ENI S.p.A. · MIL:ENI
ENI — Leaders in Europe 2007
22 slides from ENI's conference presentation, May 23, 2007
Slide 1: Securing a Competitive European Gas & Power Market(s)
Securing a Competitive European Gas & Power Market(s) Marco Alverà Senior Vice President Eni Gas & Power Division Leaders in Europe 2007 – 23rd May 2007 1
Slide 2: Divergent Growth Rates
Divergent Growth Rates CAGR in Gas Demand from 2003 to 2006 8.0% +6.1% 6.0% 4.0% 2.0% +1.2% +1% -1.9% 0.1% -0.3% 0.0% -2.0% UK Germany France Netherlands Belgium Iberia+Italy 2
Slide 3: Agenda
Agenda Growing complexity in European Gas Market(s) How to best face this complexity (policy, industry and Eni) Partnerships with Gas Producers 3
Slide 4: 2006 – A Complex Environment
2006 – A Complex Environment New uncertainty about demand growth Significant impact of local projects (LNG / pipe) Increased price volatility (from +€1000 to -€20 per 1000m3) Oil indexed and spot price differentials (€220 vs €110 per 1000m3) Continuing regulatory uncertainty Growing comple
Slide 5: New Uncertainty in Demand Growth
New Uncertainty in Demand Growth 800 Gas demand in Europe (bcm)* 700 ~2.4% ~2.4% ~200 600 Growth Driven bcm Demand 500 ~3.5% ~3.5% 400 ~325 bcm ~425 imports bcm 300 NET IMPORT (2007) imports (2020) 200 DOMESTIC PRODUCTION 100 0 1990 2007 2020E European market will remain tight in aggregate * Country
Slide 6: Significant Impact of Projects Locally
Significant Impact of Projects Locally 2006 NEW IMPORT NEW IMPORT MARKET SIZE PROJECTS* PROJECTS Germany 95 BCM ~60 BCM ~63% Italy 83 BCM ~45 BCM ~54% UK 97 BCM ~64 BCM ~66% Future projects as percentage of 2006 market size *Germany: Nordstream (55 bcm), Wilhelmshaven LNG (5-10 bcm) Italy: Galsi (8-
Slide 7: Growing Volatility and Structural Differentials
Growing Volatility and Structural Differentials MAY 2007 7
Slide 8: Growing Complexity in the European Gas Market(s)
Growing Complexity in the European Gas Market(s) DEMAND UNCERTAINTY SIGNIFICANT IMPACT OF LOCAL PROJECTS PRICE VOLATILITY Increasing complexity OIL-INDEX / MARKET PRICE DIFFERENTIALS REGULATORY UNCERAINTY 8
Slide 9: Agenda
Agenda Growing complexity in European Gas Market(s) How to best face this complexity (policy, industry and Eni) Partnerships with Gas Producers 9
Slide 10: How to Best Face Complexity - Policy
How to Best Face Complexity - Policy Promote creation of a European gas transport company Encourage development of gas trading markets Support cross border transactions Support partnerships with producing countries (Algeria, Russia and Libya) Industry must help harmonisation From local mar
Slide 11: How to Best Face Complexity - Industry
How to Best Face Complexity - Industry 1. Commercial exposure to different markets 2. Scale 3. Extensive transport and storage infrastructure 4. Commercial flexibility and the ability to exploit it 5. Diverse and growing portfolio of gas 6. Strong partnerships with gas producers New “role” for Europ
Slide 12: 1. Commercial Exposure to Different Markets
1. Commercial Exposure to Different Markets Eni UK 100% Gas sales GVS 50% International 54% 42% sales1 Branch 50% Italy 58% 46% Francia 100% 33% 2006 2010 Adriaplin 51% 100% 50% Eni Trading BV gas (BlueStream) 100% EPAS 49% 1 Including Extra Europe gas sales and E&P equity gas sold in Europe 12
Slide 13: 2. Scale
2. Scale 2006 Gas Sales1 (bcm) 97 90 79 72 2010 target over 105 bcm 1 Source: Eni elaborations on company data 13
Slide 14: 3. Extensive Transport and Storage Infrastructure
3. Extensive Transport and Storage Infrastructure NORTH SEA SYSTEM LNG INTERCONNECTOR STORAGE CAPACITY TENP EL FERROL TRANSITGAS TAG BLUE PANIGAGLIA STREAM SINES SNAM SAGUNTO RETE GAS BONNY TMPC NIGERIA TRANSMAGHREB TTPC GREENSTREAM OMAN EGYPT Target to further grow transport, LNG & storage 14
Slide 15: 4. Commercial Flexibility and the Ability to Exploit it
4. Commercial Flexibility and the Ability to Exploit it PHYSICAL AND CONTRACTUAL FOR ILLUSTRATIVE PURPOSES ONLY FUTURE OPTIONALITY IN GAS HEDGING OPTIMISATION PROPRIETARY EXPOSURE TO TRADING Flexible contracts ∆ACQ-AMinQ ~ 14Bcm Invest in HR and IT to enhance trading capabilities 15
Slide 16: 5. Diverse and Growing Portfolio of Gas
5. Diverse and Growing Portfolio of Gas FROM NORWAY FROM RUSSIA Equity (Oil/Gas) FROM NETHERLAND Contracted FROM ALGERIA FROM FROM FROM LIBYA EGYPT NIGERIA Gazprom Gazprom Deal Deal Bcm 2005 2006 2010 Equity 22 22 21 Contract Contract “life “life Contracted 74 76 87 index” index” extended extended t
Slide 17: 6. Strong Partnership with Gas Producers
6. Strong Partnership with Gas Producers Eni benefits from an integrated approach (G&P/E&P/Saipem) Eni has a leading upstream presence in all major gas regions serving Europe (Algeria, Egypt, Kazakhstan*, Libya, Nigeria, Norway, Russia and UK) Strategic partnership in place or in progress in most ke
Slide 18: Agenda
Agenda Growing complexity in European Gas Market(s) How to best face this complexity (policy, industry and Eni) Partnerships with Gas Producers 18
Slide 19: Eni's Approach to Strategic Partnerships
Eni’s Approach to Strategic Partnerships INTERNATIONAL NATIONAL COMPANIES OIL & GAS COMPANIES Replace reserves Diversify risk Grow production Expand abroad UPSTREAM Relationships with CAPEX in a high oil NOCs price environment Secure and Access end users diversify supply directly DOW
Slide 20: An Integrated Win-Win Deal
An Integrated Win-Win Deal Access to Russian E&P Access to Eni’s projects UPSTREAM Use of Eni’s E&P and pipeline technologies Joint development of LNG projects Strategic Partnership Agreement All gas contracts Gas sales directly in Italy DOWNSTREAM extended to 2035 (upto 3bcm from 2010) Access to En
Slide 21: Strategic Partnership – Yukos Auction
Strategic Partnership – Yukos Auction 40% 60% EniNeftegaz Miscellaneous Urengoil assets Arctic Gas Gazprom Neft NG Technologia To be sold or Reserves Daily production 900,000 boe* liquidated 5bn boe Daily refining capacity 690,000 barrels* * The figures include Gazprom Neft’s 50% participati
Slide 22: Conclusions
Conclusions The European gas market(s) are becoming increasingly complex Opportunity for policymakers to push for market reform Incentives for industry players to form new partnerships and innovate Opportunity to enhance Eni’s positioning 22