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Saipem activities in Canada and its sustainable business model

18 October 2013

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Introduction

Canadian O&G market: Where the action is!!!

Saipem in Canada: Company Evolution and Business Model

The Canadian Challenge

Outline

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Introduction

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Saipem Highlights Leading Global EP(I)C General Contractor

High quality player onshore and in niches offshore

Drilling

Key local employer and investorin strategic markets

Revenues (2012) 13.4 B€Backlog (December 31st, 2012) 19.7 B€

Employees (December 31st, 2012) 45,000 Engineers & Project Managers > 7,000

Operating in more than 70 countries,more than 50 permanent establishments,employees from 125 nationalities

Distinctive ‘frontier focus’ inOil & Gas industries

Full service EP(I)C provider

Most modern, technologicallyadvanced offshore construction fleet

Engineering & Construction

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Feasibility Studies

TechnologyLicenses

Project Definition

Basic Design,Front End

Start-up andCommissioning

Revamps,Upgrades,Modernization

Saipem E&C: Complete Range of EPC/EPIC Services

Engineering,Procurement,Installation,Construction

Lease and Operate Decommissioning

Emphasis on maximizing local presence and content

Superior capabilities for harsh, remote and difficult environments

Customized project and contracting solutions

Targeting even the most challenging and technologically advanced projects, offshore and onshore

EPC LSTK EPIC T&I Cost-plus Convertible Lease & Operate

Maintain and Operate Env. Remediation

Project Management

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Canadian O&G market: Where the action is!!!

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Oil sands value chain

From 2001 to 2011 the combined oil, gas and oil sands CAPEX in Alberta was about $300 billion. Investment in Alberta oil sands increased from $1.4 billion in 1998 to$21.6 billion in 2011.

The investments (140 projects) focused on: Mining In situ technologies

Steam-Assisted Gravity Drainage (i.e. SAGD)

Downstream Upgraders

Transportation Systems Bitumen/Emulsion Pipelines (e.g. Hydrotransportation) Export Pipelines (e.g. Keystone XL) Gas Pipelines (e.g. Gateway)

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The SAGD process uses dual horizontal well-pairsthat are drilled in parallel. The lower productionwell is drilled horizontally and close to the bottom ofthe bitumen zone. Steam is injected in the upperinjection well generating a high temperature vaporchamber which heats the surrounding bitumen,allowing it to drain by gravity into the lowerproduction well.

Basic KPI: Steam to Oil ratio (between 2,5/3) bitumen production per well pair (is between 400 and

1,000) Recovery factors (higher than 50%).

Key challenges for SAGD plants: Maximizing energy efficiency (60–70% of total operating

cost); Effective oil and water separation (emulsion-breaker and

water clarification technologies); Water treatment for reuse in steam generation (e.g. lime

softening, reverse osmosis, and ion exchange).

Issues in SAGD projects: OTSG purchasing; Multiple buildings and tanks; Low degree of modularization.

In situ technologies (i.e. SAGD)

Concept

C.P.F.

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Saipem Canada Evolution & Business Model

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Saipem in Canada: Company Evolution and Business Model

GROWTH IN BUSINESS LINES GROWTH IN BUSINESS OFFERING

COMPANY EVOLUTIONBUSINESS MODEL

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Saipem experiences in Canada:Current Projects in Canada

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Husky Sunrise

CNRL Horizon

2010-Q1 2014 EPCEP LUMP SUM + C-CONVERTIBLE at 90% Model ReviewCentral Process Facilities for Steam-Assisted Gravity Drainage (SAGD) Complex with 60,000 BPD of bitumen production (2 trains – 30,000 BPD each).

SOW: EPC for oil treatment, produced water de-oiling, water treatment and steam generation, production and storage of produced bitumen, construction camp and non-process buildings.

Horizon

Sunrise

Hydrotreaters2011-2015 EPC LUMP SUMSOW: EPC for a Secondary Upgrader with a production capacity of 42,599 BPSD of Hydrotreated Gas Oil, as part of Horizon Phase 2.

The scope of the project includes 3 units to be built within the existing complex: Gas Oil Hydrotreating Unit (GOHTU), Common facilities (Substation & Rib), Wash Water and Rich Amine System and the Interconnecting Piperack.

VALUE500 million CAD

VALUE>1 billion CAD

Statoil Corner SAGDPre-Construction Service Agreement andConvertible Lump Sum EPCSOW: FEED and Procurement of Long-Lead items for the Central Processing Facility: 1 train of 44,000 BBPD with once-through steam generators (OSTG); 6 well pads with a total of 47 well pairs; flowlines interconnecting CPF and well pads; associated infrastructure.

Statoil

VALUE AT CONVERSION~ 1 billion CAD

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CNRL Horizon

Secondary Upgrader2005-2009 EPC LUMP SUM (Joint Venture) : 400 Million CADSOW: EPC of three hydrotreaters to process 110,000 BPD (during Phase 1) of feedstock from the Primary Upgrader into synthetic crude components.

Horizon

2005-2009 EPC LUMP SUM (Joint Venture) : 900 Million CADCanaport™ LNGLP liquefied natural gas (LNG) receiving terminal 1 billion standard cubic feet per day (initial capacity)Saint John, New BrunswickSOW: Tanks: three 160,000 cubic meters full containment liquefied natural gas storage tanks with a throughput capacity of 600,000 cubic meters of gas per hour.

Canaport LNGLP

Canaport

Hydrotransport Tranche 22009-2011 EPC LUMP SUM : 100 Million CADScope of Work: The Extraction Tranche 2 - Hydro-transport consists of a third Hydrotransport system, power equipment and distribution for the Mine and all associated infrastructure and modifications:28 inch diameter hydrotransport pipeline (3 km ), 2 slurry booster pump house skids, substation and power distribution, slurry valving station, large bore water lines (hot process, reclaimed).

NHT 33000 BPSD DHT 48850 BPSDGOHT 42400 BPSDLicensor: UOP

Sturgeon County Upgrader 2011-Q2 2012 EDS & EARLY ENGINEERING: 30 Million CAD

SOW: EDS and Early Engineering for the 50,000 BPD initial capacity of the LC Finer Unit (Unit 20: Residue Hydrocracking Unit) as part of the bitumen-processing and converting Upgrader to be constructed by North West Redwater Partnership.

North West

North West Redwater

Saipem experiences in Canada:Completed Projects in Canada

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The Canadian challenge

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Opportunities in the oil sands supply chain

ManufacturingProviders

ProfessionalServicesProviders

RetailServices providers

FinancialProviders

Increasingnumber of

E&P Players

TechnologyProviders

InfrastructuresProviders

TransportationServices Providers

Oil Sands Development

SNAPSHOT ALBERTA

• Every dollar invested in the oil sands creates $8 in direct and indirect activity in the Alberta economy.• About 16.5% (1 out of 6) of the Albertans are directly or indirectly employed in Alberta’s energy sector.• Oil sands activities also contribute to substantial job creation in other sectors such as manufacturing and retail.

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Thank you