1 Fuel Specifications & Alignment in AsiaXIV Refinery Technology Meeting Trivandrum, India 20-22 September 2007

2 Worldwide Road Transport Fuel Demand (2005)Source: Hart’s World Refining and Fuels Service, 2006

3 Growth of Vehicles in Asia Driving DemandSource: ADB Policy Guidelines to Reduce Vehicle Emissions

4 Worsening Air Pollution in Major Cities in AsiaMajor Asian cities are among the most polluted in the world Particulate Matter is a major problem Annual Mean Pollutant Concentration of Selected Asian Cities, 2003 Source : CLSA & Civic Exchange, 2005

5 Contribution of the Transportation Sector to Air PollutionTransportation sector is the leading source of NOx, PM, CO, SO2 and volatile organic compounds all of which have significant negative effects on public health. In addition CO2 emission is now a growing concern due to climate change.

6 Automobile Exhaust Emissions (1 of 2)CO - Carbon monoxide – Produced by incomplete combustion. – Absorbed by the blood reducing its capacity to carry oxygen. NOx - Oxides of Nitrogen - 3 gases – Nitric Oxide (NO) – Nitrous Oxide (N2O) – Nitrogen Dioxide (NO2) – Contribute to smog formation and can cause problems for people with respiratory illness

7 Automobile Exhaust Emissions (2 of 2)HC - Hydrocarbons – Fuel constituents as result of incomplete combustion. – Contribute to ozone formation and some HCs are classified as carcinogens. PM - Particulate Matters – Tiny particles with solid core – PM10 are smaller than 10 millionths of a meter in diameter – Presumed to affect cardiovascular, respiratory and asthma sufferers

8 How the Oil Industry & Automakers addresses Air Quality ConcernsRelationship between air quality, vehicle emissions, engine technology and fuels have been researched by the oil industry and automakers Improvements in vehicle technology and better fuel quality have resulted in lower tailpipe emission contributing to better air quality worldwide. How much further can existing vehicle technology and conventional fuels be improved to meet continued air quality and growing CO2 concerns ?

9 Worldwide Fuel SpecificationsEuro Standards US Standards – ‘Boutique Fuels’ Japanese Standard Worldwide Fuel Charter

10 Evolution of the Euro StandardsThe Auto-Oil Programme (AOP) I & II was initiated to improve air quality in the EU. The two AOPs have resulted in : Tighter emission standards Improved procedures for Inspection & Maintenance Lead phase out New petrol and diesel fuel quality standards – “Euro Standards”

11 Euro Standards – Key Specifications for PetrolSource: International Fuel Quality Center

12 Emission Levels from Petrol Driven Passenger CarsBetter petrol fuel standards and new emission control technologies has significantly reduced tailpipe emission of harmful air pollutants. Euro1 Euro2 Euro3 HC NOx CO 1 2 3 0.5 1.0 EM TWC(13R) 1O2S g/km S/C(7R) TWC(9R) OBD 2O2S S<50 ppm S<150 ppm S<500 ppm Euro4

13 Petrol Quality Effect on Emissions

14 Euro Standards – Key Specifications for DieselSource: International Fuel Quality Center

15 Emission Levels from Diesel Passenger CarsSimilarly for diesel vehicles, tailpipe emission of harmful air pollutants in particular PM can be reduced with low sulfur fuels and new emission control technologies. Euro1 Euro2 Euro3 Euro4 HC NOx CO 1 2 3 0.5 1.0 PM 0.05 0.10 0.15 VE EGR OC EM CR g/km S<50 ppm S<350 ppm S<500 ppm

16 Diesel Quality Effect on EmissionsDiesel fuel-change Reduction of: Poly-Aromatics Back End Distillation (T95) Increase of ... CO Sulphur HC NOx Particulates + / ++ ++ / o +++/++ +++/+ Vehicle - Emissions LDV / HDV Density ++ / - ++ / -- Cetane Number o ? / o o / + - / o - / + + + / o o / - - / o - / -- } Effect + ++ +++ o - -- --- 2-10 % 10-20 % > 20 % Improvement or Deterioration 2 %

17 Air Quality Improvements in EUAs a result of technological innovations and better fuel quality, air quality in Europe has significantly improved and will continue to improve in the future. Emissions from Road Transport in Europe Source: Auto Oil Program Report

18 Future Developments in the EUSulphur reduction – presence of sulfur hampers the development of exhaust after treatment technologies. Increase in the usage of oxygenates (ethers – MTBE and ETBE, alcohol – ethanol) Reduction in Polyaromatic hydrocarbon content of diesel Biofuels - biodiesel

19 Global Fuel Quality StatusLead Removal Volatility Controls & Oxygenate Introduction Initial Benzene Sulfur Reduction Olefin & Aromatic Content Limits Elimination Additional Composition of Renewable Fuels (Biofuels) Objective: Control Emissions of Traditional Air Pollutants CO2 Reduction North America EU Myanmar Vietnam Philippines Malaysia Singapore Thailand China Japan South Korea Taiwan We have seen the level of demand growth expected in the region and discussed the impact that this will have on refiners and the magnitude of the investment that refiners will have to make to produce not only higher volumes but also substantially cleaner fuels. It is no secret that Asia has long suffered with unacceptable air pollution levels in many of its large urban centers. Source: International Fuel Quality Center

20 Fuel Specifications in Asia – Current StatusDifferent countries at different levels of development Most countries adopt Euro model as it is a proven model and easy to understand Most countries in Asia have phased out lead and are at Euro 2 fuel quality level China and India have two tier fuel standards, a more stringent one in major cities.

21 Emission Standards are Getting Tighter in Asia

22 Fuel Quality Roadmaps in Asia

23 Sulphur Level in Fuels across Asia

24 Fuel Specifications Trends in AsiaMost countries have roadmaps up to 2010 Korea, Singapore, Taiwan and Hong Kong already have Euro 4 fuels China, India and Thailand to have Euro 4 equivalent fuels by 2010/2012 Partnership for Cleaner Fuels and Vehicles (PCFV) has adopted an objective of 50 ppm for sulfur levels in petrol and diesel by 2010 for Asian countries

25 Fuel Specifications Trends in AsiaLeapfrogging from Euro 2 to Euro 4 fuel & emission standards are being considered due to good technical and financial sense Refinery expansions are being based on Euro 4 standards Some Asian countries where air pollution from transport is severe are considering Euro V standards Incentives given to produce cleaner fuels Fuel quality monitoring is essential, especially where different fuel standards exist in the same country

26 Harmonized Standards across AsiaReduction in complexity for the oil industry and automakers Security of supply ASEAN- METI(Japan) Economic and Industrial Cooperation Committee (AMEICC) Working Group on Cleaner Fuels has called for non binding commitment for Euro 2 in 2006 and Euro 4 in Alignment of Standards to Euro 4 Standards not expected until after 2012.

27 Share of Biofuels in Road Transport Fuel ConsumptionSource : OECD/IEA 2006

28 Clean Fuels – Cleaner AirClean fuel enable the after treatment technologies needed to reduce exhaust and greenhouse gases Cleaner fuel can immediately reduce air pollution levels across the entire vehicle population