P130319

Assets Development

for

Today’s Market Needs

by Umberto Vergine

Saipem CEO

La Defénse – March 19, 2013

2

Execution efficiency

Shareholder Value

Profitability

Growth Skills, competencies development

Assets Development, for

E PM I C

Objectives Means

New Evolving Market Requirements

Around year 2000 Saipem started an ambitious >10 B€ investment program

World leading EP(I)C Engineering & Construction General Contractor

1. For most complex oil & gas projects, onshore land, offshore…

…In toughest environments (climate, logistics)

2. For new rapidly developing market segments:

Deepwater/subsea Unconventional oil & gas Floating production LNG etc.

Strategic Goal

Then a medium-size installation/construction contractor, primarily offshore

MOST COST-EFFECTIVE PROCESS

E

C/fab

Time

P

Saved Time

Increases: Cost, Complexity, Risk

Reduced EPIC Contract Duration

Integrated Project

Management TIME-IS-OF-THE-ESSENCE PROCESS

E C/Fab.

P

I/C

Time

TYPICAL

EPC/EPIC

PROCESS

Premise(1/3): Saipem believes that the EPC/EPIC approach can offer superior performance in large projects execution

3

LOW RISK

LONG DURATION

HIGH RISK

TIME SAVED

I/C

4

Premise(2/3): Local Content Maximization

A cornerstone of Saipem’s business philosophy

Develop/invest in local project execution centers

Project Management

Engineering

Procurement and Subcontracts with Local Suppliers

Prefabrication Yards

Local hiring

Local partnerships

Training, know-how transfer

HSE, medical training and assistance

Creation of long-term social and economic value

Development of local skills Effective engagement of all stakeholders

Objective: deeply rooted local sustainable presence

Local employees: >70% of total From 125 nationalities In more than 70 countries

29 engineering and project execution

centers

10 local prefabrication

yards

Premise(3/3): Direct control of as many execution steps as possible offers numerous advantages for large EP(I)C projects execution

Traditional Approach

Direct execution

Outsourced (by definition)

Subcontracted by choice

E

P

I,C

Lower Risk Better Control Improvements & Feedback (Lessons Learned Analysis)

Saipem’s Goal

E

P

I,C

5

PM PM

Subcontracts for detail engineering

Subcontracts for construction

6

Supply of complex solutions for even the largest and most challenging EP(I)C projects utilizing a global integrated network of skills and assets

Development of Saipem’s Business Model

Major emphasis on HSEQ culture

Strong Project Management

Key First Step: Acquisition of Large World Class Engineering and Project Management Assets

FOR OFFSHORE EPIC COMPETENCES AND ENGINEERING RESOURCES (2001-2002)

(50%)

7

Floaters, Subsea, Maritime Works LNG Regasification Maintenance and Turnaround

Offshore pipelines and platforms

FOR ONSHORE EPC COMPETENCES (2006)

Upstream and downstream E,P,C (subcontracted) Contractor, onshore

Competitive-cost detail engineering in India

High tech solutions for floaters

Development of World Class Engineering and Project Execution Centers

Successful integration and rationalization (One Company, One Quality)

For even the largest and most complex projects anywhere in the world

Deepwater

&

Subsea

Mega-Project Management

Floaters

Downstream Refining,

Petrochemicals and Power

LNG

Liquefaction

Onshore

Offshore

Pipelines

Marine Works

Infrastructures

Offshore

Heavy Lifting

LNG

Regasification

8

Saint Quentin Yvelines (Paris)

Rome

Fano

San Donato (Milan)

San Donato (Milan)

Some projects to be led also from London, Chennai (India), Sharjah (U.A.E.)

9

Engineering and Project Execution Centres

Other local offices

Development of a Global Network of Engineering and Project Execution Centers

Regional Centers

Central E and PM Centers Cost effective export-type

Centers

10

Fabrication Yards & Main Logistic Bases

Development of a Global Network of New Fabrication Yards

Most recent investments

11

Next 2010+ Phase - Major Challenges: Growth, Project Complexity

Deep water, subsea

Unconventional oils

LNG and gas chain

Floating production

Arctic or Arctic-like environments

World leading EP(I)C Engineering & Construction General Contractor

1. For most complex oil & gas projects, onshore land, offshore…

…In toughest environments (climate, logistics)

2. For new rapidly developing market segments:

Deepwater/subsea Unconventional oil & gas Floating production LNG etc.

Strategic Goal

Substantial investments will be made in new unconventional settings

12

Most new oil and gas production coming from unconventional sources

Source: Douglas-Westwood (2012)

Bitumen and Oil Sands

Offshore Shallow

Conventional Onshore

Offshore Deep

Bln US $

Source: Goldman Sachs - March 2012; * From GS Top 330 projects

Incremental Capex - to 2015*

Capex Growth 2013-2014 Capex Growth 2014-2015

13

Engineering and Project Execution Centers for Alberta Oil Sands, Canada

~ 1000 engineering professionals

Contributed to Lump Sum expertise in Alberta

Calgary, Alberta, Canada

Oil Sands production, processing and refining

Next: LNG on West Coast

Alberta Oil Sands and W.Coast LNG

Growing to 500 employees

Started in 2013 and 2012, respectively

Edmonton & Nisku Yards, Alberta, Canada

From 5 employees in 2007 to ~ 1500 today - of which 700 engineers The only real local EPC contractor in

Alberta, with full control of the entire work sequence and risk assumption

Small Truckable Modules For Ft Mc.Murray

14

Brasil

Other Discoveries

Deep Waters

33,989 million bbl

New

Dis

coveri

es 2

005-2

010

Brazil

32%

19%

49%

Source: Petrobras (2012)

Half of new oil & gas discoveries in last 5 years are in deepwater

63% of these in Brazil, large part elsewhere in South Atlantic

Major new potential in Angola

Deepwater production by 2020 5.5 Mbpd 10 Mbpd Deeper and deeper Weighted average discoveries in 2012: 1500 m water depth

Max water depth: >3000 m

Frontier exploration and drilling

Dominance of a small number of super-majors

New Industry Frontier: Subsea Production in Ultra-Deep Water

15

Saipem’s Engineering, Project Execution, Technology Development for Deep Water

Rio de Janeiro, Brazil New center, in conjunction

with Guarujà prefab yard

For Pre-salt Investments

Growing to >200 engineering professionals

Deep Water Engineering & Technology Co., Luanda, Angola

South Atlantic Deep Water Projects

Guarujà, Santos, Brazil

Operational from 2013

Local Content for

Pre-salt

New Subsea Process System

Advanced Subsea Robotics

16

High technology, highest productivity vessel

For large diameter, long distance trunklines Steep high productivity S-lay for deepwater fields Latest generation dynamic positioning Arctic capabilities – for future frontier markets J-lay and S-lay operation Committed in GoM, Brazil, Australia …

Latest generation vessel for deepwater field development

All project tasks with a single vessel: lifting/installation, pipelaying

Follows impressive achievements of FDS over the last decade

J-lay quad joints in ultra deepwater Capability to install heaviest stand alone riser system for ultra deepwater Option for high productivity S-lay operations Currently in Brazil, then S.Atlantic

FDS 2

Focus on Deep Water - Investments in the Most Modern Vessels - E&C Offshore

Castorone

All-in-one Highly Sophisticated Vessel for Deepwater Projects

For Exceptional Pipelines

In Deep Water

17

Focus on Deep Water - Investments in the Most Modern Vessels - Drilling Offshore

Drillship semisub for harsh environments, in up to 10,000 ft water deepths

Fully winterized for harsh environments Expanded operating range Reduced environmental impact, high energy

conservation Dedicated ROV storage area Initially committed to Norway

Drillship for operations in up to 12,000ft water depths

Top technology for ultra deep water drilling Optimized operational efficiency Initially committed to W. Africa

Saipem 12000

Scarabeo 8

For Ultra-Deep Water

For Very Harsh Environments and Ultra-Deep Water

18

Our Future: Integrated LNG chain

Integration of numerous essential technology, design, execution components

Developed strong local content in key “LNG markets”

Saipem can provide all necessary infrastructures required

Actively involved in most of today’s LNG challenges, onshore and offshore

FLNG: Active since 2007 with proprietary technology developments and designs

Ready with capabilities to fabricate large modules

A requirement for some projects

Powerful long-term alliances

19

Our Future – Floaters: E, PM and C

Karimun Island, Indonesia

Local content for Indonesia

Large Modules for World Markets

Close to Australia, Asia/P and West Coast North American markets

Integration of multiple technical disciplines Specialized engineering for

Process – Technology – Marine - Construction

New Saipem’s dedicated organization based in Paris

Dedicated Asian yard for in-house modules/topsides fabrication

For projects worldwide

OLT, World first Offshore moored FSRU - Italy

20

Engineering and Project Execution Centres

Yards & Main Logistic Bases

Other local offices

Further Medium-Term Growth Opportunities

New Local Engineering and Project Execution Centres

Newest Markets

Heavy Oils New Investments?

Infrastructure FPSO LNG FLNG

Arctic LNG

Conclusions: Saipem’s in Evolution 2000 - 2013

13.4

45,000

19.7

12.9

Backlog (B€)

1.3

Market cap (B€)

Employees 9,800

2.6

2.6

Revenues (B€/Y)

Mid-size, predominantly I/C offshore contractor, in 2000

Leading, full service EP(I)C general contractor, offshore and onshore, today

(+)

(+)

(+)

(+)

(+) Dec. 31, 2012

21

22

Ready to support the IOCs’/NOCs’ production programs

by designing and building their biggest investments

of tomorrow, with

the best and most innovative designs and

construction solutions, in:

DEEP WATER FLOATING PRODUCTION LNG UNCONVENTIONALS

in harshest and most remote environments,

with HSEQ and Local Content as foundations.

Conclusions: Saipem 2013+