October, 2015

European refining
competitiveness
Tomorrow's Leaders Symposium
World Petroleum Council Youth of Europe
8th October 2015 Budapest, Hungary

This presentation includes forward-looking statements. Actual future conditions (including economic conditions, energy demand, and energy supply) could differ materially due to changes in technology,
the development of new supply sources, political events, demographic changes, and other factors discussed herein (and in Item 1A of ExxonMobil’s latest report on Form 10-K or information set forth
Status October 2015
under "factors affecting future results" on the "investors" page of our website at www.exxonmobil.com). This material is not to be reproduced without the permission of Exxon Mobil Corporation.
Oil & gas remain critical for EU economy

EU Demand – By Section EU Demand - By Fuel

Quadrillion BTUs Quadrillion BTUs

Other Renewables
Res/Comm
Biomass

Industrial Nuclear

Coal

Electricity Gas
Generation

Oil
Transportation

ExxonMobil 2015 Outlook for Energy

 Refining converts oil into many products

LPG / Propane

Chemicals feed

Gasoline

Aviation fuels
Refinery
Diesel
Crude Oil Input
Gasoline

Fuel oil

Diesel
Lubes/Other
Wax/Asphalt
Refinery
Source: U.S. Department of Labor
3

ExxonMobil 2015 Outlook for Energy

 Refining converts oil into many products

LPG / Propane

Chemicals feed

Gasoline

Aviation fuels

Diesel
Crude Oil Input
Gasoline

Fuel oil

Diesel
Lubes/Other
Wax/Asphalt
Refinery
Source: U.S. Department of Labor
4

ExxonMobil 2015 Outlook for Energy

European refining industry is
important to energy security
EU transportation demand remains high
Transportation Demand
MBDOE

Rail

Marine

Aviation

Heavy Duty

Light Duty

ExxonMobil 2015 Outlook for Energy

 Demand and regulations drive fuel imbalance
• Europe´s diesel demand continues to
grow Mta
Gasoline Demand and Fuel trade
• Growing commercial transportation 150 OECD Europe (Mta)1

• Sustained passenger vehicles switch Mogas demand

100
from gasoline to diesel
• Further decline in gasoline demand 50 Mogas exports: 37% of production (2014)

• Favorable excise taxation led to

‘dieselisation’ of fleet 0
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14
• Improved fuel economy of car fleet &
biofuels impact -50
Jet+Diesel imports: 15% of demand (2014)
• Fuel oil demand declines -100

• Significant impact from Bunker Fuels

Sulfur spec reduction (IMO)

• Fuel imbalance becomes ever more pressing issue for Europe

• Europe increasingly dependent on diesel imports from US, Middle East, Far East
• Challenge (and higher costs) to export growing gasoline surplus
• US shifting from significant gasoline importer to balanced situation

1 Source: IEA data for OECD Europe

7
 Global supply patterns are hurting EU
Refining
• Excess global refining
capacity
Europe Capacity and Utilization 1
• New world-class export
MBD Capacity Actual runs Utilization % refineries in Middle / Far
16 90 East
88
15
86
• Russian refinery exports
14 84 shifting from feedstocks
82 & heavy fuel oil to EU
13
80 grade finished products
12 78 • US new competitors in
76
11 EU Diesel market with
74
10 72
low energy & feedstock
1995 2000 2005 2010 cost
• Leading to record low
utilization of European
refineries

1 Western Europe and Med; Crude & Condy; Source: PIRA

8
US refining industry has a competitive advantage
1 Energy cost as % of total cash cost 2
70%
60%
50% EU
40%
30%
20% US

10%
0%
2000 2002 2004 2006 2008 2010 2012

• Energy is largest refinery operating cost

• EU refineries are world class in energy efficiency
• But faced with much higher energy cost than US

1 average prices from Nymex, ICE

2 Concawe study based on Solomon Associates data for industry averages Western Europe, United States

9
 EU refining is facing increasing rationalization
pressure

1Western Europe and Med; Cumulative from 2009

Sources: ExxonMobil assessment based on public information
European refining industry is not
globally competitive due to
higher energy and labor costs,
global change in demand and
supply patterns, and severe /
increasing regulatory burdens.
 EU regulations add significant costs
12.0 12.0

11.5 2020 11.5 2020

11.0 Low cost scenario 11.0
High cost scenario
10.5 10.5

Estimated cost to EU refiners ($/bbl)

Estimated cost to EU refiners ($/bbl)

10.0 10.0

9.5 9.5

9.0 9.0

8.5 8.5

8.0 8.0

7.5 7.5

7.0 7.0

6.5 6.5

6.0 6.0
Baseline ETS IED REACH RED SLFD Baseline ETS IED REACH RED SLFD
opex (MFD) opex (MFD)

Source: Concawe, Report no. 11/14, The estimated forward cost of EU legislation for the EU refining industry

12
Policymakers can help sustain a globally
competitive EU Refining industry
• Encourage market conditions for access to energy and feedstock at a
competitive cost.
• Guarantee a level-playing field amongst cost effective technologies.
• Energy taxation should be consistent and proportional to the energy
content.
• Allow internal market forces to work: avoid interventions that distort
free competition of assets in a global environment. Any subsidies
would have the opposite effect of ensuring a competitive EU refining
market.
• The EU policy framework should not cause unnecessary extra cost for
the refining sector.
• EU policies should be transparent, predictable and market based.

13
Summary

• Oil is and will remain essential for European economies for the
foreseeable future.
• The refining industry, which is an essential and integrated part of many
European industries, is no longer globally competitive.
• Europe´s regulatory environment affects the competitiveness of
European refining industry compared to other regions.
• EU refining is facing increasing rationalization pressure.
• Some level of domestic refining capacity is highly desirable for security
of energy supply.
• Allow market forces to work and avoid interventions that distort free
competition of assets in a global environment.

14