INTERVIEW WITH MICHAEL TAVERNER, EXECUTIVE CHAIRMAN OF JATOIL LIMITED (JAT)

“Business Update and New Board Appointment”

http://www.brr.com.au/event/51680

TUESDAY, SEPTEMBER 23, 2008, 3:30 PM.

            BRR    Good afternoon and welcome to Boardroomradio. Today, we’re speaking with Michael Taverner, Executive Chairman of Jatoil and also Phil Hodgson, Non-

10                    Executive Director of Jatoil. Thanks for joining us today, gentlemen.

            JAT      Thanks, Eddie.

            JAT      Thank you.

            BRR    Now, recently Jatoil has made some changes to its Board and also Michael

15                    has visited Vietnam for business purposes. First, we started off with the visit to Vietnam. Michael, we see that you visited your joint venture partners in Vietnam. What was the purpose of this visit?

            JAT      Eddie, we, as you know, our joint venture over there was with GreenEnergy Vietnam and the purpose of the visit was multi-purpose really, one of the

20                    main purposes was to participate in the Board meeting of our joint venture. You know, we take a pretty active interest in our joint venture partnership over there. We have monthly Board meetings, not all those Board meetings are face-to-face. We inject probably every second or third, we make sure that we have a face-to-face meeting so that we are in a position to make some of

25                    the best decisions there for the joint venture operation in Vietnam. So this was one of those opportunities where we had a face-to-face Board meeting in Vietnam with our joint venture.

                        Secondly, it was an opportunity to review some of the field of operations in

30                    Vietnam and so we incorporated this visit with another field trip. This time, our field trip included one of the international experts that we’re bringing into our team. This person is an agricultural expert who operates internationally with jatropha businesses and we took the opportunity to visit our field site in Central Vietnam to review our agronomy program there. Throughout Vietnam,

35                    we now have about eight field trials and several contract growers that are now establishing their small jatropha plantation to begin with. The purpose of this visit was to visit those to ensure that we have an understanding of the design of the trials and to continually monitor our agricultural practices and particularly we’re looking at developing a manual, if you like, of best

40                    agriculture practice for our operations in different parts of Vietnam. So this was an important visit to review the, sort of, the crop development that we’ve brought there, and you know, we store a whole variety of activity. Some of the crops which have been in the ground for a short time was looking very strong vegetative growth and some of the areas there have very promising growth

45                    with intercropping with things like peanuts and green beans, so it was looking very promising. Other areas were in more marginal drier sandy areas where again, even though the conditions were so tough, we’re working at how to get the most out of the plant under very tough condition. So you know, we’re developing and compiling our management expertise at an agricultural level and you know, initially that’s really going to be a very important focus for the company to ensure that we have crops that are yielding to their potential. The purpose of the field trials is both to improve agricultural practice and to help us with selecting the best jatropha types or varieties for each of the different

5                      localities we’ve got in Vietnam. So the result of this business, we’ve got some survey expert opinion to support the already existing material over there to improve our agricultural practice in Vietnam. It was a third, greater in terms of going over there and that was to prepare for a meeting that GreenEnergy Vietnam had with senior people from provincial and national government in

10                    Vietnam. We convened at the conference of about 30 people from across the various ministries, oil zones, industry trade, plan and investment natural resources as well as from provincial government as well as from universities and different research institutes. The purpose was to ensure that we understand and to ensure that we are part of the national jatropha policy in

15                    Vietnam. So that was a very significant meeting for GreenEnergy Vietnam to, first of all, talk about the work and they also visited some our fields site in Vietnam to actually view first hand what we’re doing and there was a great deal of excitement about our activities and considerable recognition at GreenEnergy Vietnam is definitely a first mover in this area. So that was the

20                    purpose of the meeting and that was some of the outcome of the meeting.

            BRR    Okay, Michael, and we also mentioned that Jatoil had some changes to its Board. Could you take us through the reasons behind this?

            JAT      Yes, Eddie. When we listed the company, we had a reasonably small Board.

25                    There were three directors on the Board of Jatoil and clearly there are room for increasing the numbers and broadening the expertise. We believe that we were in a position now to make that decision to broaden the expertise and fortunately, we came across to Phil, who has expertise in a downstream part of the biodiesel market that’s very significant going forward for Jatoil and Phil,

30                    we saw as an excellent complement to the existing directors on Jatoil.

            BRR    We are fortunate, like we said, to have Phil with us. Phil, first we would like to say, congratulations on your appointment to the Board of Jatoil.

            JAT      Thanks very much, Eddie. I look forward to contributing and working with

35                    Jatoil, and it’s a very exciting time for the company. So it’s going to be an interesting few years.

            BRR    Phil, Michael mentioned your extensive experience in biodiesel fuel.

            JAT      Eddie, I think this might relates to Jatoil and helping them on to identify

40                    opportunities moving forward.

            JAT      Well, I guess, we go back to my experience. I was with the Shell Company for over 14 years and that’s started off in the refinery itself. So I’ve been responsible as a process engineer for making fuel, diesel, kerosene, amongst others, and very familiar with one of the issues associated with getting those

45                    fuels out into the market place from the refinery and through the distribution chain. Later on in my career with Shell I spend a bit of time at the commercial end of the business, so I work in sales and also in strategy and portfolio, merges, acquisitions, etc. All of it in what you might term, the downstream part of Shell’s business. So I guess, to sum of all those experiences leads me knowing pretty well that downstream market with respect to fuels. Since leaving Shell over a year ago now, I’ve been working as an independent consultant and a lot of the work I’ve done is being in the energy sector and some of that works also being in biodiesel particularly. One of the things that

5                      attracted me to the opportunity at Jatoil was the opportunity to use that knowledge and help Jatoil overcome some of the challenges that the biodiesel industry will face and has faced over the last short time period.

                        If you look at those challenges that we’ve seen in the Australian industry, for

10                    example, you would note that a lot of the biodiesel producers that set up under government incentives over the last few years had found it tough. Now those guys have faced bearing quality constraints, they’ve faced in excise regime that’s been confusing, and they’ve faced distribution channels for their product that has and always been over than flowing. They’ve also faced quite

15                    substantial increases in the cost of their raw material inputs and they face these challenges, I think, largely because they haven’t looked across the whole value chain when putting their business strategies together. One of the things that I’m very encouraged with Jatoil and one of the areas that I hope to add some value is to make sure that they do look across that whole value

20                    chain. Jatoil is obviously very strong, in what you might term that upstream part, that raw oil production piece, and all of there have so far has centred around that piece whereas a significant value can be captured in my mind down the trail. The other area, where I guess, I hope I can add some value is having had that experience, in what you might term, the downstream, from

25                    processing that oil to distributing it. That’s the piece that Jatoil is certainly aware of and it’s one of those pieces that will form a key part of their strategy moving forward is to make sure that their product gets out to market, in a sense, Jatoil if you like, almost creating a marketing and so one of the things that where we would be conscious of is that they do their best to influence the

30                    way it should unfold in these countries and get the basics right so that there’s a viable business there.

                        So, yes, that pretty much sums up my experience and where I see Jatoil will developing, and as I said before, I think they’re in a fairly unique position right

35                    now, time wise and experience wise, and strategy wise to take advantage of it and to make a great business.

            BRR    Michael and Phil, we thank you for taking the time out today to inform us of the developments at Jatoil and we look forward to speaking to you soon.

40        JAT      Thanks, Eddie.

            JAT      Thank you, Eddie.

            BRR    That was Michael Taverner, Executive Chairman of Jatoil and also Phil Hodgson, Non-Executive Director of Jatoil. If you have any questions about

45                    this broadcast or any other broadcast, please feel free to contact us on brr@brr.com.au. I’m Eddie Saade and thank you for listening to Boardroomradio.

INTERVIEW CONCLUDED

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