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060404 The Challenges of the GT Project UNCTAD 10th Africa Oil Gas, Trade Finance Conference Exhibition

2. 060404 The Challenges of the GT Project

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060404 The Challenges of the GT Project UNCTAD 10th Africa Oil Gas, Trade Finance Conference Exhibition

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    1. 1 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition

    2. 2 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition Gassi Touil – Rhourde Nouss QH LNG Integrated Project First Integrated Project (Exploration, Development, Production, Liquefaction & Commercialization of Gas) in Algeria Launched initially by Sonatrach in 2002 Scope increased by Sonatrach in 2004 as initial reserves were perceived as insufficient to pay for development & risks Very tight schedule (start-up end of 2009), with penalties if dates not met Awarded to Repsol YPF and Gas Natural in December 2004 Effective Date May 2nd, 2005

    3. 3 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition Gassi Touil – Rhourde Nouss QH LNG Integrated Project Repsol YPF’s Assets in Algeria

    4. 4 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition Gassi Touil – Rhourde Nouss QH LNG Integrated Project Contract Areas

    5. 5 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition Partners: Association: Repsol YPF (60% Operator) + Gas Natural (40%) Upstream: Sonatrach (35%) + Repsol YPF / Gas Natural (65%) Transport: Sonatrach (100%) LNG Plant: Sonatrach (20%) + Repsol YPF / Gas Natural (80%) Commercialization: Sonatrach (51%) + Repsol YPF / Gas Natural (49%) Contract: Production Sharing: 30 years (2005 - 2035) Production: Start Up: End of 2009 Sales 100% (plateau): 4 MTA LNG + Associated Liquids Gassi Touil – Rhourde Nouss QH LNG Integrated Project Contract & Expected Production Data

    6. 6 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition One of the 10 most Large & Complex E&P Projects in the World. Initial CAPEX (100%) estimate 3 B$ The present extremely Tight Oil & Gas Market makes it very difficult to control Schedules and Costs, and to find the adequate Resources Expect to have a peak of some 5 - 6,000 Persons (mainly Algerians) working during the Construction Phase Some 500 - 600 Direct Employees once on Production, plus a similar number in indirects Cooperation among the partners, particularly with Sonatrach, and with qualified service companies, is critical to success Gassi Touil – Rhourde Nouss QH LNG Integrated Project Main Challenges

    7. 7 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition Very Aggressive Exploration Campaign, with a cost of 105 MM$ (Contractual 35 MM$) in 5 years The largest 3D Seismic Campaign ever launched in Algeria (3,500 km2) A total of at least 19 Identified Accumulations in a surface of 3000 km2 to be Explored / Appraised or Developed Up to Three Different Reservoirs per Accumulation. The most important one being the Hamra Quarzites, never economically produced before Production of Hamra Quartzites advanced to 2009 (Contract 2012) to obtain real drilling and production data as soon as possible Gassi Touil – Rhourde Nouss QH LNG Integrated Project Main Challenges

    8. 8 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition 85 existing wells to be inspected, tested, secured, possible workovers, etc. Some will be abandoned, others as producers Additionally, some 40 – 50 new wells will be drilled for production start up Hamra Quartzite drilling (estimate 100 days per well) and fracturing extremely challenging. HQ productivity critical to the success of the project. Up to 7 Drilling and Workover Rigs working simultaneously Gas Treatment Facilities (22 – 23 MMNm3/d) at three locations, including Separation and Injection of CO2 and some 600 km of in-field flowlines and pipelines A 4 Million Tons per Year LNG Plant to be located at Arzew. Possible second LNG Train to be decided by 2008 Gassi Touil – Rhourde Nouss QH LNG Integrated Project Main Challenges

    9. 9 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition Gassi Touil – Rhourde Nouss QH LNG Integrated Project Reservoirs

    10. 10 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition Gassi Touil – Rhourde Nouss QH LNG Integrated Project Main Progress Milestones

    11. 11 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition

    12. 12 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition Gassi Touil – Rhourde Nouss QH LNG Integrated Project The largest seismic campaign ever in Algeria

    13. 13 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition Full scale reservoir characterization as a key tool to drill new opportunities and predict reservoir behavior

    14. 14 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition Gassi Touil – Rhourde Nouss QH LNG Integrated Project Advanced Well Design, Planning & Architecture

    15. 15 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition Gassi Touil – Rhourde Nouss QH LNG Integrated Project Depleted fields rejuvenation

    16. 16

    17. 17 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition Gassi Touil – Rhourde Nouss QH LNG Integrated Project CO2 Injection

    18. 18 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition Gassi Touil – Rhourde Nouss QH LNG Integrated Project Upstream Facilities Present Market Environment very difficult: Large increases in equipment and materials prices, Much longer delivery times, Most quality contractors are saturated To accelerate engineering, FEED done mostly in-house Preliminary Open Book Estimate Contract signed with major international contractor, expect to sign EPC in October 2006 First Gas Planned September 2009

    19. 19 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition Gassi Touil – Rhourde Nouss QH LNG Integrated Project Upstream Facilities The integration of a large number of gas fields of different characteristics (high pressure vs depleted, wet vs dry, high CO2 vs sweet) present significant challenges for an efficient, long term development To optimize this very complex network, large scale integrated simulations, from the reservoir to the facilities, have been developed. This allows the Project Team to select the optimum development scenarios (e.g. compression) and to update them easily

    20. 20 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition Gassi Touil – Rhourde Nouss QH LNG Integrated Project LNG Facilities The Market Situation is even more difficult than in Upstream Facilities, as only a very small number of contractors are qualified to design & build LNG Plants The number of LNG projects under development has increased dramatically, giving the international contractors a very large leverage This is causing significant costs increases in many projects around the world

    21. 21 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition Gassi Touil – Rhourde Nouss QH LNG Integrated Project LNG Facilities

    22. 22 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition Gassi Touil – Rhourde Nouss QH LNG Integrated Project Layout of LNG Facilities at Arzew

    23. 23 060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition Gassi Touil – Rhourde Nouss QH LNG Integrated Project Conclusions Very Complex and Demanding Project, in very Difficult Market Circumstances Very Tight Schedule, but presently On Target Productivity of the Hamra Quartzite is the cornerstone of the project The Project will use Cutting-Edge Technology in several areas to overcome the technical / economical challenges Close collaboration among the partners, in particular with Sonatrach, is key to the success of the project

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