Techint S.p.A.

Sezione Componentistica d’Impianto ANIMP XI Convegno, Villa Torretta, 5 novembre 2009

Natural Gas Industry Perspectives

Vittorio Folla

Senior VP, Business Planning & Marketing

Techint S.p.A.

Previsioni di Mercato Oil&Gas - Raffinazione,Chimico e Petrolchimico, Offshore,energia convenzionale e alternativa

Techint S.p.A.

• Techint is a private company that was established in 1945 by Agostino Rocca and todayhas more than 100 companies operating worldwide

• Today the Group is focused on steel production (pipes and flat products)

• The Techint Group had a fast evolution, and in the 2008 the significant data are:

– Annual revenues: US$ 26 billion

– Employees: 68,732

The Techint Group

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Techint S.p.A.

The Techint Group

Techint E&C

Sales: USD 2.1 billion

Tenaris

Sales: USD 12.1 billion

Tenova

Sales: USD 1.55 billion

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Tecpetrol

Sales: USD 625 million

Ternium

Sales: USD 9.0 billion

Humanitas

Operative beds: 1,260

Leading supplier of tubes and

related services

Worldwide supplier of advanced

technologies, products,

and services for the metal and

mining industries

Promotes, implements and

manages health care projects

Leading manufacturer of finished

steel products in Latin America

Oil and gas exploration and

production (E&P) companyEPC services on a global basis

Techint S.p.A.

Techint Engineering & Construction inthe world

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Canada

Mexico

Argentina

Brazil

Chile

Colombia

Ecuador

Perù

Trinidad & Tobago

Uruguay

Italy

Netherlands

Russia

Kazakhstan

Algeria

Libya

Egypt

Nigeria

Saudi Arabia

Qatar

U.A.E.

Techint S.p.A.

Techint Engineering & ConstructionMarket Segment

4/4

• Oil & Gas production facilities

• Petroleum Refineries andPetrochemical plants

• LNG

• Power plants

• Pipelines

• Power and Telecommunication lines

• Mining

• Architectural works

• Infrastructure

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Techint S.p.A.

• The Market:

– global market overview

– market analysis: Techint point of view

– market drivers

• Natural Gas Chain

• Investment Outlook

• Conclusions

Main Issues

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Techint S.p.A.

• Even if Oil & Gas companies have reassessed their investments’ economic feasibility,because of the ongoing crisis, in the middle and long term it is expected a new positivemarket trend:

– World energy demand within 2030: +50%

– World GDP: $165 trillion within 2030 ($56 trillion in 2005)

– Expected investments in energy infrastructures: $26 trillion (by 2030)

• The most rapid growth in energy demands is expected in non-OECD countries:

Global Market Overview

World Marketed Energy Consumption

[Source: IEA 2009]

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Techint S.p.A.

• Fast market growth in the period 2002-’07, thanks to the Oil & Gas sector, which lead tothe 2006-’07 economic bubble

• Downturn during 4Q of 2008:

– Drop in new investments and high competition on prices

• Difficulty in making a clear market forecast; but a new growth is foreseen starting from2010

• Middle East: even if some projects have been postponed, it is the area less affected bythe crisis

• In the gas processing sector, Middle East and Russia are the most interesting areas.Good opportunities are also foreseen in Africa (Nigeria, Libya, …)

Market Analysis: Techint point of view

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Techint S.p.A.

Natural Gas: Market drivers

– Gas price: lower than oil

– New petrochemical plants areexpected to rely more and more onnatural gas feedstock

– In Middle East, oil producers areturning to natural gas for domesticuses, in order to maximize revenuesfrom oil exports

– Higher natural gas demand by Gas-fired power plants, due to lower capitalcosts than nuclear plants and moreenvironmental advantages (lesscarbon intensive) than other traditionalfuels

– Higher gas consumption in MiddleEast in the industrial and electricitygeneration sectors

Natural Gas Demand

– Growth in LNG market but at lowerrate than in the past years, becauseof cost escalation and domesticdemand increase by exportingcountries

Natural Gas Transportation

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Techint S.p.A.

Natural Gas: Market drivers

– Investments for new gas treatmentplants

– LNG liquefaction and regasificationterminals are affected by the growingdomestic consumption (i.e. MiddleEast)

– International Oil Companies / PrivateCompanies’ role (IOCs)

Investments

– Much severe control uponenvironmental impacts and energyefficiency

– New legislation limiting greenhousegas emissions

Legislation

– Unconventional gas sourcesproduction (tight sands, gas shale,CBM, …)

Innovation

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Mb/d bcm

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Techint S.p.A.

World Natural Gas Demand

• Average annual growth rate expected by Region

– Europe: about +1% per year, thanks to electricity consumption

– Russia: about +1% per year. Russia is second only to United States in total natural gasconsumption, which represents 56% of the global energy consumption mix

– In Cina and India, vice versa, natural gas currently is a minor fuel in the overall energy mix,representing only 3% and 8%, respectively, of total primary energy consumption, but with anexpected fast growing by 5.2% and 4.2% per year on average to 2030.

– Middle East and North Africa’s consumption are foreseen to growth up +2% and +3.2% peryear, respectively.

Consumi di Gas naturale per regione

Serie sorica e previsioni (EIA)

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

1990 2005 2006 2010 2015 2020 2025 2030

[tcf]

North America

OECD Europe

Non-OECD

Europe&Eurasia

Non-OECD Asia

Middle East

Africa

Central and South

America

Natural Gas Consumption by

Region (1990-2030)

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[Source: IEA 2009]

Techint S.p.A.

World Natural Gas Demand

• Average annual growth rate expected by Sector

– Gas consumption will be much more addressed to the power sector, mainly in non-OECDcountries where electricity demand is foreseen to rise most rapidly

– End-use sectors, especially industry, will absorb almost all of the remaining part of the increaseof world primary gas demand to 2030

– Demand for gas in the residential sector in foreseen about stable in the OECD countries, wherethe per-capita use of gas is approaching saturation levels. However demand is growing morequickly in non-OECD countries, thanks to a parallel growth in population

– Gas-to-liquids (GTL) plants, account for a small but growing share of global natural gasdemand, especially in Middle East and Africa (from 5 to 33 bcm between 2006 and 2030) [about

180 !1.170 Tcf]

World primary natural gas demand and its Increase by sector, 2006-2030

Billion cubic metres[Source: WEO 2008] 12

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Techint S.p.A.

Produzione di Gas naturale per regione

Serie sorica e previsioni (EIA)

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

45,0

2006 2010 2015 2020 2025 2030

[tcf]

North America OECD Europe

Non-OECD Europe&Eurasia Non-OECD Asia

Middle East Africa

Central and South America

World Natural Gas Production

• In order to meet the growth in demand, the world’s natural gas producers will need to

increase supplies by 48 tcf [about 1.360bcm] between 2006 and 2030.

• World’s gas resources are unquestionably large enough to meet the projected increasein global demand. Investment in infrastructure will be required to fill the gap betweengas exporters and importer countries.

Natural Gas Production by

Region (1990-2030)

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13[Source: IEA 2009]

Techint S.p.A.

World Natural Gas Production

• Much of the supply increase is expected to come from the non-OECD countries, whichaccount for more that 80% of the total increase in world natural gas production in thereference period

• The proximity of NG reserves to markets will continue to drive gas production. I.e.Middle East, with more than 40% of the world’s proved natural gas reserves, accountsfor 1/5 of the total increase in gas production

– Saudi Arabia has developed an investment plan in order to reduce gas production from oilsources

• Russia is the country with the major gas reserves– Gazprom is planning new investments to develop new sources of natural gas, in order to face

toward the decline of the actual ones

• Substantial growth in natural gas production in Africa (increasing from 2006 to 2015+45% and +110% by 2030)

– More than 85% of Africa’s natural gas is produced in Algeria, Egypt and Nigeria

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Techint S.p.A.

World Natural Gas Production

Change in natural gas production by country/region, by 2030

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Source: WEO 2008 15

Techint S.p.A.

Natural Gas Chain

Sweetening

Drying

Sulphur RecoveryH2S

Tail Gas Clean Up

Tail Gas Effluents

Sulphur Degassing

Gas F

ield

– o

ff-s

ho

re/o

n-s

ho

re

LNG Shipping LNG Regasification

CompressionStation

NGL SeparationC2, C3, C4+

Peak Sheaving

S

Pipelines NG

to petrochemical manufactures

LNG Liquefaction

UGS

HC Dew Point Control

CO2

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GTLliquid hydrocarbons

! !

Techint S.p.A.

Foreseen investments (2009-2012)

Gas Processing Capex

• Foreseen investments (2010-2012) in the more interesting region (Middle East, NorthAfrica, Europe, FSU), according to announced projects, are about 35 bln", that is about11.6 bln" per year on average

• New projects are expected mainly in UAE, Russia, Saudi Arabia, and Qatar, both fordomestic needs and for export and LNG

Gas Processing expected market (2010-2012) –other than LNG and regasification-

2010 2011 2012

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Pervisione investimenti

(Trattamenti Gas & Zolfo)

0

3000

6000

9000

12000

15000

2009-2010 2010-2011 2011-2012

[Ml!

]

Previsioni investimenti 2009-2012

Medio Oriente

63%

Nord Africa

13%

Russia

18%

Est EU + Kaz.

5%Europa

1%

Techint S.p.A.

Foreseen investments (2009-2012)

LNG regasification Capex

• Foreseen investments (2010-2012) in the more interesting region (Europe, America),according to announced projects, are about 7.3 bln", that is about 2.4 bln" per year onaverage

• High announced investments in Europe. Expected high “mortality ratio” of the initiatives

LNG regasification expected market (2010-2012)LNG rig.

0

1000

2000

3000

4000

2009-2010 2010-2011 2011-2012

[Ml!

]

Global Market

2010 2011 2012

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TOT 2,3 Mld! (2009-2012)

Europa

82%

Americhe

18%

Techint S.p.A.

XXSHIPPING LOADIND ANDUNLOADING EQUIPMENTS

XCRIOGENIC EQUIPMENTS

XSCADA AND CATHODICPROTECTION

XXSPECIAL PRESSUREEQUIMENTS

XSTAINLESS STEEL PRESSUREEQUIPMENTS

XXXXCARBON STEEL AND LOW ALLOYPRESSURE EQUIPMENTS

XXXXXPUMPS

XXXXXXXCOMPRESSORS AND GASTURBINES

XXSTAINLESS STEEL PIPELINE

XXXXXXXCARBON STEEL AND LOW ALLOYPIPELINE

UNDERGROUNDSTORAGE

LNG REGAS.PIPELINESLIQUEFACTION

(AND PEAKSHEAVINHG)

COMPRESSIONSTATIONS

PRIMARY TRAETMENTSAND DESULPHURATION

GOSPEQUIPMENT AND

MATERIALS

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Techint S.p.A.

Conclusions

• Projections about Natural Gas Market are still interesting

• Market is expected to start growing again by the next year

• Some years are necessary to reach the past levels of investments

• Some countries, i.e., Middle East, are less affected by the crisis

• We must improve competitiveness against far east new coming players

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Techint S.p.A.

Contractor thatoperates in a

technology niche

GlobalEPC

contractor

Far east new coming players

Conclusions

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CONTRACTS’ VOLUME

TECNOLOGYLicensor

ProcessCompany

Generalist / Constructionsociety / Regional player New coming

threat

New coming

threat

GlobalEPC

contractor

Previsioni di Mercato Oil&Gas - Raffinazione,Chimico e Petrolchimico, Offshore,energia convenzionale e alternativa

Sezione Componentistica d’Impianto ANIMP XI Convegno, Villa Torretta, 5 novembre 2009

Thank you.

Techint S.p.A.

Techint S.p.A.– Focus on solar thermalpower

TARGET: to develop the potential of “melted salts technology” over the currently used oiltechnologies (Spain, USA), in order to enter in a new sustainable future market segment

23

MW

Cumulative installed CSP capacity CSP growth scenario