e&p 2004 business update and field trip to egypt and libya · e&p 2004 business update and...
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E&P 2004 Business Update and Field Trip to Egypt and Libya
October 26th, 2004
Stefano CaoChief Operating OfficerExploration & Production Division
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.
3
1,5451,5561,621
1,5561,628
1,498
52
382
1000
1100
1200
1300
1400
1500
1600
1700
Strong Production Growth
1Q 03 1Q 04 2Q 03 2Q 04 3Q 03 3Q 04E
31.931.535.4
26.0
41.5
28.4
PSA effectBrent $/bl Excluding Psa effect
kboe/d
8.8% 6.6%2.6%
Reported
8.7% 4.2% -0.7%
4
Jan-Sep03
Jan-Sep04E
1,5981,537
31
1000
1100
1200
1300
1400
1500
1600
1700
Strong Production Growthkboe/d
Brent $/bl PSA effect
Nine months growth +4.0%
Nine months growth net PSA effect
+6.0%
Growth in line with 2003-07 target
+5%*
* Reference conditions Brent ($/bl): 24 (04), 22 (05), 21 (06/07)
36.3
28.6
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
6
* From Cost Oil and Profit Oil
PSA - Price Effect
100M$100M$
80 M$40 M$
5 Mbl
2.5 Mbl
2 Mbl
2 MblPRODUCTION*
REVENUES*
Profit: 20% of production (10 Mbl)
Cost recovery = 100 M$Cost recovery = 100 M$
20 $/bl 40 $/blOil price
7
1,598
1,537 50
42-31
Jan-Sep 03 PSA ProducingFields &
Divestments
NewProduction
Jan-Sep 04E
Production Contributions
• Darquain• Xicomba• Medusa• Elephant• Bayu Undan• Clara Ovest• Okpoho• Kizomba A
• Wafa• Rod & Satellites• South Pars 4&5
kboe/d
Jan-Sep 04EJan-Sep 03 4Q 04E
(net of PSA impact)>1,700
8
2004 Main Events
ANGOLAKizomba A (bl.15) (20% - 3Q04)Bavuca (bl. 15) (20%)Lianzi 1 (Angola/Congo) (10%)
ANGOLAKizomba A (bl.15) (20% - 3Q04)Bavuca (bl. 15) (20%)Lianzi 1 (Angola/Congo) (10%)
U.S.A.Timon/K2* (18.2% Op.)
St. Malo* (1.25%)
U.S.A.Timon/K2* (18.2% Op.)
St. Malo* (1.25%)
ALGERIARod & Satellites (64% - 4Q 04)
ALGERIARod & Satellites (64% - 4Q 04)
Start upExploration success* Appraisal
Start upExploration success* Appraisal
NORWAYLinerle (11.5%)
NORWAYLinerle (11.5%)
IRANSouth Pars (60% Op .- 4Q04)
IRANSouth Pars (60% Op .- 4Q04)
AUSTRALIABayu Undan (12% - 1Q04)
AUSTRALIABayu Undan (12% - 1Q04)
NIGERIAOkpoho (100% Op. - 2Q04)
NIGERIAOkpoho (100% Op. - 2Q04)
LIBYAElephant (33.3% Op. - 1Q04)Wafa (50% Op. - 3Q04)
LIBYAElephant (33.3% Op. - 1Q04)Wafa (50% Op. - 3Q04)
KAZAKHSTANKairan 1 (16.67 Op.)
KAZAKHSTANKairan 1 (16.67 Op.)
ITALYClara Ovest(51% Op. - 2Q04)
ITALYClara Ovest(51% Op. - 2Q04)
INDONESIAGehem 2 * (Ganal) (20%)Gula 3 * (Ganal) (20%)Gehem 3 * (Rapak) (20%)
INDONESIAGehem 2 * (Ganal) (20%)Gula 3 * (Ganal) (20%)Gehem 3 * (Rapak) (20%)
SAUDI ARABIA“Area C” New Acreage
SAUDI ARABIA“Area C” New Acreage
CONGOPegase NM 1 (30%)
CONGOPegase NM 1 (30%)
EGYPTTaurt 1 (50%)
EGYPTTaurt 1 (50%)
RUSSIA“Donbas” New AcreageRUSSIA“Donbas” New Acreage
9
Projects Start Ups on track
Investment $ 3.4 bn
Reserves 1 bn boe
Eni share 20%
Kizomba A (Angola)
Investment $ 3.5 bn
Reserves 1 bn boe
Eni share 12%
Bayu Undan (Australia)Elephant (Libya)Mediterranean Sea
Azzawiyah Terminal •
Tripoli
30”x725 km PIPELINE (EXISTING)
NC-115
24” PIPELINE75 km
Escarpment
CE
AGOSP
Accommodation Camp
D
B
Overhead Power from NC-115
Wellpads
Pump StationHamada NC8 Field
Provision for future Pump Station
Provision for future Pump Station
Investment $ 1.1 bn
Reserves 0.7 bn boe
Eni share 33% Op.
Jan. ‘04 Feb. ‘04 Aug. ‘04Start-up
10
Projects Start Ups on track
Start-up Nov. ‘04
South Pars 4 & 5 (Iran)
Investment $ 2 bn
Reserves 2.4 bn boe
Eni share 60% Op. (buy back)
Oct. ‘04
Investment $ 0.6 bn
Reserves 0.3 bn boe
Eni share 64%
ROD & Satellites (Algeria)
Oct. ‘04
Investment* $ 7.1 bn
Reserves 1.75 bn boe
Eni share 50% (upstream)* Including Greenstream
Libyan gas project (Libya)
11
Karachaganak - Status
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)
2010 2020 20372004
0
100
200
300
400
Total Production
Eni Share
kboe/d
12
Original oil in place: 38 bln barrels
Reserves: up to 13 bln barrels of oil with partial gas injection
Multi-phase development
Capital investment:
• First phase (East area) 10 bln $
• Full field development 29 bln $
Commercial production: 2008
WEST AREAWEST AREA
NECK AREANECK AREA
EAST AREAEAST AREA
Kashagan
13
Kashagan - Status
Development in progress in accordance with schedule
50% of the first phase investment awarded
Early Works for Eskene onshore site in progress
Construction of first hub island almost completed
Drilling of development wells in progress
2008 2011 2016
Start upStart up
First phaseFirst phase
Full FieldDevelopment
Full FieldDevelopment
75,000
450,000
1,200,000
bopd
14
Exploration Completed with 100% Success
Kashagan: two discovery wells K-E1 and K-W1 and 5 appraisal wells
Kalamkas: discovery well in 2002, 3D seismic, appraisalplanned
Aktote: discovery well in 2003, 1st appraisal completed
Kashagan SW: discovery well in 2003
Kairan: discovery well in 2004, ongoing studies to appraisediscovery
Russia
Kazakhstan
Caspian Sea
KASHAGAN SWKASHAGAN SW
KALAMKASKALAMKAS
KAIRANKAIRAN
AKTOTEAKTOTE
KASHAGANKASHAGAN
15
Iraq
Kashagan - Export Alternatives
CaspianSea
KASHAGANKASHAGAN
Samara Samara
Turkey
Uzbekistan
Kazakhstan
Russia
Iran
Georgia
Ukraine
Moldavia
Poland
Turkmenistan
Azerbaijan
CeyhanCeyhan
BTC (in progress)BTC (in progress)
TbilisiTbilisi
BakuBaku
AtyrauAtyrau
NovorossiyskNovorossiysk
CPCCPC
To Novorossiysk (a Bosphorusbypass is required)
To Novorossiysk (a Bosphorusbypass is required) AktauAktau
To AktauTo Aktau
Trans-Caspian ShippingTrans-Caspian Shipping
To ChinaTo China
To Baltic SeaTo Baltic Sea
ExistingFuture alternatives
16
Portfolio Rationalization: actions delivered
Gabon exit
Qatarexit
U.K.32 commercial fields and marginal discoveriesOperated fields T-Block and B-Block
ItalyTempa Rossa (25%)
Stargas (SPI mineral assets)
Netherlandsexit
Mauritaniaexit
Associated production reduction to date: 70 kboe/dCapital employed reduction: ~ 700 Mln euro
U.S.A.Gom - Tail assets
AzerbaijanLukagip (50%)
17
2004-2007 Production: Focus on North Africakboe/d
20072003
1,562
1,900
1,598
Jan-Sep 04E
North Africa (Egypt, Libya, Algeria, Tunisia)
* Net of portfolio rationalization - Reference conditions Brent ($/bl): 24 (04), 22 (05), 21 (06/07)
CAGR +5%*
North AfricaCAGR 11%2003-2007
22% 24%28%
18
Proved Reserves December 31, 2003
Total : 7.3 bn boe
26% 30%
Gas: 3.1bn boeLiquids: 4.2 bn boe
NorthAfricaNorthAfrica
19
Eni North Africa Production
0
100
200
300
400
500
2003 2004 2005 2006 2007
GasLiquids
kboe/d
CAGR 2003-07
• Gas +21%
• Liquids +6%
710
1200
460
300
2003 2007
Gross
Equity
Operated production (kboe/d)
20
2003 2004E 2004-07
Eni North Africa Capex
1,5681,58679
1,507 1,483
North Africa: 21%of 2004-07 E&P Capex
Development
Exploration
Million €
85
400
3,500
3,100
21
0
5
10
15
20
25
30
99-01 00-02 '01-03
13.9 13.6 13.2
16.617.118.1
0
5
10
15
20
25
30
99-01 00-02 01-033
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
99-01 00-02 '01-03
11.711.811.1
10.610.8
10.2
3
6
9
12
15
18
99-01 00-02 01-030
1
2
3
4
5
6
99-01 00-02 '01-03
3.93.83.8
3.53.6
3.8
0
1
2
3
4
5
6
99-01 00-02 01-03
North Africa
Lifting costs($/boe)
Life index(years)
Benchmark Group includes BP, ExxonMobil, Shell, Total, ChevronTexaco, ConocoPhillips, Repsol YPF, Eni E&P
Cash Flow($/boe)
Cash Flow = Net Income + Exploration expenses + DD&A
Eni E&P Benchmark GroupEni North Africa
22
Eni Core Area in North Africa - Libya and Egypt
Acreage : 21,268 sqkmReserves 2P (31.12.03) : 1.7 Bln boeJan-Sep 04 Production : 88,000 boepd
Acreage : 12,849 sqkmReserves 2P (31.12.03) : 0.9 Bln boeJan-Sep 04 production : 200,000 boepd
Libya Egypt
Western Libya Gas Project
24
Western Libya Gas Project: monetize equitygas leveraging on business integration
Equity gas TrasportationCoastal plant
Strong integrationalong the value chain
Marketing
25
Western Libya Gas Project: overall scheme
LIBYA
LIBYA
SICILY
SICILY
540 Kmcoast to coast
•Ø 32”
•Ø 16” •Ø 36”
•Ø 10”
•Ø 32”
1.127
540 Km
MELLITAH
SABRATHA Plt.
SICILY
GELA
BahrEssalamLIBYA
Wafa
Project completed on schedule and within budget
Capex 7.1 3.8(billion €)
100% Eni Equity
Upstream 3.0 bln €Mid stream gas 0.8 bln €
520 kmCoast to Coast
26
Western Libya Gas: World scale project
7.1 € billion overall capex>20,000 people employed
10 international main contractor/consortium9 main engineering/construction locations outside Libya
Langfang
YokohamaFukuyama
London
Sabratha & BahrEssalam
Mellitah
Wafa
ParisItaly
Tripoli UlsanKuantan
Dusseldorf
Malaysia
27
Western Libya Gas Project:strong integration along the value chain
Equity gas TrasportationCoastal plant Marketing
28
Western Libya Gas Project Upstream Overview
Eni Gas operator (Eni 50% - NOC 50%)
Reserves (Eni share):950 M boe
Gas Production of 10.0 Bcm/Y (100%)4.0 bscm/y - Wafa6.0 bscm/y - Bahr Essalam
of which:
8.0 bscm/y destined to Italy2.0 bscm/y destined to local market
Peak production by end 2005 :
Eni equity: 128 kboe/d
Local Gas Line
540 K
m
Onshore Pipelines
WAFADesert Plant
MELLITAHComplex
Wafa Coastal Plant, Mellitah Plant and gas compression
station
SABRATHA
SABRATHAPlatform
SubseaClusters
Gas Export Line
GREEN STREAM
29
Wafa Desert & Coastal Plants
Sept. 2002Sept. 2002Construction Start
2nd Sept. 2004Sept. 2004First Gas Production
29th Jun. 2004Sept. 2004First Oil Production
ACTUALPLANNEDWafa
Sept. 2002Sept. 2002Construction Start
12th Oct. 2004Oct. 2004First Oil Shipment
9th Sept. 2004Sept. 2004First Gas Delivery
ACTUALPLANNEDCoastal Plant
Wafa Desert Plant & Pipelines Wafa Coastal Plant (Mellitha)
SEPTEMBER 2002
SEPTEMBER 2004
30
540 K
m
540 K
m
540 K
m
Western Libya Gas ProjectUpstream
Onshore area - Wafa field12 oil and 17 gas wells, 8 workovers
Oil and condensate separation and stabilization. Gas dehydration and CO2 removal
32” gas pipeline and 16” liquidspipeline, 540 km long from Wafa toMellitah
Peak production (IV Quarter 2004):Eni equity: 65 kboe/d
31
540 K
m
540 K
m
540 K
m
Western Libya Gas Project Upstream
Coastal treatment plant -Mellitah
Onshore production treatment
WAFA liquids fractioning and propaneand butane recovery
Liquids storage and loading (oil, propaneand butane)
Offshore production treatment
CO2, H2S removal and propane, butanerecovery from Bahr Essalam producedgas
Bahr Essalam condensate stabilizationand treatment
32
540 K
m
540 K
m
540 K
m
Western Libya Gas ProjectUpstream
Offshore field - BahrEssalam
Offshore platform installation 190 mtwater depth. Equipped with gas separation and dehydration plantsDrilling of 38 wellsLaying of two sub-sea pipelines 110 kmlong for transport of gas (36”) and condensates (10”) from the platform tothe onshore treatment plant (Mellitah)Peak production (2005):Eni equity: 63 kboe/d
33
June 2002June 2002Project Kick-off
June 2005June 2005First offshore gas sales
May 2005May 2005Production System ready for Start-up
Actual/ForecastPlanned
Bahr Essalam FieldHighlights
KEY DATES
Sabratha platform
34
Overall Eni Equity Production Trend in Libya: strong growth driven by oil and gas
Production
Gas
Liquids
Time to harvest
>90
85
65
~250
CAGR 2004-07>35%
2004E 2007E
84
2003
kboe/d
35
Libya 2001-2007 Upstream Capex Profile
20032002
0.5
1.0
0.8
2004E 2005-07
1.0
2001
0.1
Capex: main contribution from gas project
Bln €
Overall
36
Libya - Equity Reserves at 31.12.2003
52%
48%
P1
1,184
Liquids
Gas
Million boe
Gas reserves
20% of total Eni proved gas reserves
37
Libya Gas Project:strong integration along the value chain
Equity gas TrasportationCoastal plant Marketing
38
WAFA
MELLITAH
•GELA
UPSTREAM
EXPORT SEALINE
L I B Y A
NC41 EXPORT SEALINEDiameter: 32”Length: 520 kmMax water depth: 1,127 mLaying period: 2003/04
OWNERSHIP
COMPRESSION STATIONInstalled power: tot. 128.4 MW Ready for operation: September 2004
Greenstream: gas transportation system
75%25%Eni
fully consolidatedin G&P Division
NOC
39
Greenstream: gas transportation system
RECEIVING TERMINALMetering system and Connectionwith Italian main network
TRANSPORTATION CAPACITY
8 bcm/y
NETWORK UPGRADE IN ITALY
Section length: 360 km
40
Libya: gas marketing
Gas sold to Italian player:
4 bcm/y to Edison 2 bcm/y to Gaz de France2 bcm/y to Energia
5
04E 05E
0.6
Supply build up to Italian market
06E
8bcm
Libya gas project supply
4 bcm/y WAFA6 bcm/y Bahr Essalam
of which 2 bcm destined to local market
Long term take or pay contracts(24 years)
Plateau production at 2006
41
Libyan Gas Projects Conclusions
Integrated projectsmonetizing equity gas and maximizing returns along the gas chain
World scale project delivery
Strong contributionto 2004-2007 production growth
Gas reserves available tosupply the growing demand in Italy
Local Gas Line
540 K
m
Onshore Pipelines
WAFADesert Plant
MELLITAHComplex
Wafa Coastal Plant, Mellitah Plant and gas compression
station
SABRATHA
SABRATHAPlatform
SubseaClusters
Gas Export Line
GREEN STREAM