Geneva : Group Headquarter Headquartered in Geneva We today have a direct presence in 33 countries with a staff of 1800 qualified personnel, supported by a network of 97 agents.
The ACE - AUDIT CONTROL & EXPERTISE Group Our Mission, Our Mission « To provide our Customers integrated risk management solutions through superior credit support, inspection, quality assurance, delivered world-wide by a team of professionals applying the best technology. »
The ACE - AUDIT CONTROL & EXPERTISE Group Our Risk Management Services, • ACE Pre-Loan Survey (Due-Diligence) • ACE Collateral Management Services & ACE Field Warehousing Services • ACE Monitoring Services (Inventory & Receivables) • ACE Agricultural Credit Management Services • ACE Credit Shield (Insurance) Services • ACE Audit Services • ACE Inspection Services • ACE STF Training Services Our Services
"Financing Oil Imports Using Integrated Risk Management Solutions"
OIL FINANCING - MARKET CONSTRAINS Oil Local Marketing Chain - Previously highly regulated - THE FACTS Lack of (or Weak) Regulatory Mechanism Intervention of Majors & International banks on the local market Vertical integration of the Oil Marketing chain from the international level (Majors) Strangulation of Local Oil Importers Liberalization of the downstream marketing chain
« TRANSACTIONAL » FINANCING Since Oil or Product Finance is mainly A MULTI-STEP LOAN MANAGEMENT…..
« TRANSACTIONAL » FINANCING EVALUATION OF THE TRANSACTION TO BE FINANCED • The BANKS, The INSURERS & ACE need to know: • Oil Specifications • Market Environment (if it is a buyer or seller market) • Logistics aspects • Storage and Refining Capacity • Transportation availability • Security • Time Cycle • Price Mechanisms • Selling Mechanism (Firm Offtake or Speculation) The preparation of the terms of the facility agreement requires full knowledge and in-depth understanding of the Risks associated to the transaction.
« TRANSACTIONAL » FINANCING PARTIES INVOLVED IN THE TRANSACTION The bank/Insurer & ACE have to know the various players involved in the transaction in order to secure the collateral and remove the lien of the parties : • First Stage Buyers, Suppliers, Exporters • Traders • Transporters • Refineries • Tank Farm Operators • Forwarders • Shipping Agents • Insurers • Brokers One objective only : Completion of the transaction in facilitating Repayment of the loan
COUNTRY - OIL IMPORT STRUCTURE The Participants
COUNTRY - OIL IMPORT STRUCTURE - 90/10 Principle - 90% of Imports are done by 10% of Actors • Majors (International Integrated Oil Company) Between 5 to 10 operating in the country, Very well equiped with logistic and infrastructures, They own their own terminal, tank storage and distribution outlets. • Small Importers High number in operation, Very few or outdated logistic and infrastructures, Rarely possess terminal or tank storage and distribution outlets
COUNTRY - OIL IMPORT STRUCTURE - 90/10 Principle - 90% of Imports are done by less tan10% of Participants
COUNTRY - OIL IMPORT STRUCTURE Refinery, • Old refining facility • Under-maintained and decaying processing machinery, with diminishing refining capacity. • Output covers about 50% of Products internal demand. Tank Farms, • Most storage facilities owned by the Majors. • Very well equipped and allowing good storage conditions when owned by Majors. • Ill equipped when owned by small importers.
COUNTRY - OIL IMPORT STRUCTURE The Challenge
COUNTRY A – CHALLENGE Deregulation of Oil & Product Import Marketing Chain • Registered importers increased very quickly. But most of them had, • no own storage facilities. • no prior experience of dealing in petroleum. • Imports were segmented into small lots. Liberalization of downstream petroleum marketing was prompted by the previously described situation to promote competition. It resulted in serious changes to the importing structure…. • Effective regulatory mechanism was left to basic « Supply & Demand » rule. As a result, • Small product import lots bypassed existing storage facilities to go directly to retail pump stations. • Tax body was unable to control effectively the numerous and small imports. • Adulteration of products by mixing increased and further boosted by differential grade taxing. • Product standards varied drastically within the country. • Minimum safety standards were not met by newly created retail distribution network.
SOLUTION The proposed Solution
AN ACE RISK MANAGEMENT SOLUTION Field Tank Farm Receipt & Receivables Financing coupled with, • DNA Cargo Tagging, • IT Real Time Tank Storage Monitoring, • near real time fully secured over the web reporting The idea would be to • Use in synergy Field Tank Farm receipt & Receivables financing with • Multilevel biotechnical and chemical cargo marking process - which applies unique DNA codes - allowing for unequivocal identity proof of ownership and source of Oil/Products cargo, • With permanent real time monitoring for Tank Farm storage through the use of an integrated IT graphic solution combining permanent sensor and ultrasonic measurement technologies with Web enabled reporting using ACESMART.
AN ACE RISK MANAGEMENT SOLUTION ACE On-Site Real Time monitoring network & sensors Oil/Products Tank Storage or Refinery Complex Wide Area Network, via IP: dial up, GSM, wireless, satellite or a combination of all, depending on conditions & existing infrastructure ACE Central Server • ACE On-Site interventions for: • Marking / Tagging • Sampling & Analysis (Country Wide)
Concept • Pre-Operation Phase - ACE will - Survey Refinery Process - Approve Refinery Facility • Sub-Lease from owners • Obtain Weaver & Consent from owners • Pre-Operation Phase - ACE will - Identify Tank Farm / Terminal - Survey Tank Farm / Terminal - Approved Tank Farm / Terminal • Sub-Lease from owners • Operate Tank Farm/Terminal • Pre-Operation Phase - ACE will - Identify Field Tank Farm - Survey Field Tank Farm - Approved Field Tank Farm • Sub-Lease from owners • Operate Field Tank Farm TANK FARM Storage TANK FARM Storage REFINING PROCESS TANK FARM Storage TANK FARM Storage OPERATION PHASE ACE will - Monitor Processing - Control Quantity out - Control Weight out - Control Quality out - Attend & Monitor Transport • OPERATION PHASE - ACE will - Control Quantity and Weight In - Control Quality In - Approve/Refuse crude oil entry - If approved, DNA Tag oil cargo TRANSMIT TO FINANCIER • Quality/Quantity/Weight Cert. • Issued Tank Farm Receipt OPERATION PHASE ACE will - Control Quantity out - Control Weight out - Control Quality out - Attend & Monitor Transport • OPERATION PHASE - ACE will - Control Distributed Quantity - Control Weight Out - Control Distributed Quality TRANSMIT TO FINANCIER • Delivery Documents. ACE Integrated Risk Management Solution - Collateral Management & Monitoring - CRUDE OIL
Concept 2 • Pre-Operation Phase - ACE will - Identify Tank Farm / Terminal - Survey Tank Farm / Terminal - Approved Tank Farm / Terminal • Sub-Lease from owners • Operate Tank Farm • Pre-Operation Phase - ACE will - Identify Field Tank Farm - Survey Field Tank Farm - Approved Field Tank Farm • Sub-Lease from owners • Operate Field Tank Farm TANK FARM Distribution Storage TANK FARM Distribution Storage TERMINAL/TANK Storage TANK FARM Distribution Storage • OPERATION PHASE - ACE will - Control Quantity and Weight In - Control Quality In - Approve/Refuse product entry - If approved, DNA Tag product cargo TRANSMIT TO FINANCIER • Quality/Quantity/Weight Cert. • Issued Tank Farm Receipt OPERATION PHASE ACE will - Control Quantity out - Control Weight out - Control Quality out - Attend & Monitor Transport • OPERATION PHASE - ACE will - Control Distributed Quantity - Control Weight Out - Control Distributed Quality TRANSMIT TO FINANCIER • Delivery Documents. ACE Integrated Risk Management Solution - Collateral Management & Monitoring - PRODUCTS
The LEGAL Nature of ACE Risk Management Services BAILMENT CONCEPT This is the legal term describing the relationship when the ownership of personal property resides in one person and possession of it is in another. • The depositor of the goods is known as the « Bailor » • The person engaged in storing the goods of others for compensation (I.e. the Collateral Manager) is known as the « Bailee » Two conditions are necessary for « Bailment » to exist, • The Depositor relinquishes possession of the property; • ACE assumes « exclusive, continuous and notorious possession of the property ».
Oil/Products Import Structure – Legal Agreements Procurement/Purchase Contract Purchase, Weaver & Consent Agreements Small Importers Lease/Sub-Lease, Weaver & Consent Agreements TANK FARM Storage Transport, Weaver & Consent Agreements Transporters REFINERY Process & Storage Refining/Storage or Tolling Agreement Assignment of Insurance CMA & CSS Agreements Transport, Weaver & Consent Agreements Transporters • “All Risks” plus • misappropriation. • Professional Indemnity, Fraud • & Omission. • Political Risk (confiscation, • expropriation, nationalization • & Depossession). TANK FARM Storage Lease/Sub-Lease, Weaver & Consent Agreements Sale & Purchase Agreement Assignment of Farm Tank Receipt & Proceeds SUPPLYER Financing Bank (SPV) ACE Insurance Company Distribution Network
Oil/Products Import Structure – Product Vs Cash Cash for Procurement Grading Storage Fees Storage Fees ACE crude Oil Tank Farm Receipt Financing Bank (SPV) Transport Fees Product Grade ACE Tank Farm Receipt Transport Fees Processing/ Storage Fees Tax & Duties CMA & CSM Fees ACE Tank Farm Receipt Proceeds from Sales SUPPLYER Small Importers TANK FARM Storage Transporters REFINERY Process & Storage ACE Transporters TANK FARM Storage Financing Bank (SPV) Revenue Authority Distribution Network
Field Tank Farm Receipt Financing Benefits of implementation for Stakeholders To Tank Farm Operators/Refinery • Reduce number of small counterparties. • Eliminate bypassing of existing infrastructure. • Constant monitoring of storage conditions and stored quantities. To Small Importers • Reduced transactional obstacles (economies of scale). • Reduced transactional cost (economies of scale). • Access to Tank Farm financing (Field Tank Farm Receipts). To Tax Authorities and Consumers • No more tax evasion and increased cargo tracebility capacity. • No more Fuel alduration. • Improved Quality & Safety Standards country wide. To Financing Institutions • Securitized warrant based financing. • Access to unratable and previously non-financed borrowers.
ACESMART Near Real Time, On-Demand, Secured and direct access to reliable data... Creates integrity & transparency in the transaction Resulting in Value Chain creation… We, at ACE, are know ready for this challenge
COMPLETE VISUAL & FRIENDLY TO USE INTERFACE JET FUEL A1 GASOIL UNLEADED 95 UNLEADED 98 EMPTY HEAVY FUEL OIL IFO MDO Tank 9
ACE Services .... .... dedicated to Risk Management (Headquarters) - Rue Richard-Wagner 1 1202 Geneva – Switzerland Tel. : +41 22 919 91 11 Fax : +41 22 919 91 19 Email : email@example.com www.ace-group.net