E&P 2004 Business Update and Field Trip to Egypt and Libya

Transcription

1 E&P 2004 Business Update and Field Trip to Egypt and Libya Stefano Cao Chief Operating Officer Exploration & Production Division October 26 th, 2004

2 Disclaimer This presentation contains forward-looking statements regarding future events and the future results of Eni that are based on current expectations, estimates, forecasts, and projections about the industries in which Eni operates and the beliefs and assumptions of the management of Eni. In particular, among other statements, certain statements with regard to management objectives, trends in results of operations, margins, costs, return on equity, risk management and competition are forward-looking in nature. Words such as expects, anticipates, targets, goals, projects, intends, plans, believes, seeks, estimates, variations of such words, and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict because they relate to events and depend on circumstances that will occur in the future. Therefore, Eni s actual results may differ materially and adversely from those expressed or implied in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, economic conditions globally, the impact of competition, political and economic developments in the countries in which Eni operates, regulatory developments in Italy and internationally and changes in oil prices and in the margins for Eni products. Any forward-looking statements made by or on behalf of Eni speak only as of the date they are made. Eni does not undertake to update forward-looking statements to reflect any changes in Eni s expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. The reader should, however, consult any further disclosures Eni may make in documents it files with the US Securities and Exchange Commission. 2

3 Strong Production Growth kboe/d % 2 6.6% % ,498 1,628 1,556 1,621 1,556 1, % 4.2% -0.7% 1Q 03 1Q 04 2Q 03 2Q 04 3Q 03 3Q 04E Brent $/bl Reported PSA effect Excluding Psa effect 3

4 Strong Production Growth kboe/d Brent $/bl PSA effect , , Nine months growth +4.0% Nine months growth net PSA effect +6.0% Growth in line with target +5% * Jan-Sep 03 Jan-Sep 04E * Reference conditions Brent ($/bl): 24 (04), 22 (05), 21 (06/07) 4

5 Production Sharing Agreement (PSA) Cost oil: Recovery of Capex and Opex borne by the contractor Recovery is in kind. Volume of production equivalent to the amount of money to be recovered Volume depends on oil price level Profit oil: Remuneration to the contractor Remuneration as a percentage of the production Volume is defined by specific contractual terms 5

6 PSA - Price Effect Oil price 20 $/bl 40 $/bl Profit: 20% of production (10 Mbl) Cost recovery = 100 M$ 2 Mbl 5 Mbl 2 Mbl 2.5 Mbl PRODUCTION* 40 M$ 80 M$ REVENUES* * From Cost Oil and Profit Oil 100M$ 100M$ 6

7 Production Contributions kboe/d Wafa Rod & Satellites South Pars 4&5 >1,700 (net of PSA impact) 1,598 1, Darquain Xicomba Medusa Elephant Bayu Undan Clara Ovest Okpoho Kizomba A Jan-Sep 03 PSA Producing Fields & Divestments New Production Jan-Sep 04E 4Q 04E 7

8 2004 Main Events Start up Exploration success * Appraisal ITALY Clara Ovest (51% Op. - 2Q04) RUSSIA Donbas New Acreage KAZAKHSTAN Kairan 1 (16.67 Op.) NORWAY Linerle (11.5%) ALGERIA Rod & Satellites (64% - 4Q 04) LIBYA U.S.A. Elephant (33.3% Op. - 1Q04) Timon/K2* (18.2% Op.) Wafa (50% Op. - 3Q04) St. Malo* (1.25%) NIGERIA Okpoho (100% Op. - 2Q04) EGYPT Taurt 1 (50%) IRAN South Pars (60% Op.-.-4Q04) SAUDI ARABIA Area C New Acreage AUSTRALIA Bayu Undan (12% - 1Q04) CONGO Pegase NM 1 (30%) ANGOLA Kizomba A (bl.15) (20% - 3Q04) Bavuca (bl. 15) (20%) Lianzi 1 (Angola/Congo) (10%) INDONESIA Gehem 2 * (Ganal) (20%) Gula 3 * (Ganal) (20%) Gehem 3 * (Rapak) (20%) 8

9 Projects Start Ups on track Start-up Jan. 04 Feb. 04 Aug. 04 Elephant (Libya) Bayu Undan (Australia) Kizomba A (Angola) Azzawiyah Terminal Tripoli Mediterranean Sea Provision for future Pump Station 30 x725 km PIPELINE (EXISTING) Pump Station Hamada NC8 Field Provision for future Pump Station NC-115 Overhead Power from NC-115 Escarpment Wellpads E C 24 PIPELINE 75 km B A GOSP Accommodation Camp D Investment $ 1.1 bn Reserves 0.7 bn boe Eni share 33% Op. Investment $ 3.5 bn Reserves 1 bn boe Eni share 12% Investment $ 3.4 bn Reserves 1 bn boe Eni share 20% 9

10 Projects Start Ups on track Start-up Oct. 04 Oct. 04 Nov. 04 Libyan gas project (Libya) ROD & Satellites (Algeria) South Pars 4 & 5 (Iran) Investment * $ 7.1 bn Reserves 1.75 bn boe Eni share 50% (upstream) * Including Greenstream Investment $ 0.6 bn Reserves 0.3 bn boe Eni share 64% Investment $ 2 bn Reserves 2.4 bn boe Eni share 60% Op. (buy back) 10

11 Karachaganak - Status kboe/d 400 April 2004: Start-up of KPC and Unit-2 May: Raw Gas injection at 500 bars June: First shipment of oil at the Novorossiysk terminal July: Field production 350,000 boe/d (Eni >100,000 boe/d) Total Production Eni Share

12 Kashagan EAST AREA Original oil in place: 38 bln barrels Reserves: up to 13 bln barrels of oil with partial gas injection WEST AREA Multi-phase development Capital investment: First phase (East area) 10 bln $ Full field development 29 bln $ NECK AREA Commercial production:

13 Kashagan - Status Full Field Development 1,200,000 Development in progress in accordance with schedule 50% of the first phase investment awarded Start up bopd 75,000 First phase 450,000 Early Works for Eskene onshore site in progress Construction of first hub island almost completed Drilling of development wells in progress

14 Exploration Completed with 100% Success Russia Kazakhstan KALAMKAS Caspian Sea KASHAGAN KASHAGAN SW KAIRAN AKTOTE Kashagan: two discovery wells K- E1 and K-W1 and 5 appraisal wells Kalamkas: discovery well in 2002, 3D seismic, appraisal planned Aktote: discovery well in 2003, 1st appraisal completed Kashagan SW: discovery well in 2003 Kairan: discovery well in 2004, ongoing studies to appraise discovery 14

15 Kashagan - Export Alternatives Poland Russia Samara Existing Future alternatives To Baltic Sea Ukraine Kazakhstan Moldavia Novorossiysk CPC Atyrau To China KASHAGAN To Novorossiysk (a Bosphorus bypass is required) Georgia Tbilisi Caspian Sea Aktau To Aktau Uzbekistan Azerbaijan Trans-Caspian Shipping Turkey Baku Turkmenistan Ceyhan BTC (in progress) Iraq Iran 15

16 Portfolio Rationalization: actions delivered Netherlands exit Italy Tempa Rossa (25%) Stargas (SPI mineral assets) U.K. 32 commercial fields and marginal discoveries Operated fields T-Block and B-Block Azerbaijan Lukagip (50%) U.S.A. Gom - Tail assets Mauritania exit Qatar exit Associated production reduction to date: 70 kboe/d Capital employed reduction: ~ 700 Mln euro Gabon exit 16

17 Production: Focus on North Africa kboe/d CAGR +5%* 1,900 1,562 1,598 North Africa CAGR 11% % 24% 28% North Africa (Egypt, Libya, Algeria, Tunisia) 2003 Jan-Sep 04E 2007 * Net of portfolio rationalization - Reference conditions Brent ($/bl): 24 (04), 22 (05), 21 (06/07) 17

18 Proved Reserves December 31, 2003 Total : 7.3 bn boe Liquids: 4.2 bn boe Gas: 3.1bn boe North Africa 26% 30% 18

19 Eni North Africa Production kboe/d Operated production (kboe/d) Gas Liquids Gross Equity CAGR Gas +21% Liquids +6%

20 Eni North Africa Capex Million Exploration Development 3, ,100 North Africa: 21% of E&P Capex 79 1,586 1, ,507 1, E

21 North Africa Eni E&P Eni North Africa Benchmark Group Life index Lifting costs Cash Flow 30 (years) 6 ($/boe) 18 ($/boe) ' ' '01-03 Benchmark Group includes BP, ExxonMobil, Shell, Total, ChevronTexaco, ConocoPhillips, Repsol YPF, Eni E&P Cash Flow = Net Income + Exploration expenses + DD&A 21

22 Eni Core Area in North Africa - Libya and Egypt Libya Egypt Acreage Reserves 2P ( ) Jan-Sep 04 Production : 21,268 sqkm : 1.7 Bln boe : 88,000 boepd Acreage Reserves 2P ( ) Jan-Sep 04 production : 12,849 sqkm : 0.9 Bln boe : 200,000 boepd 22

23 Western Libya Gas Project

24 Western Libya Gas Project: monetize equity gas leveraging on business integration Equity gas Coastal plant Trasportation Marketing Strong integration along the value chain 24

25 Western Libya Gas Project: overall scheme 100% Eni Equity Capex (billion ) Upstream 3.0 bln Mid stream gas 0.8 bln Project completed on schedule and within budget Wafa LIBYA A Ø 32 Ø 16 MELLITAH BahrEssalam Ø 36 Ø 10 SABRATHA Plt. GELA SICILY Y Ø Km km Km Coast to Coast coast to coast 25

26 Western Libya Gas: World scale project London Dusseldorf Paris Italy Yokohama Fukuyama Mellitah Wafa Sabratha & Bahr Essalam Langfang Tripoli Kuantan Ulsan 7.1 billion overall capex >20,000 people employed Malaysia 10 international main contractor/consortium 9 main engineering/construction locations outside Libya 26

27 Western Libya Gas Project: strong integration along the value chain Equity gas Coastal plant Trasportation Marketing 27

28 Western Libya Gas Project Upstream Overview Gas Export Line SABRATHA Platform Eni Gas operator (Eni 50% - NOC 50%) Subsea Clusters GREEN STREAM Reserves (Eni share): 950 M boe Gas Production of 10.0 Bcm/Y (100%) 4.0 bscm/y - Wafa 6.0 bscm/y - Bahr Essalam Onshore Pipelines 540 Km MELLITAH Complex Wafa Coastal Plant, Mellitah Plant and gas compression station SABRATHA Local Gas Line of which: 8.0 bscm/y destined to Italy 2.0 bscm/y destined to local market Peak production by end 2005 : Eni equity: 128 kboe/d WAFA Desert Plant 28

29 Wafa Desert & Coastal Plants Wafa Desert Plant & Pipelines Wafa Coastal Plant (Mellitha) SEPTEMBER 2002 SEPTEMBER 2004 Wafa PLANNED ACTUAL Coastal Plant PLANNED ACTUAL Construction Start Sept Sept Construction Start Sept Sept First Oil Production Sept th Jun First Gas Delivery Sept th Sept First Gas Production Sept nd Sept First Oil Shipment Oct th Oct

30 Western Libya Gas Project Upstream Onshore area - Wafa field 12 oil and 17 gas wells, 8 workovers Oil and condensate separation and stabilization. Gas dehydration and CO2 removal 32 gas pipeline and 16 liquids pipeline, 540 km long from Wafa to Mellitah 540 Km Peak production (IV Quarter 2004): Eni equity: 65 kboe/d 30

31 Western Libya Gas Project Upstream Coastal treatment plant - Mellitah Onshore production treatment WAFA liquids fractioning and propane and butane recovery Liquids storage and loading (oil, propane and butane) 540 Km Offshore production treatment CO2, H2S removal and propane, butane recovery from Bahr Essalam produced gas Bahr Essalam condensate stabilization and treatment 31

32 Western Libya Gas Project Upstream 540 Km Offshore field - Bahr Essalam Offshore platform installation 190 mt water depth. Equipped with gas separation and dehydration plants Drilling of 38 wells Laying of two sub-sea pipelines 110 km long for transport of gas (36 ) and condensates (10 ) from the platform to the onshore treatment plant (Mellitah) Peak production (2005): Eni equity: 63 kboe/d 32

33 Bahr Essalam Field Highlights KEY DATES Planned Actual/Forecast Project Kick-off Production System ready for Start-up First offshore gas sales June 2002 May 2005 June 2005 June 2002 May 2005 June 2005 Sabratha platform 33

34 Overall Eni Equity Production Trend in Libya: strong growth driven by oil and gas kboe/d Time to harvest Production CAGR >35% ~250 Gas 84 > Liquids E 2007E 34

35 Libya Upstream Capex Profile Bln Capex: main contribution from gas project Overall E

36 Libya - Equity Reserves at Million boe P1 1,184 Liquids Gas 52% 48% Gas reserves 20% of total Eni proved gas reserves 36

37 Libya Gas Project: strong integration along the value chain Equity gas Coastal plant Trasportation Marketing 37

38 Greenstream: gas transportation system GELA OWNERSHIP NOC Eni fully consolidated in G&P Division 75% 25% WAFA NC41 MELLITAH UPSTREAM EXPORT SEALINE L I B Y A EXPORT SEALINE Diameter: 32 Length: 520 km Max water depth: 1,127 m Laying period: 2003/04 COMPRESSION STATION Installed power: tot MW Ready for operation: September

39 Greenstream: gas transportation system TRANSPORTATION CAPACITY 8 bcm/y RECEIVING TERMINAL Metering system and Connection with Italian main network NETWORK UPGRADE IN ITALY Section length: 360 km 39

40 Libya: gas marketing Supply build up to Italian market bcm E 05E 06E Gas sold to Italian player: 4 bcm/y to Edison 2 bcm/y to Gaz de France 2 bcm/y to Energia Long term take or pay contracts (24 years) Libya gas project supply Plateau production at bcm/y WAFA 6 bcm/y Bahr Essalam of which 2 bcm destined to local market 40

41 Libyan Gas Projects Conclusions Subsea Clusters SABRATHA Platform Gas Export Line GREEN STREAM Integrated projects monetizing equity gas and maximizing returns along the gas chain World scale project delivery Onshore Pipelines 540 Km MELLITAH Complex Wafa Coastal Plant, Mellitah Plant and gas compression station SABRATHA Local Gas Line Strong contribution to production growth Gas reserves available to supply the growing demand in Italy WAFA Desert Plant 41