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IRAQ Refinery 2012 April 17 th

IRAQ Refinery 2012 April 17 th. Techint Group Revenues: Over USD 19 billion as of December 31, 2010. Our group. Techint Group Employees: 54,200. 38%. IRAQ OPERATIONS. 40%. IRAQ OPERATIONS. 10%. 3%. 5%. 4%.

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IRAQ Refinery 2012 April 17 th

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  1. IRAQ Refinery 2012 April 17th

  2. Techint Group Revenues: Over USD 19 billion as of December 31, 2010 Our group Techint Group Employees: 54,200 38% IRAQ OPERATIONS 40% IRAQ OPERATIONS 10% 3% 5% 4%

  3. Techint has been providing Engineering, Procurement and Construction services on a global basis for the last 60 years. Present in Italy, Argentina, Brazil, Canada, Chile, Mexico, Peru, Uruguay and other Latin American countries, as well as the Middle East, Asia and Africa. Highlights of last 15 Years 11 LNG Re-gasification Plants 6 Major LNG Liquefaction Plants 20 Major Oil&Gas Upstream Development Project 135 Major Refinery Projects Over 70,000 km of pipelines installed Over 23,000 km of power lines laid 74,000 MW installed in power plants Over 7 million kVA installed in substations Employees 18,000 (permanent and temporary) SalesUSD 1.9 billion

  4. Techint E&C Services • Feasibility Studies & Project Financing • Basic and Front-End Engineering Design • Detail Engineering • Project Management • Procurement Services • Construction • Construction Management • ProjectFinancing • Commissioning • Operation and Maintenance

  5. Leading supplier of tubes and related services for the world’s energy industry and certain industrial applications. With manufacturing facilities in Argentina, Brazil, Canada, Colombia, Italy, Indonesia, Japan, Mexico, Romania, and the United States, and a proprietary network of finishing and service centers worldwide. An integrated R&D network comprised of four centers in Argentina, Italy, Japan and Mexico where more than 200 scientists and engineers work. Listed on the NYSE, and on the stock exchanges of Milan, Mexico and Buenos Aires. Annual manufacturing capacity 6 million tons of steel pipes Employees25,500SalesUSD 7.7 billion

  6. Why IRAQ is THE Market for EPC Contracting • 31 Million Population  2nd in Region • +10 years of inactivity in Infrastructure  EPC Contracting in Country Re-starting from Scratch • 115 Billion Barrel Of proven reserves (Statistics 2001) • 150-350 Billion Barrel Of real reserves according to recent unofficial statistics (World 1300 Billion)

  7. Why IRAQ is THE Market for EPC Contracting Mainly Through existing DGS modif. Short Term +3 MMbpd Through New Facilities Mid Term

  8. Why IRAQ is THE Market for EPC Contracting Project Funnel (Published or Planned) Should be prioritized UPSTREAM & MIDSTREAM IN MESOPOTAMIAN BASIN HIGHEST CAPITAL CONSUMING 10 Billion USD YEARLY CAPEX

  9. Why IRAQ is THE Market for Refining Contracting • At least 6 major refineries upcoming • Approximately 1 mln bbl/d to be installed • 5% discount on oil feedstock from Ministry of Oil • Iraq Refinery Law approved • Domestic need expected to rise to 1 mln bbl/d Vs 400 kbbl/d actual capacity - Proximity to rising demand markets • Today Iraq spends approximately 4 bln USD per year for refinery products inport

  10. What has slowed down investment in refineries • Limitation of equity injection from MOO due to upstream production priorities • IMF limitations on Iraq foreign total debt and sovereign guarantees • IOCs keen to step in oil production, more prudent to invest equity in permanent refining capacity • Prudent ECAs approach towards Iraq political risk • Location of planned refineries Vs access routes to international refined product markets • Crude oil supply routes to planned refineries still to be finalised

  11. What additional refineries will bring • Higher GDP • Higher flexibility in country energy mix and strategies • Higher occupation, five times labour intensive building 100000 bbl/d refining capacity than building 100000 bbl/d crude export capacity

  12. LOCAL CONTENT “MAIN DRIVER FOR IRAQ PROJECTS SUCCESS” REMOTE DRIVEN SITE DRIVEN

  13. LOCAL CONTENT “MAIN DRIVER FOR IRAQ PROJECTS SUCCESS” CHALLENGES LABOUR QUALIFICATION AND AVAILABILITY LOGISTICS & TRANSPORT SECURITY

  14. LOCAL CONTENT “MAIN DRIVER FOR IRAQ PROJECTS SUCCESS” LABOUR QUALIFICATION AND AVAILABILITY Only in south Iraq upstream projects a workforce of 50-100,000 would be needed in coming years using standard productivity rates As of today the overall situation is such that an Average productivity factor towards standard productivity k=3,5 - 4 Construction “All In” rates are actually ranging in 40-50 USD/Man-hour

  15. LOCAL CONTENT “MAIN DRIVER FOR IRAQ PROJECTS SUCCESS” TODAY’s “ALL IN RATE” COMPOSITION Labour 17 USD/h Indirect 3 USD/h Equip./Scaff./TCF 6 USD/h Power & Consumables 3 USD/h Security 6-10 USD/h Labour Camp 9 USD/h Subcontractor Profit/O.H. 5 USD/h Total 49-53 USD/h Productivity Factor k=3,5 - 4 20%-80% Mix To IOC Specs

  16. LOCAL CONTENT “MAIN DRIVER FOR IRAQ PROJECTS SUCCESS” IRAQ “ALL IN RATE” vs. Other GCC Total 49-53 USD/h Productivity Factor k=3,5 - 4 IRAQ Total 15-20 USD/h Productivity Factor k=2,5 - 3 GCC

  17. LOCAL CONTENT “MAIN DRIVER FOR IRAQ PROJECTS SUCCESS” SUBSTANTIAL IMPROVEMENTS CAN BE MADE WITH A PROPER EXECUTION STRATEGY With a proper training program a mix up to 40-60 (Iraqi/Foreign) Can be achieved Higher Iraqi content would imply a lower security concern Higher competition on TCF and site facilities subcontractors has to be enforced Stimulate with attractive payment terms local contractors to purchase construction facilities and equipment

  18. LOCAL CONTENT “MAIN DRIVER FOR IRAQ PROJECTS SUCCESS” Short Term Achievable “ALL IN RATES” COMPOSITION Labour 13 USD/h Indirect 3 USD/h Equip./Scaff./TCF 4 USD/h Power & Consumables 3 USD/h Security 3-5 USD/h Labour Camp 6 USD/h Subcontractor Profit/O.H. 5 USD/h Total 37-39 USD/h (from 49-53) Productivity Factor k=3 – 3,5 (from 3,5 – 4) 40%-60% Mix Iraqi Content

  19. LOCAL CONTENT “MAIN DRIVER FOR IRAQ PROJECTS SUCCESS” LOGISTICS AND TRANSPORT CONSTRAINTS South Iraq ports (Umm Qasr and Khor Al Zubair) have been improved but still not ready for major projects and Ro-Ro operations Custom clearance, material security and inland forwarding SPTM trailers and special equipment have to be brought along with the incoming special cargo, limited permanent fleet available so far

  20. LOCAL CONTENT “MAIN DRIVER FOR IRAQ PROJECTS SUCCESS” LOGISTICS CRITICALITIES MITIGATION Integrated inland logistic plan from “under hook” to oilfields Jetty provision as part of project Implementation strategy Overdesigned cargo buffering and laydown zone between landing point and site Bonded area provision for custom clearance within the buffering zones

  21. LOCAL CONTENT “MAIN DRIVER FOR IRAQ PROJECTS SUCCESS” 30-50 km TO OILFIELDS 3-5 km TO BUFFERING AREA BONDED “under hook” to Oilfields service  Locally Contracted 2-3% of C.P. EPC Contractor Responsibility  Traceability, Inspection, Non Conformities & Damages Management

  22. LOCAL CONTENT “MAIN DRIVER FOR IRAQ PROJECTS SUCCESS” SECURITY CONSTRAINTS IOC’s very Stringent Requirements Sites De-Mining Preventive Security – Local Community Program

  23. LOCAL CONTENT “MAIN DRIVER FOR IRAQ PROJECTS SUCCESS” SECURITY TREATS MITIGATION IOC’s requirements shall be interpreted in function of the local content. Broad range of security companies present in Iraq with experience dealing with IOC’s requirements.

  24. LOCAL CONTENT “MAIN DRIVER FOR IRAQ PROJECTS SUCCESS’’ SITES DEMINING Several local security companies offer turnkey contracts for the demining of definite areas. Sites demining can be properly executed subcontracting the activity to local security companies with foreign expertise input Where required

  25. LOCAL CONTENT “MAIN DRIVER FOR IRAQ PROJECTS SUCCESS’’ LOCAL EXPERTISE Local community program is a far-sighted strategy for the valorization of Iraqi available competences and indirectly drives to security profile improvement. Local EPC contractor establishment is needed to plan the community program before mobilization.

  26. LOCAL CONTENT “MAIN DRIVER FOR IRAQ PROJECTS SUCCESS’’ CONCLUSIONS TECHINT choice is to be Local and to bring our Global expertise to Iraq TECHINT is convinced that this choice is driving to better service to the Country with higher margins to Contractor TECHINT is committed to seek improvement of Local content in quantity and quality within the Personnel Mix

  27. thank you October 19th 2011

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