IPG: Profile

1. Overview of Project Development in the Downstream Oil Industry Prepared for Africa Oil & Gas Trade & Finance 2005 IPG: Profile NOT AN OFFICIAL UNCTAD RECORD • Publicly traded company on the Kuwaiti Stock Exchange: [Ticker Symbol – IPG] • Market capitalization in excess of US$400 Million. • For year 2004, after tax net profit US$29 Million. • For year 2004, equity of US$132 Million. • For year 2004, sales in excess of $1.3 billion.

2. Africa presents an enormous potential in downstream logistics asset development to service existing as well as growing needs. “Asset development” is defined as Greenfield or acquisitions combined with technological upgrades of aging infrastructure. IPG is here today because…

3. Today’s Objective Share the experiences of the Independent Petroleum Group (IPG) s.a.k., an Independent oil company, in the development of its downstream logistics projects, with the hope that it raises issues that you might consider in the development of your own projects, with your partners.

4. Today’s Topics • Who is IPG, anyway? • Background on IPG • Oil Storage Project in Mozambique: Inpetro SARL • Project Development • Prospecting Insights • Setting Up the Deal • Rights, Liabilities & Obligations • Funding Challenges • Innovation of Small and medium sized operators in Project Development

5. Who is IPG, Anyway? • An Independent oil company, headquartered in Kuwait. • Established in 1976 to provide a competitive service in the supply of crude oil and petroleum products to niche markets. • Over its 29 year history, succeeded in becoming an international oil company with commercial activities targeting Africa and Asia. • In 2004, more than 175,000 barrels a day.

6. IPG: Profile • Diversification into downstream oil logistics in the mid 1990s. • International maritime logistics operating out of the Arabian Gulf. • Storage terminals and related infrastructure in Africa and Asia. • Combined capex of projects in development in excess of US$600 Million. • Works closely with its strategic partner, Emirates National Oil Company (ENOC).

7. Petroleum Value Chain

8. Petroleum Value Chain

9. State of the art petroleum storage terminal • Inpetro SARL • Joint Venture • Petróleos de Moçambique, S.A.R.L. (“Petromoc”) • National Oil Company of Zimbabwe (Pvt) Ltd (“Noczim”) • Independent Petroleum Group s.a.k. (“IPG”)

10. Inpetro SARL • 9 tanks with aggregate capacity of 95,000 cubic meters • Aviation Fuel, Petrol and Diesel • Linked to Petromoc infrastructure, as well as to CPMZ pipeline

11. Petroleum Value ChainInpetro SARL

12. Inpetro SARL • Why the Port of Beira? • Beira Corridor, an important gateway (import/export). • Malawi, Zimbabwe, Zambia and other countries in the region. • The Port’s infrastructure is developed, and linked to road, rail, tanker and pipeline.

13. Highlighting Broad Issues related to Project Development Mr. Anthony “Tony” Bridgens Member of the Fiscal Board of Inpetro SARL Manager Business Development, Trade & Finance, IPG

14. Prospecting Insights • Large potential in Africa • Additional services for growing markets • Technology upgrade • Small and medium projects servicing niche markets • Unique technical design • Innovative business modeling • To achieve economic viability • Appropriate solutions needed for unique propositions in small and medium size projects • Large operators have a preference for “off the shelf” solutions • Smaller and medium sized operators have a greater appetite for risk • Can mobilize more quickly and find appropriate solutions • Finding the right promoter is key element • Strong balance sheet, good liquidity

15. The right partners are a key factor for success Local expertise Technical excellence Resource rich Quality of partners must be undoubted Long term players Have to contribute more than money Strategic fit Data is essential Goes to the heart of the feasibility of the project Assists in risk mitigation and the type of structure Data should be freely available Strategic alignment All strategic issues should be put on the table Compromise found where conflict of interest exists Clear objectives captured in an appropriate agreement Provides stakeholders and third parties comfort Setting Up The Deal

16. Investors need to be reassured their rights are protected. Land tenure Dividend distribution Capital repatriation Etc. Investment centers need to provide level of comfort Environmental concerns Assistance with legislation Explanation of liabilities and obligations Other regulatory issues Laws specific to the industry Other Investor obligations not directly related to the project For example, social obligations Employment creation Related infrastructure upgrades Other Investor obligations not directly related to the project The more information provided upfront, the less pre-operating cost Lessens the need to invest in expensive professionals Rights, Liabilities & Obligations

17. Private Equity Prepared for significant “hurt money” to establish credentials for a project Limited availability Private Equity Funds Large availability but limited by strict qualification criteria Need to achieve economies of scale restricts Private Equity Funds from entrance in small and medium sized projects Multilateral and bilateral funders Enthusiastic with access to massive resources, but strict qualification criteria Bureaucratic processes are lengthy Commercial Financial Institutions Probably the biggest underwriters of projects in the downstream sector Responsive with good financial backup service Regional institutions have capital limitations Western Institutions are more risk averse as they have numerous international opportunities Funding Challenges

18. Innovation of the Small and Medium Project Developers • Small and medium operators in downstream sector have a role to play in Africa. • They are innovators to their approach to solving project issues. • They are adept at offering appropriate solutions, as opposed to “off the shelf” solutions • Small and medium project developers are light on their feet, with an ability to mobilize quickly • Capital can be a constraint, but there are some medium operators in their sector that have the ability to overcome this constraint, such as IPG.