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22nd World LP Gas Forum in Rio « Energising the future ». « Financial Crises in 2008: Impacts on the LP Gas Business ». Ernst Brandstaetter General Manager SHV Gas Supply & Risk Management, Paris. World LPGAS Forum: 7th – 9th October 2009 1. SHV Business Structure.

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22nd World LP Gas Forum in Rio

« Energising the future »

« Financial Crises in 2008:

Impacts on the LP Gas Business »

Ernst Brandstaetter

General Manager

SHV Gas Supply & Risk Management, Paris

World LPGAS Forum: 7th – 9th October 2009 1

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SHV Business Structure

SHV

Mammoet

(Heavy lifting

And transport)

Makro

(Food & Non Food Consumer Articles)

Dyas

(E&P of Oil & Gas)

NPM Capital

(Private Equity)

TCEC

(Renewable

Energy)

ERIKS

(mechanical engineering components)

SHV Gas

(LPG)

World LPGAS Forum: 7th – 9th October 2009 3

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China

Philippines

SHV Gas : Presence in the World

Asia

Pakistan

North America

Europe

Africa

India

South America

Brasil

Australia

World LPGAS Forum: 7th – 9th October 2009 4

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Content

Reflection

Prediction

Reality

Consequences

World LPGAS Forum: 7th – 9th October 2009 2

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INTERESTING STATEMENTS…

I do not anticipate any serious problems among the large internationally active banks.

28 February 2008

Ben Bernanke, Chairman of the board of governors of the United States Federal Reserve

I do believe that the Economy is growing.

15 July 2008

In today’s regulatory environment it is virtually impossible to violate rules.

World LPGAS Forum: 7th – 9th October 2009 5

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REFLECTION: Long Term Crude Development

11 September 2001

World LPGAS Forum: 7th – 9th October 2009 6

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REALITY: C3 CIF ARA & FEI

« We project healthy growth in global GDP (+4.9%) and oil demand (+1.4 mb/d or 1.7%) in 2008. Demand growth will be led by China and the Middle East. »

Société Générale,19 November 2007

March: Falling Russian oil supply – fist y/y declines for over 10 years

July: Iran-Us relation turn of the worse

April: Iran-US relations deteriorate

«The possibility of $150- $200 per barrel seems increasingly likely over the next six-24 months (…) »

Goldman Sachs, official report 5 May 2008.

January: Disruption in Nigeria and North Sea

June: Rising Chinese, ME and Indian demand

World LPGAS Forum: 7th – 9th October 2009 7

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October:

Evidence of further US oil

demand deterioration and slowdown

in China.

REALITY: C3 CIF ARA & FEI

August:

Fannie & Freddi Mac

collaps/

financial troubles.

MARKET CRASH

November:

Drastic reduction to

GDP forecast

September:

Lehman Brothers

Collapse.

World LPGAS Forum: 7th – 9th October 2009 8

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Immediate consequences on the Derivative Markets

  • Trading counterparts disappeared or refocussed approach
  • Number of derivative desks cut
  • Trading markets close to stand still
  • Q4 MTM exposure reached record highs. Financing of risk is creating cash flow problem
  • Price volatility becomes exceptional
  • Stock markets influence commodities
  • Unhedged storage positions cause record losses

“ A large number of senior London-based equities traders at Morgan Stanley are leaving the firm, or facing redeployment, as the bank presses forward with its plans to cut a further 10% of staff in the institutional securities division.”

Renée Schultes, December 2008

«  Volatility increased to a point we had never seen except in a period of war I’m grateful to all the client who, despite all this turbulence, continued to deal with us. »

Marc Mourre, Morgan Stanley – February 2009

World LPGAS Forum: 7th – 9th October 2009 9

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Immediate consequences on the Physical Markets

  • Financial turmoil reduces demand (industrial/commercial/domestic segment)
  • Petchem buyers decrease presence on the market
  • Triple A rated customers turn to prepayment customers
  • Long markets and collapsed crude prices delay/even stop new productions
  • Shipping markets crash to record lows

“During the past two quarters, we have seen dramatic softening in demand

for our products and unprecedented volatility in raw materials costs.”

Volker Trautz, LyondellBasel’s Chief Executive

BASF has announced plans to axe 3700 jobs and left the future of 23 production sites in doubt following its acquisition of Swiss firm Ciba in April this year.

July 2009

LyondellBasel is owned by New York- based industrial group Access Industries, but the filing in the Southern district of NY in Manhattan applies to Lyondell Chemical Co., its U.S. arm. The court filing lists assets of $27.1 billion and liabilities of $19.3 billion.

ConocoPhillips, lays off 4 % of its GLOBAL workforce and scales back capital spending this year to $12.5bn, from $15.3bn in 2008.

Morgan Stanley

LUKOIL said it would cut its planned capital expenditure in 2009 to $9.7 billion, from an earlier forecast of $11.2 billion, due to unfavorable market conditions.

Morgan Stanley

World LPGAS Forum: 7th – 9th October 2009 10

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Immediate consequences on the Physical Markets

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

January February March April May June July August September October November December

World LPGAS Forum: 7th – 9th October 2009 11

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Immediate consequences on the Physical Markets

  • Financial turmoil reduces demand (industrial/commercial/domestic segment)
  • Petchem buyers decrease presence on the market
  • Triple A rated customers turn to prepayment customers
  • Long markets and collapsed crude prices delay/even stop new productions
  • Shipping markets crashed to record lows and will not recover soon
  • FOB posted price contracts create massive losses

World LPGAS Forum: 7th – 9th October 2009 12

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C3 CP & C3 FEI $/Mt – October 2008

Shipping

Total loss = 240 $/tons

$ 10.500.000 per cargo

Loss

CP

FEI

World LPGAS Forum: 7th – 9th October 2009 13

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GOODNEWS!!

Producers start to connect with the final customers cutting intermediaries

Shipping costs are at record low levels

Product prices return to the level of year 2002

World LPGAS Forum: 7th – 9th October 2009 14

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Prices return to the level of year 2002

World LPGAS Forum: 7th – 9th October 2009 15

slide16

Alzheimer Syndrom in Commodities Trading

BRENT Y08 Yield Basis Jan 08

BRENT Y09 Yield Basis Jan 09

World LPGAS Forum: 7th – 9th October 2009 16