1. 1 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 Challenges of the Gassi Touil Integrated Project Algiers, April 04, 2006 NOT AN OFFICIAL UNCTAD RECORD

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 km 2 )  A total of at least 19 Identified Accumulations in a surface of 3000 km 2 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 MMNm 3 /d) at three locations, including Separation and Injection of CO 2 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 Gassi Touil – Rhourde Nouss QH LNG Integrated Project Exploration – Map & Works Minimum Phase I (5 Years) 3 Exploration Wells 500 km 2D Seismic 150 km 2 3D Seismic 1 Long Production Test 1 Hydraulic Fracture 35 MM$ Planned Phase I (5 Years) 8 Exploration Wells 1430 km 2D Seismic 260 km 2 3D Seismic 1 Long Production Test 1 Hydraulic Fracture > 105 MM$

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 Matrix Permebility 0.1 mD

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 High-tech to optimize productivity from the Ordovician fractured reservoirs

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 Existing wells surveillance campaign

16. 16 RESERVOIR: HQ - 4938 – 5016 m - P RES = 10 000 psi - 1.42 s.g. equiv. - Static BHT = 158°C - CO 2 < 11%, N 2 <1% BRIDES WELLS TO ORDOVICIAN CP 30’’ or 42’’ @ +/- 9 m 26” drilling, WBM 1.05 s.g. 425 m : 18 5/8” Csg, 87.5#, K55, BTC 16” drilling, OBM 1.25 s.g 2350 m : 13 3/8” Csg, 68#, N80, BTC cement to surface : Light Cement or DV 12 ¼’’ drilling, OBM 2.10 s.g. 3250 : 9 5/8” Csg, 53.5#, special drift, P110,Tenaris Blue Cement to surface : DV @ ~2500 m, in Lias Anhydritique 8 ½” drilling, OBM 1.30 to 1.50 s.g. (Possibility of ‘’Flow Drilling’’) TOL @ 4470 m 4670 m : 7” liner, 32#, P110, Tenaris Blue TOL @ ~ 2250 m, +/-250 m above 9 5/8” DV 6” drilling, OBM 1.45 s.g. 5200 m : 4 ½” liner, 13.5#, P110, Tenaris Blue WH 15 K Compact opt DV BRD 4, 5, 6 24” WBM 1.05 – 1.06 18 5/8”: 415 426 440 (Sénonien Lagunaire Anhydrites & Dolomites) 17 1/2” OBM 1.10 – 1.45 13 3/8”: 2361 2376 2331 (Top Lias: Lias argilo-dolomitique) 12 ¼” OBM 2.10 – 2.40 9 5/8”: 3260 3190 3260 (Base Lias: Lias argileux) 8 3/8” - 8 1/2” OBM 1.24 – 1.57 7”: 4666 4670 4724 (Top Ordov.: DMK) 6” OBM 1.45 -1.49 4 ½”: 5130 5220 5204 (Grès d’El Atchane) DV 2250 2350 2500 3250 2678 - 2721 Hz B

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 CO2 Injection Project – Defined Workflow

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 CO 2 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