Experienced Operator

Improving reliability under the new Management Services Agreement

Syncrude Canada Ltd. entered into a Management Services Agreement with Imperial Oil Resources in November 2006 in order to provide Syncrude with new tools and resources to improve operational reliability. Syncrude will have access to the global best practices and systems of Imperial Oil Resources and ExxonMobil. The agreement does not change the joint venture operating structure; Syncrude continues as the operator of the facilities under the direction of the Syncrude Management Committee, and Canadian Oil Sands remains the chair of that committee.

The term of the agreement is initially for 10 years with five-year renewal provisions thereafter. During the first 10 years, Syncrude will pay $47 million in annual fixed service fees as well as cover the direct costs Imperial Oil Resources incurs in providing these services. The fixed fees then drop to $33 million annually on renewal. As well, performance fee incentives will apply if certain targets are achieved between years four and 10. Each Syncrude Joint Venture owner pays its pro rata share of these costs.

Under the agreement, the following opportunity areas have been identified:

• Increased production through improved maintenance effectiveness and reliability by implementing ExxonMobil’s Global Reliability System.
• Improved energy efficiency through the implementation of a Global Energy Management System.
• Heightened procurement efficiencies through full access to Imperial and ExxonMobil’s global contracts and contemporary sourcing strategies.
• Strengthened business controls with the implementation of the Controls Integrity Management System.