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Vitol 2012 report

In 2012 total traded volumes for crude oil and oil products for the Vitol Group were 261 million metric tonnes (mt’s), compared with 273 million mt’s in 2011 and 264 million mt’s in 2010, on a like for like basis. These numbers exclude natural gas, electricity, coal, chemicals and carbon credits. On a contracted sales basis, natural gas sales were 1,430 TWh, power sales were 178 TWh, coal sales 25.2 million metric tonnes and carbon sales 113.5 million metric tonnes.

Total revenues for 2012 for total global trading activity were $303 billion compared with $297 billion in 2011. Average oil prices of $111.67 per barrel in 2012 were similar to the 2011 average of $111.26 per barrel (basis dated Brent).

Physical energy trading is at the heart of Vitol’s business and Vitol continues to be a major participant in global shipping markets, chartering for 5,495 voyages in 2012, delivering crude oil and products to our customers around the world. Crude oil trading volumes were 117 million mt’s in 2012, on a delivered basis and there were substantive volumes for all product businesses including power, natural gas, LPG and LNG, carbon and coal.

We continue to look at a variety of new investment opportunities in the midstream and downstream energy sectors, which can deliver growth and synergy with our core trading business. A number of investments were made in 2012 which enhanced our global reach, linking trading with our customers.

Vivo Energy, owned 40% by Vitol, 40% by Helios Investment Partners and 20% by Shell today operates in 14 countries in Africa, marketing fuels and lubricants under the Shell brand. Total volumes in 2012 were 4% higher than in 2011 in the first 10 countries that joined Vivo Energy, with retail volumes increasing by 9% versus prior year. The business has made excellent progress in growing its presence in the fuels and lubricants markets, underpinned by the Shell brand, while delivering an outstanding HSE performance.

Our refining portfolio has grown following the acquisition of the Cressier refinery in Switzerland in June last year and the creation of Varo Energy. The 68 kbpd refinery as well as the accompanying storage and wholesale marketing assets underpin Vitol’s expansion into the regional product markets.

In Germany, Vitol Germany continues to expand, with their recent entry into the marine bunker fuel market in the ports of Hamburg, Bremerhaven and Weser.

Vitol Aviation has continued to expand its sales and marketing footprint with annual sales of more than 2.5m tonnes to customers in the US and Europe. Recent new airport locations include Kuala Lumpur and 21 locations in Africa. 2013 new market plans include airports in Paris, Moscow and Geneva.

In the USA, Blueknight, in which Vitol is a major investor, has expanded its foothold in U.S. energy markets with storage and energy transportation assets, including around 1,300 miles of pipeline. This includes a new pipeline to Crane, 40 miles south of Midland, Texas, where the start of the Longhorn pipeline takes crude oil to the US Gulf Coast. Blueknight also owns a combined 15 million barrels of crude and oil product storage facilities across 22 different states.

Our coal business has continued to expand rapidly, with a number of investments and offtake agreements. Of note was Vitol’s acquisition from Grindrod of a 35% interest in the company which owns the Maputo coal terminal in Mozambique, as well as the creation of a partnership for their sub Saharan coal trading businesses.

In VTTI, our 50% terminal joint venture with MISC Berhad of Malaysia, further growth was delivered with the completion of  the Mombasa terminal in Kenya and the Tanjung Bin terminal in Johore, Malaysia. VTTI is now active in 14 countries around the world and offers access to a total capacity of around 8.6m cubic metres This capacity is set to increase to over 13m cubic metres in the coming years through a proactive expansion and construction programme.

In our upstream businesses, Vitol E and P continue to focus on the hydrocarbon opportunities in the Offshore Cape Three Points block in Ghana, with recent discoveries of both gas and oil, in partnership with Eni, the operator and GNPC. The current focus is on the commercialization of the gas resources.

Ian Taylor, President and Chief Executive of the Vitol Group, commenting on 2012 performance, said: “Unlike in previous years, which had the benefit of some asset disposals, the solid trading result in 2012 fully reflects our underlying trading performance. It was a year without the additional advantages of market structure or volatility that previous years have offered and trading markets continue to become increasingly competitive, with additional pressure on margins.

Oil demand growth in 2013 is expected to remain somewhat constrained by the continued economic struggles of many of the weaker European economies. Global oil demand growth is currently forecast at around 1 million b/d, only a little higher than in both 2011 and 2012. Some two thirds of the growth is expected to be in the fast growing economies of Asia and in the Arabian Gulf.

Non OPEC supply is expected to grow by around 1.5million b/d. This forecast is dominated by our expectation that production will grow in the USA by almost 1 million b/d and in Canada by around 0.35million b/d.  Following recent lower OPEC production, price stability has been achieved and the market currently looks well balanced.

The refining market did somewhat better last year as a result of unexpected refinery closures. The new capacity planned to come on line later in 2013 is expected to exceed the growth in demand we are forecasting, so we expect refinery margins to be somewhat lower later this year after an unexpectedly strong first quarter.

The shipping market is likely to continue to be severely challenged, particularly in the dirty sector as long haul crude movement is expected to fall but the supply of vessels will still increase. On the clean side of the market the outlook is a little brighter as we expect to see greater products exports out of both the Middle East and the US Gulf Coast which may contain the impact of the increase in supply somewhat.

We continue to see many opportunities for investment in quality assets which add value to our core trading business and we will selectively expand our portfolio where this makes business sense.

We appreciate the excellent support from all of our many financial partners. Both of our capital raisings in Singapore and Geneva were significantly oversubscribed, reflecting the confidence that the financial markets have in our business model. Our financial base remains strong and this provides us with the platform to grow.

Ultimately our performance reflects the focused efforts of the 1,025 Vitol employees who work in more than 30 offices around the world and our Board fully appreciates their efforts and dedicated commitment”.

More details on the Vitol Group can be found at www.vitol.com, on VTTI at  www.vtti.com Varo Energy at www.varoenergy.com and on Vivo Energy at www.vivoenergy.com.

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