This document provides a summary and outlook of the crude oil markets in October 2010. It discusses factors driving crude prices such as quantitative easing, inflation risks, and the weakening US dollar. It also analyzes supply and demand trends, the role of distillates, constraints on the oil industry's ability to increase capacity, challenges in meeting emerging market demand growth, and OPEC's strategy to manage prices between $55-100 per barrel.

1. Agenda
DOLLARS AND DISTILLATES DRIVE CRUDE
October 2010
STRICTLY PRIVATE AND CONFIDENTIAL

2. QE and high liquidity risk inflation short term, but will add supply when rates rise
After the Liquidity Cycle Gold $/troz
 Gold prices are a good barometer of interest rates, liquidity
and inflation risk
 QE risks weakening the US dollar, adding a further
stimulus to North American and Emerging Market growth
 Linking of Fed policy to price levels, rather than growth a
key change in policy – could spark inflationary
expectations and cause money to flow into commodities
 Low interest rates enable the oil market to hold high levels
of inventory – currently a stabilizing feature, but could
Source: JP Morgan Energy Strategy, Bloomberg
become a driver of rising prices
Oil Price is Cheap When Measured in Gold US Dollar and Crude Oil Correlation to Resume
$/bbl $/EU
Bbl / troz
0.16 160 Brent Crude USD/EUR 1.7
0.14 140 1.6
0.12 120
0.1 1.5
100
0.08 80 1.4
LATEST MARKET OUTLOOK
0.06 60 1.3
0.04 40
0.02 1.2
20
0 Oil priced in Gold
0 1.1
1983 1988 1993 1998 2003 2008 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10
Source: JP Morgan Energy Strategy, Bloomberg Source: JP Morgan Energy Strategy, Bloomberg
2

3. Base case price forecast: Potential for major disruptions from all directions
Old World: Forward price solidly anchored
■ Prior to the 2004-2008 price run-up and subsequent In US$/bbl
$140
collapse, the forward curve was anchored around $120
$20/bbl
$100
■ $20/bbl was thought to be the marginal cost of $80
supply
$60
■ Short-term disruptions had minimal impact on long- $40
term price views
$20
■ OPEC sought to manage market through inventories
$-
'99 '01 '03 '05 '07 '09 '11
Source: JPMorgan Energy Strategy
■ Over 2004-2008 worries about long-
New World: Disruptions will transmit across the forward price curve term supply escalated
■ In 2008-2009 there was concern
Event/shock (US$ Impact) Front Back (Dec 2012) about the duration of the recession
Global economic shock (+ or -) +20/-30 +10/-15
■ In both cases, long-term concerns
Iraqi collapse or shock +30/-5 +15/-5 directly impacted short-term prices
Iran turmoil +40 +20
■ The past year has seen a period of
China take-off or collapse +15/-20 +15/-15 relative stability with the market
LATEST MARKET OUTLOOK
Substantial interfuel substitution -5 -10 poised at $70-80/bbl
■ Is this the calm realistic?
Substantial change to costs +5/-5 +10/-20
■ Will prices ratchet up again as we saw
Unknown supply disruption +5 to +50 +0 to +30
over 2004-2008?
Other? ? ?
Source: JPMorgan Energy Strategy
3

4. Flexible LNG seeks to push into high value market for oil substitutes
■ Asian LNG imports grew by close to 30 percent in
Oil-linked Asia provides the highest value for LNG
August versus the same period last year
Competing Fuels US$/MMBtu (approx) ■ Korea was up over 80% yoy
US Natural Gas 4 ■ Demand was weak in 2009 due to the crisis, but
UK Natural Gas 7 new LNG supply is pushing into the Asian market
Asia Spot LNG (Japan) 9
■ Spot LNG is certainly competitive with oil...sellers
Asia Long Term LNG (Recent) 12
seek to place flexible LNG in high value niche
LSWR FOB Indonesia 12.50 markets in place of oil (e.g., India, Kuwait)
Fuel Oil 180CST FOB Singapore 11.50
Naphtha CFR Japan 16
Minas Crude Oil 15
Global Gas Prices: What will Qatar do with its flexible volumes?
Source: JPMorgan Energy Strategy, Bloomberg Push into Asia
■ A huge question is what Qatar will do with
over 30 MTPA of “flexible” LNG initially
targeted at the US and UK which is now
$3-5/MMBtu $3-8/MMBtu $9-13/MMBtu
ramping up
■ This has important implications for the oil How will Qatar adjust
to new market
market as it is 740 kbd of oil equivalent
LATEST MARKET OUTLOOK
realities?
■ Will it push into low value markets to
compete with coal, or will it get pulled into
Asia as a substitute for oil?
■ The Middle East is the latest region to
emerge as a surprise LNG
Source: JP Morgan
importer...replacing oil
4

5. Oil demand is robust, poised to move into supply deficit
Global Demand Growth Profile and Forecasts by Region, 2009-2011 ■ World oil demand growth to moderate
461 87 75 80 to 1.6 mbd in 2011
44
-99
-
■ Still seen above trend, driven by
252 Emerging Market demand
- 1182
- 911
285 281
FSU
■ China imports easing
883 Europe 757
2272 ■ But signs it is drawing on
OECD North America 166 521
1631
211
263 stocks
82
157
119
Middle-East ■ Structural risks:
Latin America
59
Asia Pacific ■ Natural gas substitution
■ Efficiency
Africa
World Oil Balance
-1218
2009 2010 2011 92.0 +10.0
Global
+8.0
Source: JPMorgan Energy Strategy 90.0
+6.0
■ OPEC output has stabilised at 29.1 mbd, even 88.0 +4.0
assuming rising OPEC supplies, a market deficit +2.0
LATEST MARKET OUTLOOK
is seen 86.0 +0.0
■ Still see trend GDP growth -2.0
84.0
■ Receding risks of double-dip recession -4.0
■ But Eurozone problems show they have Stock Change To Balance Total Product Demand Supply
82.0 -6.0
not gone away Jan 08 Jan 09 Jan 10 Jan 11
Source: JPMorgan Energy Strategy
5

6. Rising oil demand reflects infrastructure strains, comfort with high prices
US Port Traffic Vehicle Fuel Consumption and Oil Prices
800 MPG $ bbl
22.0 120
750
700
650
21.5 80
600
550
500
21.0 40
450
400
350
Total Loaded Inbound 20.5 Average Miles Per Gallon 0
Crude Oil Prices $/bbl
300
2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: JP Morgan Energy Strategy, Port Authority Long Beach and LA
Source: JP Morgan Energy Strategy, US Bureau of Transport, EIA
Global Air Traffic Indicators  World oil demand is coming in stronger than
economic growth indicators suggest
Miles Index
40  Robust demand from Emerging Market
30 economies due to growth straining infrastructure -
20 much in the same way as 2004 and 2008
LATEST MARKET OUTLOOK
10
 Signs that initial conservation response to high
0
prices is waning – not surprising considering oil
-10
Freight Traffic prices have averaged $75 bbl for five years now
-20
Passenger Traffic
-30  Subsidies being removed in emerging markets,
2003 2004 2005 2006 2007 2008 2009 2010 but likely to be re-imposed if prices rise
Source: JP Morgan Energy Strategy, IATA
6

7. Distillate will provide the marginal demand barrel in 2010
Non-OECD Product Demand Year-on-Year Change Global Product Demand Year-on-Year Change
mbd mbd
3 Light Ends Middle Distillate Fuel Oil 4 Light Ends Middle Distillate Fuel Oil
2
2
1
0
0
-2
-1
-2 -4
Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10
OECD Product Demand Year-on-Year Change  Dramatic divergence in product demand growth trends
between Emerging Markets and OECD post recession
mbd
2 Light Ends Middle Distillate Fuel Oil  Light ends have driven the market higher, led by the
petrochemical sector
 Decline in light ends reflects weaker gasoline
0 demand and end of petchem restocking
LATEST MARKET OUTLOOK
 Maybe too bearish
-2  Middle distillate demand (gasoil, diesel, jet and
kerosene) has shown signs of improvements in the past
few months
-4  Strong gasoil/diesel cracks and is good news for
Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10
complex refiners
7

8. In an industry running at 93% capacity there is little margin for error
Peak Oil Projection International Energy Agency Concern
 There is a need to find 3-4 mbd of new oil every year just to stand still
 But we have been doing that for the past decade
 When we are less successful or demand surges, prices spike
 When we are marginally better, there is a downward bias to prices
LATEST MARKET OUTLOOK
 Future project analysis only provides clarity for the next 3-4 years
 Reality is there are plenty of hydrocarbons around
 The real questions are the price to produce them and the price to curtail demand
 A major concern is that even with the highest level of spare capacity for a decade, the industry
is running at 96% of capacity 8
 There is little margin for error

9. Meeting emerging market growth will be a challenge
Growth in Emerging Markets Indexed Global Oil Demand Growth
 EM economies pull more oil for every extra dollar earned OECD China/India/Brazil Other Non-OECD
than mature economies. 250
 EM’s have been the driver of oil demand for much of the 200
last decade, but now that they make up nearly half the
150
world oil economy
100
 Forecast of Chinese demand for 2010 is up 10.4%, plus
another 5.3% in 2011. It will surpass the US as the worlds 50
largest consumer by 2020
0
 Demand growth for 2011 from India and Brazil with yoy
increases of 4.4% and 4.8%, respectively.
Chinese Oil Demand Growth Percent Share of Global Oil Demand
30
2001 Average 2013 Forecast
25
Chinese Oil Demand …
20 Other Non-
OECD Other Non-
26% OECD
30%
LATEST MARKET OUTLOOK
15 OECD
50%
OECD
10 China/India/ 62%
Brazil
12%
M
China/India/
D
5
B
p
e
a
n
y
s
r
l
Brazil
20%
0
2000 2004 2008 2012 2016 2020 2024 2028
Source: JP Morgan Energy Strategy, JODI, IEA Source: JP Morgan Energy Strategy, JODI, IEA
9

10. High price and better equipment availability allows production to grow
Per country Revisions (% and Vol) to 2010 Supply-ex
 Over the past year, 2010 non-OPEC supply FSU
projections by the International Energy Agency have
been revised up by 770 kbd
 Russia and Azerbaijan were two major FSU
forecasting issues, which cancelled each other out
 Russia higher to new projects
 Azerbaijan to ongoing project delay
 Supply revised higher in 41 countries, lower in 23
 Decline (and forecasting error) has not gone away
Number of countries with revisions  Russia and USA alone present upside risk to 2011
forecast non-OPEC supply growth of 0.5 mbd
 Corporate guidance suggests Russian output
growth of 350 kbd, JPM forecast 80 kbd
 US growth could be revised up on:
LATEST MARKET OUTLOOK
 lower drilling impact to Gulf of Mexico
 Rapid shale oil development
 Strong pace of development in West Africa
 Iraq, Brazil provide two-way risks
10

11. OPEC will let oil prices swing between $55 and $100 per barrel
Prompt WTI Price  OPEC uncomfortable with prices below $70 bbl, but
would only act if prices dipped below $65 bbl
90  The time taken to gather a response could see
prices dip to $55
80
 Saudi budget needs $70 to balance – with social
70 spending growing rapidly, Saudi will be comfortable if
prices rise gradually
60
 Outside of a significant downward price shift, OPEC is
50 WTI
10 day MAV
not likely to change current quotas. Additional output
40 20d MAV from Iraq/Nigeria. Still concerned about high prices
30
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10
Source: JP Morgan Energy Strategy, JODI, IEA
Geopolitical flashpoints
High geopolitical risks over next six months
 Attacks on Iraqi northern pipeline have been stepped
up during political impasse
 Nigerian elections risk positioning by Niger Delta
LATEST MARKET OUTLOOK
rebels
 Iranian sanctions seem to be having economic effect,
but international patience wearing thin
 Venezuelan elections already causing surge in diesel
demand as president seeks to avert rolling blackouts.
Source: JP Morgan Energy Strategy, JODI, IEA
11

12. Refinery Crude Runs
Post-Summer Runs and Margins NYMEX product cracks
Heat Crack Gas Crack Fuel Oil Crack
 Refining runs are being supported by the bottom $/bbl
half of the barrel 20
15
 US refining runs have remained high despite
10
impending maintenance
5
 Diesel and fuel oil demand for power generation 0
has been higher than years prior -5
-10
 Diesel demand forecast has been adjusted up by
-15
150 kbd globally. Fuel oil adjusted up by a similar Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10
amount – more significant effect due to smaller
pool US Refinery crude runs
2010 2009 2008 2007
 Surge in demand is reflected in prompt cracks
rising to above $15/bbl for ULSD in Europe, its 17.0
highest level since late June 16.0
15.0
 Northern hemisphere winter heating demand
14.0
could keep inventories tight in coming months
LATEST MARKET OUTLOOK
13.0
 Market will be reluctant to draw inventory prior to 12.0
1Q11 11.0
10.0
J F M A M J J A S O N D
Source: JP Morgan Energy Strategy, EIA
12

13. Global crude demand peaked in the summer: winter rebound seen in 4Q10
Crude Market Balance
m b/d mb
Crude Market Balance
74.0
150
100
73.0
50
-
72.0
-50
71.0 -100
-150
70.0 -200
-250
69.0 -300
Jan-08 Jan-09 Jan-10
Stock Change (rhs) Crude Demand Crude Supply
LATEST MARKET OUTLOOK
 Material upward revisions to supply estimates suggest market less tight than previously thought
 Crude market tightness still seen peaking in July/August
 Thereafter seasonal maintenance points to renewed build., before year-end ramp-up in runs start the next draw
13

14. World product supply potential points to distillate-led tightness
Tighter Fuel Oil to Pressure Upgrading Margins
mbd
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
LPG Naphtha Gasoline Jet/kero Gasoil/Diesel Fuel Oil
2009 2010 2011 2012 2013
Source: JP Morgan Energy Strategy
■ Robust economic growth in Emerging Market economies, Asia in particular, underpins distillate-led demand growth
LATEST MARKET OUTLOOK
■ By contrast rising supplies of ethanol and NGL volumes will pressure gasoline cracks
 Continued robust naphtha demand growth provides some support to light distillate markets
■ A similar picture of rising supplies (OPEC NGL volumes) is evident in LPG markets
■ By contrast diesel/gasoil markets look set to tighten despite distillate-focused upgrading investment
14

15. Reported Crude Stocks have fallen by 10% from early 2009 peak
OECD Commercial Crude Inventories and Floating Storage
In mb
1.25 Floating OECD Land-based
1.20
1.15
1.10
1.05
1.00
0.95
0.90
LATEST MARKET OUTLOOK
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10
OECD land-based crude stocks and global floating crude storage has
fallen by over 100 mb since the peak in April 2009
15

16. Medium-term risks to near-term prices
Spare capacity starts to fall sharply from 2011
mbd mbd
100 7
 Pace of economic growth
and Iraqi oil field
6 development are the real
95
uncertainties as we move
5
forward
90
4  Financial stresses and
unemployment could drive
3
85 efficiencies, but policy and
2
high prices will be more
80
effective and permanent
1
 Electric vehicles are unlikely
75 0
to have a significant impact
2009 2010 2011 2012 2013 2014 2015 on demand until post 2015 at
best
Supply Capacity (LHS) Demand(LHS) OPEC Spare Capacity (RHS)
JPMorgan Medium Term Crude Oil Price Forecast
1Q10 2Q10 3Q10 4Q10 2010 2011 2012 2013
LATEST MARKET OUTLOOK
Nymex WTI Crude ($/bbl) 78.88 78.05 76.00 81.00 78.50 82.50 92.50 102.50
Price forecast assumes OPEC will try to moderate increases
 but will the market rise much faster, to prevent a supply crunch happening?
All Forecasts are period averages. Actual to date prices for 1Q10 and 2Q10 are as of July 30, 2010
16

17. J.P. Morgan – Global Refinery Analysis Model
 J.P. Morgan’s Global Refinery Analysis Model (GRAM) is a bottom-up analysis of existing refinery capacity and
confirmed investment projects
 The analysis covers more than one thousand individual new units adding to the existing 750 detailed refineries
in the model
 Regional crude slates and volumes are forecast based on typical regional consumption patterns and forecast
changes to crude quality
 NGL supply volumes are assumed to be a substitute for crude in the global crude market
 Implications for the residue balance in particular
 Supply analysis assumes OPEC will maximize production of non-quotas barrels ahead of crude
 The GRAM uses 50 crude assays to analyze output from the initial distillation of the crude. The model then runs
these outputs through secondary processing units and aggregates the output into seven finished product
categories
 Model assumes that most capital intensive units are filled first
 i.e. cokers are filled before visbreakers
METHODOLOGY & REFINERY OUTLOOK
 The impact of the new capacity additions are shown through a comparison of total product supply of these
seven product categories against JP Morgan’s detailed product demand model
 Regional and global product market balances are then calculated including other sources of supply including
NGLs and biofuels
17

18. Regional refining capacity growth: the Americas; EMEA; Asia-Pacific
 Global refining industry set for substantial growth in
Global Refining Capacity Growth 2010-2014 (mbd)
2010-2014 period
 Growth is led by regional champions
 China in Asia 1.7 3.0
1.5 2.3
 Saudi Arabia in the Middle East 1.6
1.9
 The US and Brazil in the Americas
 Ongoing investment in upgrading capacity will
 Further boost the supply of light clean products
 Continue to tighten fuel oil markets
 Puts upgrading margins under pressure CDU Upgrading
 Regional variations will become critical to refinery
profitability Source: JP Morgan Energy Strategy, Wood Mackenzie
 European and Japanese refineries faces the
greatest pressure to close capacity
 Falling regional demand keeps profit generation
under intense pressure
METHODOLOGY & REFINERY OUTLOOK
 Rising biofuels supplies globally will further
undermine potential returns
18

19. Regional upgrading capacity growth: the Americas; EMEA; Asia-Pacific
Global Crude Distillation Capacity Growth 2010-2014 Global Upgrading Capacity Growth Profile 2010-2014
1.0 1.5 1.0
1.0 1.0 1.0
0.5 1.0 0.5
0.5
0.5 0.5
- 0.5 - -
2010 2012 2014 2010 2012 2014 2010 2012 2014
- -
- 2010 2012 2014 2010 2012 2014
2010 2012 2014
Source: JP Morgan Energy Strategy, Wood Mackenzie Source: JP Morgan Energy Strategy, Wood Mackenzie
■ Asia Pacific and Middle East lead CDU capacity increase
METHODOLOGY & REFINERY OUTLOOK
 Driven by supply security concerns in China, India
 OPEC expansions driven by:
■ Energy security
■ Desire to maximize revenue from the barrel
■ Market control
■ Brazil, Mexico and the US bolster the Americas
■ Upgrading capacity additions concentrated in next three years
19

20. Oil market outlook : Conclusions
 Linking of Fed policy to price levels, rather than growth a key change in policy – could spark
inflationary expectations and cause money to flow into commodities
 Low interest rates enable the oil market to hold high levels of inventory – currently a stabilizing
feature, but could become a driver of rising prices
 The recent decision to allow output to drift higher and lower stock levels adds weight to extreme
views on higher underlying decline rates and lower spare capacity
 World oil demand growth of 2.2mbd will moderate to 1.6 mbd in 2011
 Still seen above trend, driven by Emerging Market demand and healthy EM GDP growth.
 Light ends have driven the market higher, led by the petrochemical sector
 Middle distillate demand (gasoil, diesel, jet and kerosene) has overtaken
gasoline/naphtha as transportation gain become the dominant feature of world oil
demand growth.
 A major concern for the industry and OPEC is that even with 6mbd of spare, the industry is
running at 93% of capacity; suggesting there is little margin for error
 OPEC output has stabilised at 29.1 mbd, and upcoming OPEC meeting is unlikely to see any
departure from current script.
LATEST MARKET OUTLOOK
 The market seems happy to anchor prices in the $80-100/bbl long-term, but is this rational?
Supply and demand shocks could quickly force a re-appraisal of long-term equilibrium prices if
circumstance change.
20

21. North American capacity expansion driven by the US
 US refiners continue to adapt to rising supplies of heavy sour crude/bitumen from Canada, rising Shale Oil production
and the Middle East’s increasingly sour crude slate
 Nearly 75% of US capacity additions relate to projects to increase the ability to process heavy sour crude
 Key projects include:
 Motiva Port Arthur—325 kbd new crude US Coking Capacity Growth Projects
capacity in 2012
 Marathon Garyville—180 kbd new
crude capacity on stream in 2010
 Projects involve substantial expansion of
upgrading units
 However, these investment decisions,
while still robust in term of potential
economics ignore the changing landscape
of the US crude market—notably the rise of
better quality oil from the emerging shale
METHODOLOGY & REFINERY OUTLOOK
oil plays
Source: JP Morgan Energy Strategy, Wood Mackenzie
21

22. World product supply potential points to distillate-led tightness
Tighter Fuel Oil to Pressure Upgrading Margins
mbd
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
LPG Naphtha Gasoline Jet/kero Gasoil/Diesel Fuel Oil
2009 2010 2011 2012 2013
Source: JP Morgan Energy Strategy
■ Robust economic growth in Emerging Market economies, Asia in particular, underpins distillate-led demand growth
■ By contrast rising supplies of ethanol and NGL volumes will pressure gasoline cracks
PRODUCT BALANCES
 Continued robust naphtha demand growth provides some support to light distillate markets
■ A similar picture of rising supplies (OPEC NGL volumes) is evident in LPG markets
■ By contrast diesel/gasoil markets look set to tighten despite distillate-focused upgrading investment
22

23. North American supply potential — gasoline imports to diminish
North American Gasoline Market to Become More Balanced
mbd
0.4
0.2
0.0
-0.2
-0.4
-0.6
-0.8
-1.0
-1.2
-1.4
LPG Naphtha Gasoline Jet/kero Gasoil/Diesel Fuel Oil
2009 2010 2011 2012 2013
Source: JP Morgan Energy Strategy
■ Regional gasoline import requirement diminishes due to falling demand (despite Mexico)
■ Rising ethanol supplies help rebalance market
PRODUCT BALANCES
■ Current diesel exports are eroded by strong economic growth supporting diesel demand
■ However we have assumed US refiners do not radically alter their operating mode – i.e. they remain focused
on max gasoline
23

24. Upgrading capacity to tighten the fuel oil balance in the coming years
Global Fuel Oil Supply and Demand Balance
mbd
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
2009 2010 2011 2012 2013
Source: J.P. Morgan Energy Strategy
 With the move towards cleaner/lower sulfur fuels, demand for the bottom cut of the barrel has continued to
trend lower over the years despite strength in other product groups
 However, we expect the fuel oil balance to tighten considerably over the next several years as the current
refinery buildout cycle is expected to add a considerable amount of upgrading capacity
 Much of the new refining capacity (the bulk in non-OECD Asia) is expected to be rather sophisticated, with
the ability to reprocess much of the fuel oil produced into more desirable (and higher priced) middle and
light end products
 In Europe and North America, the inability to build new greenfield refineries has led to additions of
secondary units to existing infrastructure to produce a lighter product slate, reducing fuel oil yields

25. European supply potential — gasoline exports remain a threat to region
Diesel-Biased Demand Leaves Region Vulnerable to Rationalization
mbd
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
-0.2
-0.4
-0.6
-0.8
LPG Naphtha Gasoline Jet/kero Gasoil/Diesel Fuel Oil
2009 2010 2011 2012 2013
Source: JP Morgan Energy Strategy
■ Despite lower crude run assumptions, declining regional demand leaves European refineries exposed to
PRODUCT BALANCES
competition from rising Asian export volumes (particularly from India)
■ In contrast to North America, Europe’s product balance moves more out of line with demand
■ Capacity rationalization remains a real risk given low complexity many regional refineries
24

26. Conclusions: global refining and product supply
 Refiners globally are over-investing in new capacity, and particularly upgrading capacity
 This is the area that has provided strong returns over the past 20 years, but by virtue of
overinvestment will provide less of a competitive advantage in the future
 World refinery capacity and upgrading expansions to constrain refining margins for the next five
years
 Upgrading capacity to keep fuel oil margins tight and narrow differentials between light/sweet, and
heavy/sour crude oil prices
 Bulk of new capacity taking place in Asia and Middle East—the area of greatest demand growth
 Low clean freight rates to open up wider scope for product trade when Asia becomes over-supplied
 Refining profitability is therefore likely to be strongly influenced by location factors—particularly
access to low cost crudes
 Atlantic Basin crude supplies to be tightened by ongoing draw from Asia, Russian preference for
supplies via ESPO pipeline, ongoing decline in North Sea
 US refiners continue to adapt to rising supplies of heavy sour crude/bitumen from Canada, rising
shale oil production and the Middle East’s increasingly sour crude slate
 Significant investment in additional coking capacity will allow refiners to run heavier crude slates—
PRODUCT BALANCES
positioning themselves to capture lower cost feedstock’s on the Gulf Coast and potentially the US
Midwest
 But many of these investment plans were signed off before the recent surge in shale oil production
25

27. Agenda
J.P. MORGAN GLOBAL COMMODITIES GROUP
October 2010
STRICTLY PRIVATE AND CONFIDENTIAL
26

28. J.P. Morgan Global Commodities – Growth Story
Investing in our platform
 J.P. Morgan has made significant investments in building out and diversifying our Global Commodities platform and
capabilities - organically and through strategic acquisitions, such as RBS Sempra
 J.P. Morgan's Global Commodities Group offers clients a comprehensive set of market making, structuring, risk
management, financing and warehousing capabilities across the full spectrum of commodity asset classes
Key transactions accelerate J.P. Morgan’s growth
 Completed acquisition
of RBS Sempra’s
metals, oil, coal,
 Acquired UBS plastics, agricultural,
Commodities Canada and concentrates; non-
Ltd and UBS AG’s U.S. emissions,
 Acquired Bear Energy global agricultural European power and
as part of J.P. business gas and investor
Morgan’s acquisition of products assets from
 J.P. Morgan expands Bear Stearns  Acquired the Royal Bank of
energy trading platform EcoSecurities Group Scotland and Sempra
 Acquired ClimateCare, plc, a global leader in
organically Energy in July
GLOBAL COMMODITIES OVERVIEW
 J.P. Morgan corporate a leading originator of the carbon credit
 Co-founded the New carbon offsets market  Completed acquisition
focus on developing
York Mercantile of RBS Sempra’s
market leading energy
Exchange’s Green North America natural
trading platform
Exchange gas and power trading
portfolios in October
2005-2006 2006 2008 2009 2010
27

29. J.P. Morgan Global Commodities Group
Commodity risk expertise is interlinked with firm wide capabilities
 Corporate Risk Management: J.P. Morgan provides risk management solutions for clients hedging commodities
exposure - clients covered include consumers, producers, refiners and traders of metals, energy and agriculture/softs
 Market Intelligence: J.P. Morgan affords clients a wide view of the commodity markets given J.P. Morgan’s diverse
client base and distributes industry leading research in all commodities
 Commodity Related Financing: J.P. Morgan provides corporate finance solutions for clients seeking to buy or sell
commodity assets or to leverage assets as collateral for financing transactions
 Leverage of J.P. Morgan’s internal resources (Research, Lending, Equity and Debt Underwriting):
 J.P. Morgan’s clients have access to J.P. Morgan’s complete platform
 Up to date on latest industry and product trends
 Strong customer relationships: J.P. Morgan works closely with customers to design the most appropriate solution in
the futures, cash, and over-the-counter commodities markets
J.P. Morgan stands out
 Commodity leader: J.P. Morgan is at the leading edge of product development and risk management in the
Commodity and Currency product space
GLOBAL COMMODITIES OVERVIEW
 Risk transfer: J.P. Morgan takes significant principal risk, publishes leading research, and works on a global structure
to ensure that our customers get the best service available
 J.P. Morgan’s vast ability to take risk:
 Long-dated risk: J.P. Morgan can take on commodity risk beyond normal market tenors
 Outsized Risk : J.P. Morgan has strong market risk lines so can warehouse sizable positions
 Exotic risk: J.P. Morgan has the ability to trade products that many other banks do not
 Correlation risk: J.P. Morgan has a large correlation book and has the ability to trade exotic correlation
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30. J.P. Morgan Covers Commodities Across the Supply Chain
Research Global Commodities Futures & Options
 Metals, Bulk Commodities  OTC Metals, Energy and Ags  Listed Futures and Options
 Energy and Power  Warehousing Risk  Specialist Trading Desks
 Grains and Agricultural  Structured Products  Global Clearing Solutions
 Technical Analysis  Long Dated Contracts  Electronic Trading
Energy and Base Metals Precious Metals Agricultural Weather Environmental Plastics
Power Markets
 Steel  Gold  Cattle  Temperature  Ethylene
 Coal  Carbon
 Dairy  Precipitation  Polyethylene
 Nickel  Silver allowances and
 Electricity Grains offsets (e.g.,
 Zinc  Platinum  Wind  Polypropylene
 Soybeans RGGI; EUAs;
 Natural Gas
 Tin  Palladium  Hurricanes CERs; VERs)
 Gasoline  Wheat
 Copper  Sunshine  Sulphur Dioxide
 Corn
GLOBAL COMMODITIES OVERVIEW
 Crude Oil
 Aluminium  Crop Yields  Nitrogen Oxides
Softs
 NGLs
 Lead  Coffee  Renewable
Transportation Energy Credits
 Aluminium Alloy  Sugar
 Freight
 NASAAC  Cotton
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31. J.P. Morgan – Oil Trading
Global Oil Trading Headcount by Location – 24 hour coverage
London 18
Stamford 12
Calgary 6
New York 13 Geneva/ Zug 5
Houston 4
PHYSICAL AND FINANCIAL OIL CAPABILITIES
Singapore 16
 In addition, there are over 20 waterborne and pipeline logistics experts spread across these locations
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32. Global Footprint
Worldwide Locations
 From metals and energy to environmental and agricultural commodities, our nearly 2,000 professionals in more than 10
countries operate at the center of the commodity markets. In addition to our office locations, our Henry Bath warehousing
franchise operates more than 100 individual warehouses locations in 11 countries
Liverpool
Oxford
Oslo
London*
Stamford
Stockholm
Calgary Holland
New York* Beijing
Germany
Washington DC Shanghai
Chicago Seoul
Maryland
Hong Kong
Tokyo
Houston* Madrid Istanbul
Singapore*
Geneva
GLOBAL COMMODITIES OVERVIEW
Sao Paulo** Dubai
Zug
Mumbai
Italy
Combined Location
JPM GCG Only Center
Johannesburg**
Sydney
RBS-S Only Center
* Major hub
** Expected in 2nd half of 2010 31

33. J.P. Morgan’s Global Oil Physical Asset Overview
London
New York
Calgary
Geneva/ Zug
Houston
PHYSICAL AND FINANCIAL OIL CAPABILITIES
Time Chartered Vessels Singapore
Storage Facilities
 J.P. Morgan can provide physical off take, delivery, storage, shipping and blending solutions across most petroleum products,
enabled by strong trading, operational, and functional support expertise
 Unique market position because much of the physical activity cannot be achieved in the financial market (e.g., float a ship
without a sale, unmatched physical longs and shorts in different market areas, trade non-hub locations)
 Participate in both wet and dry freight
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34. Select Oil Team Members
Jeff Frase, Jeff Frase joined J.P. Morgan and the GCG management team in October 2008 as the head of Global Oil Trading, based in New York. He joins
us from Lehman Brothers, where he ran Global Oil Trading for one year. Prior to Lehman, Jeff was a part of Goldman Sachs' Commodities
Managing Director franchise for 17 years, where he had most recently been head of Global Crude Oil and Derivatives trading.
Ken Krug, Ken Krug joined J.P. Morgan in July 2010 and will run the North American physical crude oil trading business. Prior to joining, he spent four years
at Goldman Sachs running the North American physical crude oil business. Ken also started the Canadian physical crude oil trading business
Executive Director during his time at Goldman. In addition, Ken has worked in the refining space doing supply and trading at Suncor Energy.
Dean Bristow, Dean Bristow joined J.P. Morgan in 2010 with the acquisition of Sempra. He has spent the past year at Sempra running the Canadian Crude Oil
book, trading Canadian physical grades, and managing the physical storage portfolio. Previously at Sempra, Dean managed business
Executive Director development for North America physical oil and the Canadian wellhead business. Dean has over 21 years in the energy business.
Kirk Kinnear joined J.P. Morgan in 2010 with the acquisition of Sempra. He has over 30 years experience in oil trading with Phibro Energy, Hess
Kirk Kinnear, Energy Trading and Sempra. Kirk was responsible for supplying crude to refineries in the mid-continent with Farmland, and the US Gulf Coast
Executive Director with Phibro USA. He has worked on the trans-Alaska Pipeline and has experience as a lease crude buyer in the Mid-Continent and the Rockies.
Kirk currently serves as Secretary on the Board of Directors and NYMEX Foundation.
Jay Miller joined J.P. Morgan in 2010 with the acquisition of Sempra. He has been in the oil industry since 1975 and began his career trading at
Jay Miller, ConocoPhillips. Jay helped start the crude oil trading group at Drexel, Burnham, Lambert until the energy trading operations were sold to Sempra
Executive Director Energy. Jay has spent most of his career managing domestic crude oil trading operations and has extensive experience on both the physical and
financial side of the business. Jay is also a member of the Board of Directors of the New York Mercantile Exchange.
David Scholten, David Scholten joined J.P. Morgan in 2010 with the acquisition of Sempra. He joined Sempra in 2005 as domestic crude oil trader. Prior to that,
David was with Shell Trading US Co where he held various positions as a domestic crude oil trader. Before trading, David spent 8 years in
PHYSICAL AND FINANCIAL OIL CAPABILITIES
Executive Director refining as a chemical engineer with Star Enterprise.
Ira Eisenstein, Ira Eisenstein joined J.P. Morgan in April 2008 as a crude oil trader. Ira started his career as a trader at Phibro Energy and also worked in the
Executive Director tanker industry. Prior to joining J.P. Morgan, Ira was an Executive Director responsible for crude oil trading at Morgan Stanley for 17 years.
Andy Kelleher, Andy Kelleher joined J.P.Morgan in August 2009 as the head of North American Products, bringing with him 30 years of extensive experience
trading physical crude and products. His previous roles include President of ConocoPhillips Supply and Trading, Vice President of Tosco Supply
Managing Director and Trading, Phillips Petroleum Company, Sunoco Supply and Trading, and The Marc Rich Trading Company.
Greg Hebrank, Greg Hebrank joined J.P. Morgan in 2010 with the acquisition of Sempra. At Sempra, Greg managed North American light products trading
(gasoline, ethanol, distillates, jet) for the past 6 years. Prior to Sempra, Greg worked for BP, Koch, Shell and El Paso Corporation in light
Executive Director products trading.
Max Strongin, Max Strongin joined J.P. Morgan in 2010 with the acquisition of Sempra. Max joined the Sempra fuel oil desk in 2002 and traded financial fuel
Executive Director oil. Max is currently an Executive Director at J.P. Morgan trading financial and physical fuel oil based in Stamford.
Dean Craig, Dean Craig joined J.P. Morgan in 2010 with the acquisition of Sempra. He has been with Sempra for five years, and currently runs the physical
Natural Gas Liquids book. Dean has traded Natural Gas Liquids for 10 years. Prior to that, Dean traded refined products including unleaded
Executive Director gasoline, jet, and distillate for 8 years. In total, Dean has been in the trading business for 20 years.
33

35. J.P. Morgan named “Derivatives House of the Year” by EnergyRisk
Energy Risk’s Derivatives House of the Year Recognized Products
 J.P. Morgan won EnergyRisk’s Derivatives House of the Year in  Several structured transactions, in particular, showcased J.P.
June, 2010 Morgan’s ever-growing leadership in commodities
 Strategic fuel hedge programme for the Republic of Panama
 The magazine highlighted “a year of innovation in which it
 Rainfall-contingent power hedge for a South American-based
executed a number of ground-breaking deals” as key
components of J.P. Morgan’s industry dominance utility company
 “Organic growth and a raft of acquisitions” have led to a “growing  Expansion of price-making capabilities throughout Asia
foothold” in the commodities industry  Tokyo Commodity Exchange
 Bear Energy  Japanese crude cocktail
 ClimateCare  Regional crudes
 UBS Canadian energy and global agriculture businesses  Agriculture products
 EcoSecurities  Regional coal
 Sempra global metals and oil businesses  Regional Power
J.P. MORGAN GLOBAL COMMODITIES CREDENTIALS
"What's starting to change are clients' views of J.P. Morgan.
We didn't just flip a switch and one day it happened. We have
been deliberate in our growth strategy. We are now in parts
of the world that hadn't been a major focus for our
commodities team, such as Central and Latin America, the
Middle East, Africa and Asia. Over the course of the past few
years, our focus in energy and other commodities has really
been extending beyond financial and flow products to more
physical and structured transactions.“
-Mike Camacho, Global Head of Commodity Sales
EnergyRisk; June, 2010
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