2013 Interim Results Presentation

February, 2013
Disclaimer
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Purpose of this presentation

This presentation is prepared by Brightoil Petroleum (Holdings) Limited (the “Company”) solely for the purpose of corporate communication and
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current or historical operating results or its future business prospects.
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may be considered to be forward-looking statements. Forward-looking statements speak only as of the date they are made, and the Company is not
obliged to review or update in light of new information or future events. Hence, Readers should be cautioned not to place undue reliance on any of
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This presentation is not intended as an offer to sell, or to solicit an offer to buy or to form any basis of investment decision for any class of securities of
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English version prevails
In the event of inconsistency between the English version and Chinese version of this presentation, the English version shall prevail.

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Financial Highlights

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Financial Highlights– 1H FY2013
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P&L Highlights

1H FY2013 1H FY2012 Change

(In HKD million) (In HKD million) (%)
Revenue 23,590 36,262 -35%
Gross Profit 741 1,133 -35%
Gross Profit Margin 3% 3% -
Fair Value (Loss) / Gain of Derivative Financial Instruments (974) 794 -223%
Adjusted Gross (Loss) / Profit (include FV change of Financial Instruments) (233) 1,927 -112%
Adjusted Gross (Loss) / Profit Margin(include FV change of Financial Instruments) (1%) 5% -
Fair Value Gain / (Loss) of Financial Assets Held for Trading 50 (34) -247%

Operating Cost (589) (690) -15%

Operating (Loss)/ Profit (772) 1,203 -164%
Finance Cost ( Include imputed interest on Convertible loan notes
- HKD 21.5 million) (101) (193) -48%
(Loss)/ Profit before Tax (873) 1,010 -186%
Reported Net (Loss)/ Profit after Tax (871) 965 -190%

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Financial Highlights– 1H FY2013
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Balance Sheet Highlights

At 31/12/2012 At 31/12/2011 Change
(In HKD million) (In HKD million) (%)

Non current assets

Property, plant & equipment (Include VLCC under construction) 7,505 3,747 100%
Interest in jointly controlled entities 480 448 7%
Land & coastal rights
(Zhoushan/ Dalian storage project) 545 345 58%
Investment properties 41 41 -
Other non-current assets 157 502 -69%
8,728 5,083 72%
Current Assets
Inventories 2,335 5,111 -54%
Accounts receivable 3,316 5,723 -42%
Held for trading securities 148 128 16%
Cash & bank (Inc deposit with brokers and pledged deposit) 3,182 2,968 7%
Other current assets 698 993 -30%
9,679 14,923 -35%

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Financial Highlights– 1H FY2013
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Balance Sheet Highlights (Cont’d)

At 31/12/2012 At 31/12/2011 Change

(In HKD million) (In HKD million) (%)
Current liabilities
Short term loan 6,437 6,543 -2%
Accounts payable 3,201 3,498 -8%
Convertible loan notes - 803 -
Other payable 1,734 1,028 69%
11,372 11,872 -4%
Non current liabilities
Long term borrowing - 1,053 -
Convertible loan notes 215 - -
Deferred income tax liability 54 21 157%
269 1,074 -75%
Capital and reserve
Share capital 219 169 30%
Reserves 6,547 6,891 -5%
6,766 7,060 -4%

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Business Highlights
International Trading and Bunkering

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Business Highlights– International Trading and Bunkering
Business Review
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Key highlights
 Continue to be the major driver of the Group’s revenue; sales volume in 1H
FY2013 of approximately 2.8 million MT, decreased 36% y-o-y:
 Slowdown in global trade and an over-capacity in the shipping industry
 Ship owners reduce bunker consumption to control costs
 General decline in global bunker demand and margins

 Recorded loss of 791 million, mainly due to low margins with high operating
cost

 During the Period under review, the Group focused its efforts on:
 Reducing key costs as a means of offsetting the effects of the poor
macro-economic situation. These efforts included:
 Subleasing and reduction of unproductive tankage capacity in
Singapore and the United States
 Consolidation of worldwide sales offices to save on overhead
costs Bunker barge Brightoil 668 engaged in
 Diversified business to four oil product lines: fuel oil, crude, gas oil and bunkering activities
petrochemicals
 First crude oil trading team established in Singapore in October 2012

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Business Highlights– International Trading and Bunkering
Global Presence in 1H FY2013
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Latest presence

• PRC market coverage: Shenzhen, Shanghai, Ningbo, Zhoushan;

• International market coverage: Hong Kong, Singapore, Malaysia, ARA
• Listed as third-largest supplier of bunker fuel by volume in Singapore in 2012

Bunkering rep office & bunkering service ports

Bunker rep Bunkering
office service port

Shanghai,
Rotterdam, Zhoushan,
Netherlands China

Rotterdam, Ningbo,
Netherlands China

Shenzhen,
Shenzhen, China
China

Taipei, Singapore
China

Seoul, Tokyo, Hong Kong,

South Korea Japan China

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Business Highlights– International Trading and Bunkering
Upcoming Business Plan
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Business strategy and upcoming development

Fuel oil business:

 Further expansion of bunkering presence into first tier bunker ports around the world
 Focus on regional key customers
 Ride on existing infrastructure together with new bunker barges to further and increase bunker
sales into more Chinese ports

Crude business:
 Focus on regional market and key customers
 Continue to explore expansion opportunities for crude trading business including sourcing of
European and West African crude oil grades for supply into China and North Asia

Gas oil and Petrochemical business:

 Leverage on its existing Chinese presence to start a petrochemical
trading business

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Business Highlights– International Trading and Bunkering
Fuel Oil and Marine Fuels Business Plan
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 Establish fuel oil trading in Houston and Geneva trading office and start European/ Singapore arbitrage trade
 Continue to expand bunkering activities into tier 1 bunker markets, e.g. Fujairah and Panama, and further
penetration on key customers in PRC
 Grow China bunker sales volume by increasing presence and deploying upcoming additional ports
 Look to trade different grades of residue oil e.g. Straight run fuel oil
 Restart fuel oil trading in Houston trading office

Brightoil bunker barge engaged in bunkering activities

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Business Highlights– International Trading and Bunkering
Gasoil Business Plan
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 Work with marine team to grow marine gasoil bunkering business

 Develop expertise to trade low sulphur gasoil
 Establish gasoil trading activities in Geneva and Houston trading office, with an increase team of gas oil traders
in Singapore

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Business Highlights– International Trading and Bunkering
Crude Business Plan
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 Build reputation as a reliable crude supplier to refineries in North Asia (especially China)
 Increasing participation in more crude supply tenders in Asia
 Establish crude trading in Geneva trading office to transact in European and West African grades
 Establish a crude origination/trading presence in the Americans out of Houston trading office
 Asian short, and in particular China, ensures 75% of crude imports come from Middle East or West Africa
 China imports expected to increase from 5mb/d to 8mb/d by 2016, equivalent to 4 VLCCs per day
China crude imports (million MT) China crude import sources (2012)
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
-

Source: C1 Report Source: C1 Report

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Business Highlights– International Trading and Bunkering
Petrochemicals Business Plan
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 Petrochemical trading in Singapore to start in FY2013

 Identify stable supply sources
 Secure term sales into China
 Secure Petrochemical storage positions
 Key market for petrochemicals is in Asia, especially China

China’s net imports of Benzene in 2012

Source: Brightoil Research

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Business Highlights
Marine Transportation

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Business Highlights– Marine Transportation
Business Review
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Key highlights

• The first three VLCCs were delivered in July, September and November 2012 respectively. These vessels are
Brightoil Glory, Brightoil Gravity and Brightoil Galaxy

• 3 Very Large Crude Carriers (VLCCs), 4 Aframax oil tankers, 1 Bunker Barge in full operation

• Total oil carrying capacity exceeds 2 million tonnes upon delivery and operation of the last VLCC

• Synergies effect with international trading & bunkering, and oil storage & terminal facilities business; VLCC can
be used for chartering to oil majors and support out trading division operation

VLCC— VLCC— VLCC— VLCC— Aframax oil tanker— Bunker barge—

Brightoil Glory Brightoil Gravity Brightoil Galaxy Brightoil Grace Brightoil Lion Brightoil 668

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Business Highlights– Marine Transportation
Industry Performance
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Potential tanker value appreciate Large demand for VLCCs in China market

Historical tanker ship value and average earning  Chinese government has stated its goal to
140.00 60,000 set up a China oil and gas ship fleet by 2020
120.00 to take control of its oil and gas imports.*
50,000

100.00  With a current fleet of 39 VLCCs and 5

40,000
80.00 LNGCs, the main shipping companies in
30,000 China will invest more than 171 billion RMB
60.00
to construct at least an additional 60 VLCCs
20,000
40.00 and 20 LNGCs in the next 10 years, most of
10,000 the orders will be fulfilled by Chinese
20.00
shipyards.*
- -
*Source: http://www.noppen.com.cn/upcoming/L1222/index.asp
1990 1995 2000 2005 2010 2011 2012

VLCC D/H 310K DWT 5 Year old Secondhand Prices ($ Mil)

Aframax D/H 105K DWT 5 Year Old Secondhand Prices ($ Mil)
Average Earnings All Tankers ($/Day)

Source: Brightoil Shipping

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Business Highlights– Marine Transportation
Upcoming Business Plan
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Business strategy and upcoming development

• 1 VLCC, the Brightoil Grace, was delivered in January 2013; the last VLCC is
expected to be delivered in mid-March 2013
• Potential development into:
• Coastal bunker barge market
• MR/LNG market-vessels and 3-5 LNG vessels to be added
• Increase in VLCCs and Aframax oil tankers
• Synergies effect with ITB and storage business:
• A tanker fleet to support our International Trading and Bunkering
operations
• Generate additional freight income by chartering out excess capacity
• Support future China oil imports
• Continued fuel saving program in place with highly competitive fuel
consumptions and better speed performance

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Business Highlights
Oil Storage and Terminal Facilities

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Business Highlights– Oil Storage and Terminal Facilities
Business Review
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Key highlights Phasing of Brightoil capacity (In million m3)

• Dalian and Zhoushan oil storage and terminal facilities Zhoushan I Zhoushan II Dalian I Dalian II
projects under steady construction

• Zhoushan: Large jetties under construction; tank 3.68

foundation completed
Dalian: Site leveling work completed

• Zhoushan – 2 phases, phase 1 commissioning in July

3.98 3.98 3.98
2014
Dalian – 2 phases, phase 1 commissioning in July 2015
1.22 1.22 1.22 1.22
• Combined capacity to take Brightoil in top tier of
independent global storage providers 1.94 1.94 1.94 1.94 1.94

• Form part of integrated supply chain, create flexibility 2H 2014 1H 2015 2H 2015 1H 2016 2H 2016
in our trading and bunkering business, in particular for
China Market

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Business Highlights– Oil Storage and Terminal Facilities
Zhoushan Waidiao Island
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Tank foundation Site leveling Barge jetty

Facts
Brightoil owns 100% of the oil storage facilities and 55% of the terminal project in joint-venture
with Zhoushan Port Group Ltd.(a PRC state-owned enterprise)

Capacity Reach up to 3.16 million m3

Terminal to operate 13 berths, accommodating vessels ranging
in size from 1,000 to 300,000 DWT (VLCC)
Target Completion Period Phase 1: 1.94 million m3 commence operation in July 2014
Phase 2: 1.22 million m3 commence operation in January 2015

Barge Jetty

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Business Highlights– Oil Storage and Terminal Facilities
Dalian Changxing Island
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Site leveling completed Geographical Surveying

Facts
Brightoil owns 100% of the oil storage facilities and 60% of the terminal project in joint-
venture with Changxing Island Investment Company (a wholly owned subsidiary of the
Industrial Zone Management Committee of Dalian)

Capacity Reach up to 7.66 million m3

Terminal to operate 13 berths, accommodating vessels ranging
Pile testing preparation in size from 1,000 to 300,000 DWT (VLCC)
Target Completion Period Phase 1: 3.98 million m3 commence operation in July 2015
Phase 2: 3.68 million m3 commence operation in July 2016

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Business Highlights– Oil Storage and Terminal Facilities
Industry Performance
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 Strategic Petroleum Reserve (SPR) plans initiated in 2004 with around 50 million m3 capacity confirmed as parts of
Phase 1 and Phase 2 commissioning by end of 2013
 International Energy Agency (IEA) target for import coverage of at least 90 days, including strategic and
commercial reserves
 Rising import dependence of 100kb/d increases strategic reserves requirement of 1.4 million m3 (assuming 90
days coverage)
 Additional capacity of 40-80 million m3 required before end of 2020; capacity to be leased by the government in
key strategic locations
 Current rental price in China is RMB 20-26/ m3/ month* for storage facilities, turnover for terminal facilities is
excluded * Source: http://wenku.baidu.com/view/9a7e2c6faf1ffc4ffe47ac4f.html

SPR locations SPR requirements (million m3)

2010 2013 2015 2020 unit

Crude Oil imports 4.9 7.3 8.1 9.4 million b/d

SPR Phase 1 + Phase II (by

16.4 51.6 51.6 51.6 million m3
2013)

Effective import cover 21 44 40 35 days

Potential target import

- 50 70 90 days
reserves

SPR needs for target - 58.0 90.1 134.5 million m3

Additional capacity
- 6.4 38.5 82.9 million m 3
required
Source: Brightoil Research

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Business Highlights
Upstream Business

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Business Highlights– Upstream Business
Business Review and Upcoming Business Plan
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Dina 1 Gas Field

Key highlights
• 2 wells in production
• Current production rate:
Natural gas : 1.2-1.3 million m3/ day
Condensate oil of 70 -80 tonnes/ day

Upcoming business plan

• Plan for additional well to increase production rate

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Business Highlights– Upstream Business
Business Review
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Tuzi Gas Field

Key highlights
• Tuzi Gas Field Overall Development Plan (ODP) has been approved
by National Development and Reform Commission in 30 December
2012
• Expected to commence production by 2H 2013
• Based on ODP, cumulative gas extraction is 14.1 billion m3
• Projected to complete 9 wells in 2H 2013
• With addition of 9 wells, production expected to increase by:
Natural gas approximately 100,000- 150,000 m3/ day/ well

Korla

West-east gas pipeline I & II

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Business Highlights– Upstream Business
Industry Performance
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Gas consumption forecast in China

 Residential gas consumption grows rapidly, commercial gas consumption grows simultaneously
e.g. transportation sector
 Chinese border price of Turkmenistan is RMB 2.2/ m3, pipeline tariff for domestic 2nd West-East pipeline
is set at RMB 1.1/ m3 to Shanghai, as such the arrival price in Shanghai is around RMB 3.3 / m3

Natural Gas Price in China

RMB/m3

Residential Commercial Industrial

Source: U.s EIA-international Energy Outlook 2011 Source: CEIC, CICC

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Q&A

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Appendix

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Appendix – International Trading and Bunkering
Marine Fuels Industry Performance
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China Market China bonded bunker market (million tonnes)

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 Industry forecasts the demand on bonded bunker fuel
12
in China will jump to 25 million MT by 2015 10
8
 Main trade flow of fuel oil is West to East, with
6
sourcing of supply in North-West Europe, Baltics and 4
2
US Gulf Coast accounting of >80% of Asian imports
0
 Direct arbitrage shipments into China improve the 2006 2007 2008 2009 2010 2011 2012E

overall cost competitiveness and profitability of supply Source: C1 Energy

Singapore bunker sales (KT)
International Markets

 Since July, Singapore bunker demand remained below

2011 levels.
 Other key ports like Fujairah and Rotterdam have also
registered a slowdown in bunker demand in 2012 as
compared to 2011
Source: Brightoil Research

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Appendix– International Trading and Bunkering
Gasoil Industry Performance
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 Middle distillates is the main source of oil demand growth globally. The share of the total oil demand has
increased to 36% in 2010

 Growth also matched by rising imbalance and trade flows. Europe, Africa and Latin America are significant shorts
requiring imports. SE Asia and Australia also significant import market. This creates major trading opportunities

 Priority will be to develop marine bunker shorts in Asia and Europe, with associated gasoil trading. No plans to
extend in to other distillates (mogas, jet, kerosene) where no source of advantage

Gasoil trade flows (In ‘000 b/d, 2011) Global product demand growth (In million b/d)

Source: Brightoil Research Source: Brightoil Research

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Appendix– International Trading and Bunkering
Crude Industry Performance
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 Global crude trade flows “divides” East and West across axis from Russia, Middle East and West Africa
 Asian short, and in particular China, ensures 75% of crude imports come from Middle East or West Africa
 China imports expected to increase from 5mb/d to 8mb/d by 2016, equivalent to 4 VLCCs per day
 With more than 100 VLCCs imported in China market monthly, aspiration to secure a 2-5% market share will
enable full utilization of VLCCs and create additional upside

Global crude trade flows (2012) China crude imports (million MT) China Crude Import sources (2012)
10.0
8.0
6.0
4.0
2.0
-

Source: Brightoil Research Source: C1 Report Source: C1 Report

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Appendix– International Trading and Bunkering
Petrochemicals
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 Key market for petrochemicals is in Asia, especially China

 Target products are the Aromatics (Benzene, Toluene, Xylene) and others such as Styrene Monomer, PTA
 There is a huge shortage of Paraxylene in Asia up to 2015. Most of the shortage is in China
 Benzene produced from coal, will be significantly reduced as a result of sluggish steel demand in China
 BTX production in the US will slowdown due to rising shale oil production and supply will remain tight
 BTX product margins expected to outperform within the petrochemical product segment thanks to a likely supply
disruption in 2013

Key Petrochemicals trade flows 2012 China’s net imports of benzene in 2012

Source: Brightoil Research Source: Brightoil Research

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