Slide 17 of 25

Notes:

• This graph shows the cumulative growth of the Atlantic Basin light sweet crude oil production relative to the growth in crude oil production from the rest of the world. Most of the world’s light sweet crude oil production is concentrated in the Atlantic Basin, so the rest of the world represents a heavier crude oil slate.

• In the 1986 through 1990 period, demand for petroleum products grew and much of the supply increase to meet the growth came from the heavier crude producers of the Persian Gulf.

• The situation shifted dramatically in the 1990’s as increases in crude production in the Atlantic Basin not only filled new demand, but displaced some heavy production. Thus, the world crude oil quality level was lighter, especially in the strong, light-product markets of the Atlantic Basin (mainly Europe and the U.S.).

• A lighter supply barrel combined with weak light-product markets and modest growth in conversion capacity to shrink the light-heavy crude and product differentials during the 1991-1994 period.

• Looking ahead to the next time period, heavy crude production picked up in 1996 and outstripped light crude production in 1997.