Supply Implications

• European export gasoline volumes likely to remain unchanged

  • Uncertainties are weighted towards less availability

• But the quality of the available exports will diminish

• Unlikely to have extra capability to export 10 ppm diesel

  • 50 ppm sulfur can be met with little investment, creative blendstock trading, changing feedstocks
  • 10 ppm incentives in several countries will likely “use up” any European ability to produce extra 10 ppm during U.S. ULSD diesel transition

• Wildcards: MidEast refineries, EC diesel specifications, gasoline demand growth, early move to 10 ppm, MTBE ban

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• The answer to the question on the prior slide is no. In summary, our assessment of European import availability to date is:

• Gasoline volumes are likely to remain about where they are today, although the availability of RFG blendstocks or finished RFG will be diminished.

• We are unlikely to see much relief from Europe if our refiners fall short in the transition to low sulfur diesel in 2006.

• The uncertainties behind these statements lean towards less product availability rather than more – with one exception: Middle East refiners. Should Kuwait and other refiners decide to produce ultra low sulfur diesel for the European market, for example, it could free up some capacity for export to the U.S.