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Published on October 22, 2007

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Platts Methodology Forum :  Platts Methodology Forum Rio de Janeiro November 9th, 2006 Platts Representatives :  Platts Representatives Gerald Bueshel, Director Americas Oil Markets, Gerald_Bueshel@platts.com Jorge Montepeque, Global Director Market Reports, Jorge_Montepeque@platts.com Annette Hugh, Houston Bureau Chief, Annette_Hugh@platts.com Richard Capuchino, Managing Editor Latin American Oil Markets, Richard_Capuchino@platts.com Today’s Agenda:  Today’s Agenda Welcome and Opening Remarks Platts Crude Oil Assessment Processes Platts Refined Products Assessment Processes Platts Petrochemical Assessment Processes Networking Reception and Lunch Introducing Platts:  Introducing Platts Transactions Assessments Market Reports Breaking news Platts is a specialist energy publisher founded by Warren Platt nearly 100 years ago, and owned by publisher McGraw-Hill Impartial and independent The McGraw-Hill Companies:  The McGraw-Hill Companies Platts Global Coverage:  Platts Global Coverage Platts Benchmarks:  Platts Benchmarks Platts publishes more than 100 key benchmarks daily Coverage includes the oil, gas, coal, emissions, power, shipping and metals markets Key publications of record are used throughout the energy value chain Platts assessments are used in settlement of billions of dollars of oil commerce daily Platts Crude Oil Assessment Processes:  Platts Crude Oil Assessment Processes Rio de Janeiro November 9th, 2006 Use Of Platts In Pricing:  Use Of Platts In Pricing Platts benchmarks are used to price term contracts Futures settlements are often tied to spot market Derivatives “price out” against Platts spot price assessments Pricing Structure:  Pricing Structure Wet Cash Options Futures Benchmark-Related Physical Pricing Market drivers 2001-2006:  Market drivers 2001-2006 Rampant oil demand growth, particularly in Asia Background of strong global economic growth Limited spare production capacity outside Middle East A constrained refining environment Speculative investments in energy markets But… There is nothing like high prices to cure high prices Recent Oil Spot Price Developments:  Recent Oil Spot Price Developments Quality Differentials:  Quality Differentials Benchmark Assessments:  Benchmark Assessments Use Of Benchmarks In Pricing:  Use Of Benchmarks In Pricing Benchmarks act as a barometer of outright values Differentials are negotiated off benchmark price Benchmark does not change physical value Responsive to supply/demand fundamentals Algebra Platts +/- differential = Fixed price Critical Requirement for Price Setting:  Critical Requirement for Price Setting Price is a function of time and assessments must be time dependent Published price must be in line with the market price. Convergence between published and market price is paramount Definition of the Platts Spot Price Assessment:  Definition of the Platts Spot Price Assessment “The closing range in which a standard repeatable transaction takes place or could take place at arm’s length.” Assessment Process:  Assessment Process Offers Bids 15:15 assessment Cut-off for new bids/offers Market On Close:  Market On Close Consistent assessment methodology evolving in crude oil, products and petrochemicals globally Time-sensitive assessments for markets across Europe, Asia and the Americas All European oil assessments reflect end-of-day values; Russian domestic grade aligned to 1630 Moscow time Key petrochemicals markets in Europe and Asia have moved to MOC in 2006 US products markets MOC process to be completed in 2006 Time-Stamping:  Time-Stamping Alignment of Fixed Price and Spreads:  Alignment of Fixed Price and Spreads $58.00/bbl $59.00/bbl $54.00/bbl $55.00/bbl Price is a function of time Consistency: Defining Standards:  Consistency: Defining Standards Principles of Market Coverage:  Principles of Market Coverage Fully independent and impartial reporting; no stake in the price of the commodity Use of highly structured methodologies to determine accurate and precise market values Consistent application of methodologies Data inputs are gathered from reliable market participants; Communication systems are platform neutral Platts confirms all information published Assessments are based on transparency, consistent application of methodologies and verification of information Platts Global Alert (PGA) Page 300:  Platts Global Alert (PGA) Page 300 PGA300 Americas Crude Oil 77: WTI Dec: BP lowers offer to -12c 03Nov06/ 315 pm EST/2015 GMT 2015 GMT: WTI Dec: BP lowers offer to -12c 2014 GMT: WTI Dec/Jan sold at -1.70 2014 GMT: WTI Dec: BP lowers offer to -10c 2014 GMT: Mars Dec: Shell hikes bid to 52.15 2013 GMT: Mars Dec: Shell lowers offer to 52.36 2013 GMT: WTI Dec: BP lowers offer to -8c 2013 GMT: WTI Dec: BP lowers offer to -7c 2013 GMT: Mars Dec: Shell lowers offer to 52.39 2012 GMT: WTI Dec: Chevron lowers offer to -5c 2012 GMT: WTI Dec: BP lowers offer to -5c 2012 GMT: Mars Dec: Citadel lowers offer to 52.45 2012 GMT: Mars Dec: Shell lowers offer to 52.42 2012 GMT: WTI Dec: BP lowers offer to -2c Questions?:  Questions? Gerald Bueshel: +1 212 904 2928 Annette Hugh: +1 713 658 3232 Richard Capuchino: +1 713 658 3207 Jorge Montepeque: +44 207 176 6136 info@platts.com Platts Refined Products Assessment Processes:  Platts Refined Products Assessment Processes Rio de Janeiro November 9th, 2006 Mechanisms for Price Discovery:  Mechanisms for Price Discovery A transparent environment where bids/offers and transactions are displayed Transparent protocol of behaviour for participants engaging in price discovery Transparent methodologies and analytical tools Verification process to ensure critical information can be validated as bids, offers and deals serve as basis for assessments An Inclusive Process:  An Inclusive Process Deals, bids, offers Swaps Premiums Spreads SPOT PRICES Transport costs Expectations are Growing…:  Expectations are Growing… The market and surrounding environment are changing More market volatility and sophistication More corporate governance More regulatory scrutiny More attention from politicians, the public and investors …So Platts is Raising the Bar:  …So Platts is Raising the Bar Instituting more transparency in price discovery Establishing reliable data verification processes Engaging more intensively with the market and with regulators to understand their needs and explain our practices Strong internal compliance procedures Enhancing assessment processes to determine values with more transparency, precision and accuracy Spot Assessments Process Detailed:  Spot Assessments Process Detailed The latest deals and/or firm talking levels supercede any previous deals Assessment establishes a Market-on-Close value Assessments are not a weighted average. In addition to deals, Platts considers the highest firm bids vs. the firm lowest offers All bids & offers must be logistically performable Prices are determined by the most competitive bids and offers, regardless of the size of the player. Spot Assessment Process Detailed:  Spot Assessment Process Detailed Standards represent what is most widely tradeable Deals/talking levels are normalized for standard terms and conditions to ensure that deals are not an aberration Platts will exclude unusual deals or any transactions that do not meet its standards Offers and bids must be open to all creditworthy and reliable participants in the market Spot Assessment Process Detailed:  Spot Assessment Process Detailed Assessments may change even in the absence of deals because markets are dynamic Implicit values are determined by multiple factors whose relative weight is constantly changing --Spread relationships --Swaps/derivatives --Supply/demand fundamentals --Capital inflows or outflows Mechanisms for Price Discovery:  Mechanisms for Price Discovery A transparent environment where bids/offers and transactions are displayed Transparent protocol of behaviour for participants engaging in price discovery Transparent methodologies and analytical tools Verification process to ensure critical information can be validated as deals serve as basis for assessments Editorial Protocol:  Editorial Protocol Bids and offers must be transparent Companies are named Companies must perform Bids/offers must move incrementally Use of repeatability test Deals must be traceable Strict time parameters Platts Global Alert (PGA) Page 005:  Platts Global Alert (PGA) Page 005 PGA005 European Products 31: JET: CARGOES: PETROBRAS offer 30kt +/ 08Nov06/1044 am EST/1544 GMT --1544 GMT: JET: CARGOES: PETROBRAS offer 30kt +/- 10% S/O on MV Mount Rainier or acceptable sub. Jet A1 issue 5, CFR basis Le Havre with standard NWE c/p options. 01-04 Dec price Dec+54 --1544 GMT: ULSD CARGOES: Stasco bids french winter ulsd 50ppm 20kt +/- 10%, 21-25/11, cif basis Le Havre, cp options Bord-Hamburg + Spain, full cargo, Stasco GT+C, rest as per flexi terms, IPE Dec +24 --1544 GMT: NAPHTHA: totsa offer 525 12 500 mt 65 os 16-20 nov delivery MFI --1544 GMT: GASOLINE: CARGOES: 50PPM: LITASCO Bids $ 504 / MT FOB Med basis Augusta 25- 30 Kt buyers option, EN 228, 80 kpa max, 50 ppm sulphur max, loading 18 - 22 November. Litasco Gt&Cs to apply. Load locations exclude Israel and Black Sea. Cp differentials at market rate. There will be a premium if port of sale means freight saving to buyer, there will be a discount if port of sale means freight cost to buyer. Seller to nominate loadport 7 cal days prior to first day of loading range. --1544 GMT: ULSD CARGOES: Mabanaft bv offers 20kt+/-10% s/o, german winter diesel 10ppm, Cif basis Hamburg, 26-30/11 dates, with cp options GBS,GNS, UKEC, UKWC +ARA, at IPE DEC + 42 Platts Global Alert (PGA) Page 400:  Platts Global Alert (PGA) Page 400 PGA400 Americas 160: USGC: 3%S: Sempra hits BP bid 03Nov06/ 309 pm EST/2009 GMT 2009 GMT: USGC: 3%S: Sempra hits BP bid 2008 GMT: USGC: 1%S: Conoco heard bid $43.45/bbl FOB Marrero, Nov 10-12, FP&L Manatee spec (visc 75/225), 40kb. 2008 GMT: USGC: 3%S: BP bids $39.25/bbl FOB Hofti, Nov 13-15, 3%S Platts spec, 40-45kb. 2007 GMT: USGC: C63 54: talked Dec +0.5/+1.75 cts/gal 2007 GMT: USAC: 0.3%HP Morgan Stanley bids $48.50 Con-ed spec Nov 10-15 basis NYH 100mb+/- 10% 2007 GMT: USGC: 3%S: BP bids $39.20/bbl FOB Hofti, Nov 13-15, 3%S Platts spec, 40-45kb. 2005 GMT: USGC: 3%S: Sempra bids $39.10/bbl FOB Hofti, Nov 12-14, 50kb+/-5% buyer's option, Platts 3%S spec. 2005 GMT: Chicago: C1 87-unl: 25kb traded Dec+11.50 cts/g Platts Global Alert (PGA) Page 468:  Platts Global Alert (PGA) Page 468 PGA468 LPG 95: LPG:Non-Targa natural gasoline, Glencore bids 126. 03Nov06/ 314 pm EST/2014 GMT 2014 GMT: LPG:Non-Targa natural gasoline, Glencore bids 126.35 cts/gal 25kb, Nov 2013 GMT: LPG:Non-TET normal butane, ConAgra bids 107.35 cts/gal 25kb, Nov 2012 GMT: Withdrawn LPG:Non-Targa natural gasoline, ConAgra bids 126.1 cts/gal 25kb, Nov 2012 GMT: LPG:Non-Targa natural gasoline, Glencore bids 126.1 cts/gal 25kb, Nov 2012 GMT: LPG: Non-TET propane ConAgra buys NGL Supply 92.5 cts/gal, Nov, 25kb 2010 GMT: LPG:Non-Targa natural gasoline, Glencore bids 125.85 cts/gal 25kb, Nov 2010 GMT: LPG:Non-Targa natural gasoline, Shell rebids 125.85 Platts Global Alert (PGA) Page 997:  Platts Global Alert (PGA) Page 997 PGA997 Spot bunkers 109: Panama 380CST done $270, $272/mtw, FAMM 03Nov06/ 314 pm EST/2014 GMT --New York 2014 GMT: Panama 380CST done $270, $272/mtw, FAMM --New York 2013 GMT: LA 380CST Chem offers $282/mtw --New York 2009 GMT: Houston MDO done $535/mtw, BP --New York 2008 GMT: Houston MDO done $540/mtw, Chem --New York 2008 GMT: Houston 180CST done $270/mtw, Chem --New York 2008 GMT: New Orleans 380CST done $255, $256.50, $260/mtw, FAMM --New York 2005 GMT: New York 380CST Chem offers $306/mtw --New York 2002 GMT: Houston 380CST done twice $253/mtw, BP --New York 1945 GMT: New York 380CST heard done $306/mtw --New York 1921 GMT: Long Beach MDO done $597/mtw, PDI --New York 1920 GMT: Long Beach 380CST done $279/mtw, PDI --New York 1852 GMT: Charleston MDO Colonial posts $654-656/mtw The Approach for US Light Ends markets:  The Approach for US Light Ends markets From 2:45 to 3:13 PM local New York time No new bids or offers Volume, terms & conditions cannot change Only prices can change Market Makers, Market Watchers can hit bids/offers From 3:13:01 to 3:15 PM local New York time All bids & offers frozen Bids & offers can be hit Deals executed on a bilateral basis Before 2:45 PM local New York time Only firm bids and offers accepted Market-on-close Participation: 100+ in Europe, 50+ in US:  Market-on-close Participation: 100+ in Europe, 50+ in US US specification changes:  US specification changes Gasoline moved to 30 ppm maximum sulfur from January 1, 2005 This was phased in by allowing sulfur credits against progressively tighter limits on average sulfur over year; sulfur credits accrued in one year allowed as offset against next year, allowing a phased approach rather than “big bang” Corporate “pool” average reduced from 120 ppm in 2004 to 90 ppm in 2005 to 30 ppm in 2006; Maximum 300 ppm level for individual batches reduced to 80 ppm from January 1, 2006 Oxygenates in gasoline in US have been replaced by ethanol after liability waivers were removed Sulfur limits in diesel also being tightened Diesel moved to 15 ppm maximum sulfur since middle of 2006; with various extensions allowed (temporary limit of 22 ppm through fall 2006) No changes in bunker fuel qualities Specifications Guides:  Specifications Guides Specifications Guides: Extract:  Specifications Guides: Extract Symbols Directories:  Symbols Directories www.platts.com:  www.platts.com Questions?:  Questions? Gerald Bueshel: +1 212 904 2928 Annette Hugh: +1 713 658 3232 Richard Capuchino: +1 713 658 3207 Jorge Montepeque: +44 207 176 6136 info@platts.com

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