INNOSPEC MARINE FUEL SPECIALTIES

JOINT SOUTHERN BRANCH10.10.2018

Corporate HQEnglewood, CO

Regional Locations USA, UK, Continental Europe, Africa, Russia, Brazil and Asia

ManufacturingGlobal Network of Testing & Production Facilities: USA, UK, France, Italy, Spain and Germany

COMPANY PROFILE: Innospec, Inc. NASDAQ (IOSP)

© 2017. All Rights Reserved. Innospec, Inc.

$1.3 billion sales1900 Employees in

23 countries

Business Profile Business Focus

Fuel SpecialtiesPerformance Chemicals

Oilfield ServicesOctane Additives

CORPORATE STRUCTURE

Fuel Specialties Oilfield ServicesPerformance Chemicals Octane Additives

Fuel Specialties Oilfield ServicesPerformance Chemicals Octane Additives

PERFORMANCE CHEMICALS (PERSONAL & HOME CARE)

• Surfactants, benzoate esters, siliconesWhat We Do

• Luxurious foam/lather; low irritation; shine; skin-feelProduct Benefits

• Formulators and retailers of skin care, hair care, home care, agrochemical and mining products

Customers

• Innovative Technology & Customer ServiceHow We Compete

• Product performance – skin care and hair care • Natural; x-free in premium brands

Market Drivers

• Established – strong in technology innovation• Potential adjacent market development – ag, mining,

construction, agchem

Market Position

PERSONAL CARE – BEHIND THE BRANDS

Fuel Specialties Oilfield ServicesPerformance Chemicals Octane Additives

OILFIELD SERVICES

• Work with operators across all major basins to deliver custom chemical solutions and services for drilling, completions, production and pipeline applications

What We Do

• A true one-stop shop that provides chemical expertise for drilling, completion, production and midstream; in-house technical expertise and evaluation; first-class R&D capabilities

Product Benefits

• E&P Operators; service companies; drilling companies; pipelinesCustomers

• Direct to operator; regional laboratory services; innovative technology and customer service

How We Compete

• Oil & gas demand; changes to drilling, completion, and production techniques;

• Minimize environmental impact

Market Drivers

• Creating a new mid-tier leader based on technology and serviceMarket Position

Fuel Specialties Oilfield Services Performance Chemicals Octane Additives

TEL – MOTOR GASOLINE & AVIATION

• One remaining country• Potential phase out in 2018-2019

Motor Gasoline (Octane Additives)

• TEL still mandated in 100LL • Essential for general aviation fleet• FAA program targets first alternatives by

2019

Aviation Gasoline (Fuel Specialties)

Fuel Specialties Oilfield Services Performance Chemicals Octane Additives

FUEL SPECIALTIES

• Fuel Additives – detergents; cold flow improvers; lubricity improvers; corrosion inhibitors; conductivity improvers – focus on all fuels

What We Do

• Make fuels on-specification; create brand-leading & premium fuelsProduct Benefits

• Major oil companies, fuel marketers /retailers; pipelines, fleets, marine, aviation

Customers

• Innovative technology & customer serviceHow We Compete

• Miles/vehicles on the road; legislation, fuel economy & engine technology

Market Drivers

• Market leaderMarket Position

FUEL SPECIALTIES – BEHIND THE BRANDS

LPG

Gasoline & Naphta

Jet Fuel

Light Heating Oil

Diesel and Gas Oil

Marine Bunker Fuel

Industrial Heavy Fuel Oil

Crude Oil

Crud

eO

il

UNIQUELY – WE TREAT THE WHOLE BARREL…

TERMINAL & STORAGE

PIPELINE & STORAGE

PRODUCTION

REFINERY

DRILLING

AVIATION FUEL

HEAVY DUTY & FLEETMARINE PASSENGER VEHICLESPOWER

FRACTURING & STIMULATION WELL TO WHEELS

INNOSPECMARINE SPECIALTIES

CUSTOMER FOCUS: OUR TECHNICAL SERVICE

Innospec is one of the few truly dedicated manufacturers of additives designed to improve fuel performance within the marine industry

We offer a dedicated marine organisation with outstanding technical and market background from the industry

- Most of our team have been in shipping or have worked for OEMs- They are familiar with issues that superintendents have to face on board

daily- We speak the same language

We provide a fully equipped analytical laboratory for evaluation of fuel quality and deposits to quickly identify the problem and propose a solution

Although our people are particularly specialized, the marine technical team benefits from the knowledge gathered in other Innospec fuel markets. This ensures they are always one step ahead and it is the first customer choice: lubricity issues with MGO is a clear example

CUSTOMER FOCUS: OUR TECHNICAL SERVICE

Engineering services are critical to provide dosing equipment for use on board the ship

or at power stations

We have entered into partnerships with 3rd party test facilities to monitor and track

changing marine fuel quality and demonstrate additive performance in current fuels

Have taken a rigorous performance verification process with 3rd Parties, such as Shell

MPIC test beds and Lloyd’s Register Product Verification Service (PVS)

Active membership in industry groups and regular contributions to technical conferences

highlight our commitment to continuous product development

CUSTOMER TECHNICAL SERVICE

Technical Competencies- Detailed product knowledge and application- Understanding of fuel production and refinery technology- End use application and technology understanding

(e.g. marine engines, automotive engine technology)- Fuel distribution processes, e.g. pipelines, terminal, bunker operations- Knowledge of fuel properties and their influence on product quality / engine

performance- Understanding of customer specifications and associated legislation- Influencing key industry bodies e.g. ISO

INNOSPEC PARTICIPATION IN INDUSTRY GROUPS

Innospec are members of and participate in several of the leading groups associated with the Marine fuel industry

Innospec are represented on the ISO working group responsible for the development of the Classification & Specification of Marine Fuels –ISO8217

International Council of Combustion Engines (CIMAC) working group 7 (Fuels)

British Standard Institute (BSI) technical committee for Liquid Fuels PTI/002

Institute of Marine Engineering Science and Technology (IMarEST)

Cyprus Shipping Chamber Technical Subcommittee

Society of Naval and Marine Architects and Engineers (SNAME)

Chair of ASTM Group on Stability Methods

Chair of the Technical Management Committee for the Energy Institute

SHIPPING CUSTOMERS

ISO 8217

ISO 8217

ISO 8217 - Petroleum products - Fuels (class F) - Specifications of marine fuels is the

standard to which most commercial marine fuel is bought against

The ISO 8217 standard as we know it came into being in 1987

As a result of the need for greater controls in relation to marine fuels

CIMAC fuel specifications provided the framework for the first ISO 8217 standard which

has grown and developed as fuels have changed

ISO 8217 is designed to protect the end user, giving them a fuel that is fit for purpose

ISO 8217

To a large extent, this standard does protect the end user

In 2017, there were approximately 220,000 bunker stems delivered to commercial ships

Of those stems and of those tested, approximately 10% were off spec for at least 1 parameter of

ISO 8217 (based on feedback from various testing labs)

Off spec for ISO 8217 does not necessarily mean the vessel encountered problems, may have

been a viscosity was too high etc.

The ISO 8217 specification is specifically designed to reflect the changes in the industry with one

eye on what we may expect moving forward

However despite this level of protection, which works for most stems delivered to vessels, issues

can still occur

OPERABILITY ISSUES ONBOARD

ISSUES ONBOARD, WHAT TO DO ABOUT IT

Issues onboard do happen, take fuels from Houston and other ports for example

Primarily there are two types of issue that can happen onboard in HFO

Stability/Compatibility

Contamination

There are solutions for both instances onboard which involve additives

Ashaltenes

WHAT CAUSES SLUDGE FORMATION (INSTABILITY)= ASPHALTENE AGGLOMERATES AND INORGANIC MATTER

Facts: -Ashaltenes are oraganic high energy heavy HC formations contained within all HFOs.

-They can consist of up to 10% or even more of the total HFO’s content

-By nature they tend to agglomerate = connect with each other

-Fuel sludge mainly consists of asphaltenes that have dropped out of fuel’s suspension

-Inorganic matter is all other parts of the sludge such as rust – dirt – sand - catfines etc.

Stable condition

AsphaltenesResins

SaturatedAromatics

After losing the resins, asphaltenesagglomerates and forms sludge

Loses it’s resins for example after going through refining processes or blending incompatible fuels

Legend

HOW ASPHALTENES DESTABILIZE OUT OF FUEL AS SLUDGE

AsphaltenesResins

SaturatedAromatics

Asphaltene kept in suspension by the help of stabilizer

Chemical stabilizer replaces the lost resins

Legend

Addition of Treatment

Dispersant

HEAVY FUEL OIL – HOW STABILIZER MAINTAINS STABILITY OF ASPHALTENES

Unstable condition

CONTAMINATION

Houston for example, multiple explanations of the problem but what is the solution

If a ship is stranded, the most important objective is to get the ship and crew safely

alongside

This is called GET ME HOME

This can be achieved by diluting a problem fuel with a good fuel

Additives can help this process by enabling the two fuels to be compatible

This is a last measure, only to be used in an emergency case when a ship is stranded

AsphaltenesResins

SaturatedAromatics

Re-emulsify the existing agglomerations -clean up effect, make good fuelfrom sludge.

Dispersant looses bond between asphaltenesagglomerates

Legend

Addition of Treatment

Dispersant

HEAVY FUEL OIL – HOW DISPERSANTS RE-GENERATES USEFUL FUEL FROM SLUDGE AND CAN BE USED FOR TANK CLEANING

Agglomerated asphaltenes into sludge

RESULTS OF “IN SERVICE” HFO TANK CLEANING WITH DISPERSANTAfter 1 month After 3 months (4 tank fills)