OIL REFINERIES LTD. NASDAQ

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OIL REFINERIES LTD. NASDAQ
1
OIL REFINERIES LTD.
NASDAQ – TASE Annual Investor Conference
27 November, 2007 - NYC
November 2007
Disclaimer
This presentation has been prepared by Oil Refinery Ltd. (the "Company") solely for its
presentation at the NASDAQ – TASE Second Annual Investor conference. The information
included in the presentation and otherwise communicated by the Company in the course of
the said convention (the "Information") is presented for convenience purposes only, it does not
constitute a basis for investment decision, nor does it replaces independent collection and
analyzing of Information and does not purport to express any recommendation and/or opinion
and/or to substitute for the independent judgment of any potential investor.
The Company does not warrant the completeness or accuracy of the Information and it
disclaims any responsibility for any damages and/or losses whatsoever that are liable to be
caused due to use of the Information.
In any instance of a contradiction or inconsistency between the Information on this
presentation and the information recorded in the Company's ledgers and/or appearing in
official publications, the information recorded in the Company's ledgers and/or its official
publications shall prevail, as the case may be.
The Information may contain various forward-looking statements, based on current data and
expectations. Actual operations, results and other data may differ materially due to various
risks and uncertainties, including the risk factors discussed in the Company's periodic reports.
The Company assumes no obligation to update the said data and expectations or any other
Information.
2
Dynamic, New, Controlling Shareholders
$7.4 bn Mkt. Cap; >80% revenues overseas; Strong environmental agenda;
Controlled 55% by global investment group - Ofer Group; 18% by Bank Leumi
Chemicals
ICL
(52%)
Shipping
Zim Integrated
Shipping (98%)
Global Producer of
Fertilizers & Specialty
Chemicals
Global Container
Shipping
$14 bn Mkt. Cap
‘06 Rev. >$3bn
Energy
Oil Refineries
Transportation
(45%)
Chery
Automobile
Tower Semiconductors
$1.7 bn Mkt. Cap
(45%), private
China
(26%* Fully Diluted)
Inkia
$200 m Mkt. Cap
(100%)
LatAM Power Plants
IDE
3
Semiconductors
[50% by ICL]
IC Green
Energy (100%)
Sea Water
Desalination
Renewable Energies
Better PLC
Inc. (33-40%)
Electric Vehicles
Privatization Process
Israeli Government (74%)
Israel Corp. (26%)*
Oil Refineries Ltd.
Haifa Refinery
Ashdod
Refinery
Carmel Olefins
(50%)
* Israel Corp.
sold 26% stake
to Gov. in Feb.
06 as interim
stage in
privatization
Gadiv (100%)
Post Privatization (Feb 2007)
Israel Corp. (45.1%)
Petroleum Capital
Holdings (15.8%)
Oil Refineries Ltd.
Haifa Refinery
4
Carmel Olefins
(50%)
Public
(39.1%)
Paz Oil
Company
Oil Refinery
Ashdod Ltd.
Gadiv (100%)
Oil Refineries Background
Leading East
Mediterranean
Refinery
• One of largest and most complex refineries in region, with highly educated,
technology driven, experienced workforce.
• Access to crude supply and attractive markets
Integrated
Petrochemical
Business
• Petrochemical integration increases margins, reducing earning volatility
Dynamic New
Shareholders
• Israel Corp., holds 45.1%, PCH holds 15.8%; Nominate new Board and
initiate strategic analysis
Strong Value
Proposition
Announce 5-Year
Strategic Plan
5
• Exposure to attractive East Med refining market and integrated petrochemical
business; TASE: ORL, $ 1.7 bn*; Member of TA-25 Index
• $850 m in expanding business in core and complementary areas
• >$270 m in environment, safety, security, production reliability and quality
New Strategic Plan - Vision
• To be a leading global
company in all areas of
energy and petrochemicals
in Israel and the region
• To implement
aggressive investment
strategy, $850m allocated to
expanding core and
complementary business
6
• To be more environmentally
friendly; investing $270 m in
5-year plan to increase
environmental awareness
Global, Energy
&
Petrochemical
Co.
More
Environmentally
Conscious
Aggressive
Investment
Plan
Growth and
Shareholder
Returns
• To be efficient,
profitable, growing
and generating shareholder
return
Strategic Plan
Enhance Core Strengths

Refining Area



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Develop Complementary Areas

Electricity Production

International Trade Activities

Fuel and Chemical Transportation
Enhance value of current assets
Identify global expansion opportunities
Petrochemical Area

Expand locally and globally

Develop and enhance current assets

Focus on specialty products with high
added-value, reducing volatility
Activities
5-Year Investment Plan
Enhance Core Strengths


Increase Refinery Complexity

Electricity Production

$600m in Hydro-Cracker

Increase electricity production

$116m approved to implement stage 1 and
preparations for stage 2

Estimated investment of $110m

Completion 2011
Increase Operating Flexibility and
Efficiency

$140m investment framework

$50m approved to upgrade refining unit
NCI will increase from 7.4 to near 9
Utilization rates will increase
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Develop Complementary Areas
Environmental Strategy
Becoming More Environmentally Conscious

Environmental plan is integral part of ORL’s business strategy

New shareholders place substantial emphasis on environmental protection

Dedicated to preserving environment at factory, national and global level
Strategy
Investment
Plan
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• Seek to meet stringent international standards, developing environmentally
friendly products
• Act in full cooperation with different authorities responsible for the
environment and updating the public
• Invest $270 million over 5 years in adapting refinery to stringent global
standards
• Plan will reduce emissions of all sorts and will improve safety and reliability
New Global Structure
Oil Refineries Energy &
Petrochemical Company
Global Strategic HQ
Business and Strategic Development;
Planning large-scale units and site
enhancement
Refining
Supply quality product, high service
levels and at competitive prices;
Defining policy and standards in refining
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Petrochemicals
Develop sector; Identify opportunities,
penetrate new markets, technologies,
products
Fuel and
Petrochemical Trade
Trade under optimal conditions;
Develop international trade; Build
customer base and transport
logistics
COMPANY OVERVIEW
Leading Mediterranean Refinery with
Strong Petrochemical Integration
Haifa Refinery
One of Largest and Most Complex Refineries in Region

One of largest and most complex refineries in Eastern Mediterranean

Produce 180,000 bpd, with 7.4 Nelson Complexity Index

Ability to process wide range of crudes

Leverage deep experience and knowledge to optimize production, maximizing returns

Export represents ~25%-30% of revenues

Main export regions – Cyprus, Turkey, Italy

Largest customer <15% of revenues
(1)All numbers are pro-forma, for ORL only.
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Eastern Mediterranean Location
Cost advantage due to close proximity to Russian & Caspian crudes
Russia
2006: 43%
CPC Pipeline
Atyrau
Novorossiysk
Samsun
Supsa
T’bilisi
BTC Pipeline
W. Europe,
Americas
2006: 2%
Ceyhan
Baku
Caspian
2006: 46%
Haifa
Africa
2006: 9%
Map
Legend
13
Crude
Flow
Oil Pipeline
Planned Oil
Pipeline
Note: Nelson Complexity figures used. Source: Company reports / Oil & Gas Journal.
(1) Source: Energy Information Agency (International Energy Annual 2004), PFC Energy, ORL (Nelson Complexity Data for Israel refineries).
Crude Availability and Sourcing
Growing markets short of high quality fuels
Thessaloniki (72 kb/d / 6.7)
429
638
443
486
Izmit (231 kb/d / 6.2 )
Izmir (201 kb/d /
7.7)
Greece
Kirikale (100 kb/d /
6.3)
Batman (22 kb/d / 1.8)
Turkey
Aspropyrgos (147 kb/d / 10.6)
Elefsina (100 kb/d / 1.5)
Corinth (105 kb/d / 11.4)
Syria
260 243
Banias (133 kb/d 5.8)
52
Cyprus
105
Ashdod 90 kb/d / 7.5)
270
Lebanon
220
Haifa
(180 kb/d / 7.4)
Libya
106 82
El Mex (100 kb/d / 3.0)
Amiriyah (78 kb/d / 6.2)
Midor (100 kb/d / 10.1)
581
655
Israel
Ras Lanuf (220 kb/d / 1.1)
Jordan
357
244
Egypt
Product
Sales
Refined Product
Consumption (kb/d)(1)
Domestic production
(kb/d)(1)
Source: Respective company reports / Oil & Gas Journal.
(1)
Source: Energy Information Agency (International Energy Annual 2004), PFC Energy, ORL (Nelson Complexity Data for Israel refineries).
(2)
Data for each of the refineries includes: Location (Capacity / Nelson complexity).
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Refinery (2)
Structure of the Israeli Market
Extensive infrastructure for product transportation and storage
Midstream
Crude import
(ORL/ORA)
Import of distillates
(Fuel companies)
Downstream
Crude
Discharge, Storage and transportation of crude
(PEI – Tashan) (EAPC – Katza)
Ashdod
Haifa
Refinery1
Refinery
Import, heavy oils and coal
(Israel Electric Co.)
Oil dock and
customer
terminals
Storage and supply
(PEI, EAPC and Pi-Gliloth2)
Refined
Products
Fuel Companies
(Paz, Delek, Sonol, Dor Alon, others)
Trade
and Services
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Airports
Fuel Stations
Agriculture
1 Owned by Paz Oil Company; 2 Owned by Delek – the Israeli Fuel Co,
Industry
Power
Stations
Ports
(Bunkering)
Strong Refining Margin Track Record
Steadily Beating Regional Ural Margin Since 2004
Quarterly Data
Following Sale
of Ashdod
7.6
5.35.1
5.4
10.0
9.2
Refinery
7.1
7.2
End-Q306
5.8
5.7
4.3
4.0
3.3
5.7
3.8
2.7
2003
2004
2005
2006
ORL Refining Margin
16
Q4 2006 Q1 2007 Q2 2007 Q3 2007
Ural Crack Med Refining Margin*
Note: ORL refining margins are for ORL including Ashdod till 2006
*Source: Reuters – European Urals Cracking Refineries in Mediterranean, and ORL.
Integration with Petrochemicals
Crude Oil
Haifa Port
Propylene
Haifa Refinery
Propylene
Reformate
Isobutylene
Isobutylene
Carmel Olefins
Monomer Plant
Petrochemical Industries
Dor Chemicals(1)
Solvents
Carmel Olefins
Polyethylene
Plant
Aromatics
MTBE
Plastic Industry
Carmel Olefins
Polypropylene
Plant
17
Source: Company data.
(1) Not owned by ORL.
Polyethylene
Polypropylene
Consolidated EBITDA (NIS m.)
1-9 2007 EBITDA Outperforming FY 2006
1,801
195
128
23% YoY
1,179
101
100
941
142
82
1,478
978
717
2004
2005
Refining
2006
Aromatics (Gadiv)
Note: The data for 2004-2006 refers to the pro-forma statements
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1,194
973
152
60
60
121
853
921
1-9 2006
1-9 2007
Polymers (Carmel Olefins)
Summary Highlights
19
High Quality
Refinery
• Track record of continuous investment and upgrades, with highly
educated, technology driven, experienced workforce.
• Strong refining margins, full compliance with 2009 Euro V.
Strategic Location
• Strategically located with access to regional crude supply and fast
growing markets.
Petrochemical
Integration
• Synergies with petrochemical industry allows optimization across
refined product, enhances margins, and reduces margin volatility
Strong Financial
Position
• Strong balance sheet with room for leverage
• Strong cash flow allowing for growth CAPEX and dividend distribution.
Comprehensive
Strategic Plan
• Enhance core businesses and complementary growth drivers
• Increase environmental awareness, incl. natural gas.
THANK YOU
NASDAQ – TASE Annual Investor Conference
27 November, 2007 - NYC
November 2007
APPENDICES
EBITDA Bridge
22
Consolidated P&L Highlights
01-09/07
01-09/06
Q3’07
Q3’06
16,248
16,706
5,807
5,453
1,249
957
339
132
937
720
238
57
Finance Expenses
80
92
(3)
23
Privatization Grant
119
-
-
-
Tax
204
181
64
8
Profit after tax
533
447
176
24
22
22
2
-
Net Income
556
469
178
24
EPS
0.29
0.23
0.10
0.01
1,194
973
329
145
Revenues
Gross Profit
Operating Profit
Equity
EBITDA
23
Consolidated Balance Sheet Highlights
30 Sept.
2007
actual
31 Dec.
2006
Pro-forma
78
142
OTHER CURRENT ASSETS
2,036
2,058
INVENTORY
3,238
2,761
5,352
4,961
562
544
ASSETS
CASH AND CASH
EQUIVALENTS
LONG TERM INVESTMENTS
30 Sept.
2007
actual
31 Dec.
2006
Pro-forma
FINANCIAL CURRENT
LIABILITIES
1,118
899
OTHER CURRENT
LIABILITIES
2,289
2,367
3,407
3,266
2,908
3,061
828
806
3,736
3,867
3,105
2,715
10,247
9,848
LIABILITIES & EQUITY
LONG TERM FINANCIAL
LIABILITIES
OTHER LONG TERM
LIABILITIES
FIXED ASSETS
FUNDS FOR INVESTMENT
OTHER ASSETS
24
3,852
3,880
429
415
51
48
10,247
9,848
SHAREHOLDERS' EQUITY
Key Ratios
NET DEBT/EBITDA (LTM = LAST 12 MONTH)
NET DEBT/(NET DEBT +EQUITY)
EPS -EARNING PER SHARE (NIS)
25

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