refining

considering the following plants and investment:

Salamanca Refinery

Gasoline Diesel

New plant.

Postreat.Gnas.

catalytic

1 New HDS1diesel

3 Revamps HDS DI

Cadereyta Refinery (2015)

Gasoline Diesel

New plant.

Postreat. Gnas.

catalytic

1 New HDS diesel

3 Revamps HDS DI

Tula Refinery

Gasoline Diesel

New plant.

Postreat. Gnas.

catalytic

5 Revamps HDS DI

Salina Cruz Refinery

Gasoline Diesel

2 New plants.

Postreat. Gnas.

catalytic

4 Revamps HDS DI

Made

Gasoline

2 New plants.

Postreat. Gnas.

catalytic

Minatitl

Gasoline

New plant. Postreat.

Gnas. catalytic

Gasoline (8 new plants), this projects are ongoing and will be completed by 2015. Diesel (5 new plants, 17 revamps) to be completed by 2018.

1. HDS: hydro-desulphurization Process Plant


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Natural Gas: Integrated Supply Strategy

Gas Supply StrategyActions

Short-term: Increasing imports of li

natural gas (LNG) (car

during 2013 and 2014)

Long-term:

Increase investments i

production.

Expand gas transporta

infrastructure.

Explore and evaluate t

shale gas reserves.

Expand the production

hydrocarbons in the co

the Energy Reform.

View of Natural Gas Transportation Infras
http://www.google.com.mx/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&docid=D5p8AgdElv3jIM&tbnid=aXlo8GX5lQPwcM:&ved=0CAUQjRw&url=http://www.manufactura.mx/industria/2013/05/27/encuesta-50-de-las-empresas-no-sufren-por-suministro-de-gas&ei=5pM1U5GsKpTRsASp0IAI&bvm=bv.63808443,d.b2I&psig=AFQjCNF8xrvXdGZ5hbkNhN9OwmvaGit4vQ&ust=1396106368541346


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View of Natural Gas Transportation InfrasProjects, 2028

11

101

2

3

1

2

4

5

C

12

ii

6

8

i

iii

9

7

Import capacity increase

Liquid natural gas terminal

Private pipelines

Pipeline projects

PEMEX Gas pipelines

Pipelines

1. Nvo. Pemex - C

2. Los Ramones p3. Los Ramones p

South)

4. Agua Dulce - Fr

5. Tucson - Ssab

6. Los Ramones -

7. Colombia - Esco

8. Matapionche - M

9. Jltipan - Salina

Private:

10. Morelos11. Tamazunchale -

12. Norte - Noroest

Storage and liquefa

i. Natural gas sto

ii. Underground s

iii. Liquefaction pla


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Los Ramones Phase I & II: Success Case

PEMEX Gas signed a long term transport service

contract with the company Gasoductos del Noreste.

The construction of a 115 km pipeline was sped up, from

the US border to Los Ramones, NL.

Operations start: December, 2014.

Maximum transportation capacity: 2,100 MMcfd

738 km pipeline goes, from Los Ramones, NL. to the

central west region of the country.

Operations start: December 2015

Additional maximum transport capacity: 1,430 MMcfd

Project Los Ramones p hase I

Project Los Ramo nes phase II

Los Ramones I is being constructed by G

Noreste, in strategic alliance with Pemex

Los Ramones II is developed by Tag Pipe

owned by Mex Gas Supply and Mex Ga

Pemex Gas affiliates.

Los Ramones pipeline will be supplied of

pipeline from Agua Dulce, Texas to the M

constructed in a strategic alliance with NE

The advantages of the Tag Pipelines Sub

More flexibility and agility to analyze and

projects.

Time and cost reduction in project execu

Ability to venture with third parties for pro

ownership in an efficient manner.

Scheme

Trading Opportunities: PEMEX as a key player


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Trading Opportunities: PEMEX as a key playerPacific market (Transoceanic Corridor Project

Pemex has identified the opportunity to move product from the US Gulf Coast to the Pac

Mexico has a privileged geographical position to move

hydrocarbons from the Gulf Coast to the Pacific, through

the Tehuantepec Isthmus.

PEMEX has operating infrastructure in both coasts which

are 186 miles apart.

Expanding current existing infrastructure w

to move product from the USGC to the Pac

shipping costs and time (compared to Pana

optimizing vessels fleet routes.

The products to move to the Pacific are na

propane, naphtha, diesel and gasoline.


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Petrochemicals: Fertilizer Market Strategy

A new eintegratchain frothe end

The addinvestm

three

four

new cente

Energy Reformrequires PEMEX tosupply fertilizers tothe domesticindustry and

distributors ofammonia, with long-term contracts andfixed prices.

Ammonia production for PEMEX is ofutter importance to ensure the supply ofraw materials with which the fertilizersare made.

Currently, there are plants located atCosoleacaque, Veracruz, and inCamargo, Chihuahua.

Petrochemicals: Second Stage of the Ethy


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Petrochemicals: Second Stage of the EthyOxide Plant

Morelos

Scope

Construction and startup of two ncooled reactors at the Morelos co

will replace the four existing oil-co

to increase the plant capacity from

360 Mt/y of ethylene oxide equiva

Operations start in 2018

Source: Pemex Business Plan 2015-2019

Petrochemicals: Modernization and Expan


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Petrochemicals: Modernization and ExpanAromatics Train at Cangrejera P.C.

Cangrejera

Scope Modernization of the aromatics chain

Technology upgrade

Broad operational flexibility

Lower energy consumption and overall cost

of production

Minimum feedstock consumption

Minimal environmental impact

Increase the offer of Para-xylene in the domesticmarket.

Increase the capacity of Para-xylene

production to 448 Kt/a

Reduce imports

Take advantage of the available benzene.

Start of operations in 2020.

Source: Pemex Business Plan 2015-2019


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PEMEXs Power Cogeneration Potential

PEM

ProjectE.E. Generation

(MW)

Cactus 560

Salina Cruz 690

Tula 640

Minatitln 690

Cadereyta 390

Total 2,970

Salina Cruz

Cactus

MinatitlnTula

Cadereyta

PEMEXs productive processes consume large

energy.

Strategy for taking advantage of cogeneration

(PEMEXs Business Plan).

On April 2013 the CPG Nuevo PEMEX cogene

(300 MW and 550 t/h steam) began operations

Five projects which represent 2,970 MW of en


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Content

Strategic Assets


Main Projects




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Refining: Transition to Cleaner Fuels

4%15% 17% 16% 20% 11%2%

20% 20% 18%21%

59%

7%

5%7% 9%

11%

8%

32%

29%

17%16% 19%

15%

21%

57%

58%

44% 40%38%

33%

9%

2006 2008 2010 2012 2013 2014 2016

Decline in demand for fuel oil mainly due to environmental restrictions and competition with nat

Introduction of Premium Ultra Low Sulphur (ULS) from October 2006 and all the demand since

Magna ULS since October 2008 in metropolitan areas. Total demand in 2015.

Diesel ULS from January 2007 in northern border and metropolitan areas. Total demand in 201


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Natural Gas Domestic Balance 2015-2018

Expected demand will need transportation infrastructure to handle natural

gas imports

The domestic supply considering PEP Round Zero granted by SENER.

4,417 4,267 4,195 4,103

3,639 4,429 4,9965,829

2015 2016 2017 2018

National Supply Net Imports Net Exports Demand

MMcfd


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Content

Strategic Assets


Main Projects




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New Business Models - Downstream

PEMEX is seeking to create value through successful businessschemes for new projects.

The business schemes PEMEX is looking for are:

Alliances with partners that have capital and operationalexcellence.

Strategic suppliers of materials. Joint Ventures (transportation, cogeneration, etc.)


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New Business Models - Downstream

PEMEX has developed successful strategic alliances in our dow

Project Deer Park PEMGas Pipelines

PEMEXs

Participation

1. Joint Venture

2. Oil supply

1

2

3. Sup

1. Joint Venture

Objective Refine Mexican heavy

crude oil and increase

gasoline supply to Mexico

Increas

Natural Gas and LPG

transportation to power

plants in the northern region

of Mexico

Operations

Startup 1993 1997

Partner


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Investo

(+52 55

ri@pem

www.r

pemex day ny_industrial transformation

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