iraq refinery 2012 april 17 th

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IRAQ Refinery 2012 April 17th

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Techint Group Revenues: Over USD 19 billion as of December 31, 2010

Techint Group Revenues: Over USD 19 billion as of December 31, 2010

Our group

40%

38%

4%3%

5%

10%

Techint Group Employees: 54,200

Techint Group Employees: 54,200

IRAQ OPERATIONS

IRAQ OPERATIONS

33

• Techint has been providing Engineering, Procurement

and Construction services on a global basis for the

last 60 years.

• Present in Italy, Argentina, Brazil, Canada, Chile,

Mexico, Peru, Uruguay and other Latin American

countries, as well as the Middle East, Asia and Africa.

Highlights of last 15 Years

• 11 LNG Re-gasification Plants• 6 Major LNG Liquefaction Plants• 20 Major Oil&Gas Upstream Development Project• 135 Major Refinery Projects• Over 70,000 km of pipelines installed• Over 23,000 km of power lines laid• 74,000 MW installed in power plants• Over 7 million kVA installed in substations

Employees

18,000 (permanent and temporary)

SalesUSD 1.9 billion

44

Techint E&C Services

• Feasibility Studies & Project Financing

• Basic and Front-End Engineering

Design

• Detail Engineering

• Project Management

• Procurement Services

• Construction

• Construction Management

• Project Financing

• Commissioning

• Operation and Maintenance

55

• Leading supplier of tubes and related services for the

world’s energy industry and certain industrial

applications.

• With manufacturing facilities in Argentina, Brazil,

Canada, Colombia, Italy, Indonesia, Japan, Mexico,

Romania, and the United States, and a proprietary

network of finishing and service centers worldwide.

• An integrated R&D network comprised of four centers in

Argentina, Italy, Japan and Mexico where more than

200 scientists and engineers work.

• Listed on the NYSE, and on the stock exchanges of

Milan, Mexico and Buenos Aires.

• Annual manufacturing capacity• 6 million tons of steel pipes

Employees

25,500

Sales

USD 7.7 billion

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Why IRAQ is THE Market for EPC Contracting

• 31 Million Population 2nd in Region

• +10 years of inactivity in Infrastructure EPC Contracting in

Country Re-starting from Scratch

• 115 Billion Barrel Of proven reserves (Statistics 2001)

• 150-350 Billion Barrel Of real reserves according to recent

unofficial statistics (World 1300 Billion)

77

Short Term

+3 MMbpd

Through New Facilities

Mainly Through existing DGS modif.


Mid Term

88

Project Funnel (Published or Planned)

UPSTREAM & MIDSTREAM IN

MESOPOTAMIAN BASIN HIGHEST CAPITAL CONSUMING

10 Billion USD YEARLY CAPEX


Should be prioritized

99

Why IRAQ is THE Market for Refining Contracting

• At least 6 major refineries upcoming

• Approximately 1 mln bbl/d to be installed

• 5% discount on oil feedstock from Ministry of Oil

• Iraq Refinery Law approved

• Domestic need expected to rise to 1 mln bbl/d Vs 400 kbbl/d actual

capacity - Proximity to rising demand markets

• Today Iraq spends approximately 4 bln USD per year for refinery

products inport

1010

What has slowed down investment in refineries

• Limitation of equity injection from MOO due to upstream

production priorities

• IMF limitations on Iraq foreign total debt and sovereign guarantees

• IOCs keen to step in oil production, more prudent to invest equity

in permanent refining capacity

• Prudent ECAs approach towards Iraq political risk

• Location of planned refineries Vs access routes to international

refined product markets

• Crude oil supply routes to planned refineries still to be finalised

1111

What additional refineries will bring

• Higher GDP

• Higher flexibility in country energy mix and strategies

• Higher occupation, five times labour intensive building 100000

bbl/d refining capacity than building 100000 bbl/d crude export

capacity

1212

LOCAL CONTENT“MAIN DRIVER FORIRAQ PROJECTS SUCCESS”

REMOTE DRIVEN

SITE DRIVEN

1313


CHALLENGES

LABOUR QUALIFICATION AND AVAILABILITY

LOGISTICS & TRANSPORT

SECURITY

1414


LABOUR QUALIFICATION AND AVAILABILITY

Only in south Iraq upstream projects a workforce of 50-100,000 would be needed in coming years using standard productivity rates

As of today the overall situation is such that an Average productivity factor towards standard productivity k=3,5 - 4

Construction “All In” rates are actually ranging in 40-50 USD/Man-hour

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TODAY’s “ALL IN RATE” COMPOSITION

Labour 17 USD/hIndirect 3 USD/hEquip./Scaff./TCF 6 USD/hPower & Consumables 3 USD/hSecurity 6-10 USD/hLabour Camp 9 USD/hSubcontractor Profit/O.H. 5 USD/h

Total 49-53 USD/h Productivity Factor k=3,5 - 4

20%-80% Mix

To IOC Specs

1616


IRAQ “ALL IN RATE” vs. Other GCC



IRAQ

GCC

1717


SUBSTANTIAL IMPROVEMENTS CAN BE MADE WITH A PROPER EXECUTION STRATEGY

With a proper training program a mix up to 40-60 (Iraqi/Foreign)Can be achieved

Higher Iraqi content would imply a lower security concern

Higher competition on TCF and site facilities subcontractors hasto be enforced

Stimulate with attractive payment terms local contractors to purchase construction facilities and equipment

1818


Short Term Achievable “ALL IN RATES” COMPOSITION

Labour 13 USD/hIndirect 3 USD/hEquip./Scaff./TCF 4 USD/hPower & Consumables 3 USD/hSecurity 3-5 USD/hLabour Camp 6 USD/hSubcontractor Profit/O.H. 5 USD/h

Total 37-39 USD/h (from 49-53)Productivity Factor k=3 – 3,5 (from 3,5 – 4)

40%-60% Mix

Iraqi Content

1919


LOGISTICS AND TRANSPORT CONSTRAINTS

South Iraq ports (Umm Qasr and Khor Al Zubair) have been improved but still not ready for major projects and Ro-Ro operations

Custom clearance, material security and inland forwarding

SPTM trailers and special equipment have to be brought along with the incoming special cargo, limited permanent fleet available so far

2020


LOGISTICS CRITICALITIES MITIGATION

Overdesigned cargo buffering and laydown zone between landing point and site

Bonded area provision for custom clearance within the buffering zones

Jetty provision as part of project Implementation strategy

Integrated inland logistic plan from “under hook” to oilfields

2121


BONDED

30-50 km

TO

OILFIELDS

3-5 km TO

BUFFERING

AREA

“under hook” to Oilfields service Locally Contracted 2-3% of C.P.

EPC Contractor Responsibility Traceability, Inspection, Non Conformities & Damages Management

2222


SECURITY CONSTRAINTS

IOC’s very Stringent Requirements

Sites De-Mining

Preventive Security – Local Community Program

2323


SECURITY TREATS MITIGATION

Broad range of security companies present in Iraq with experience dealing with IOC’s requirements.

IOC’s requirements shall be interpreted in function of the localcontent.

2424

LOCAL CONTENT“MAIN DRIVER FORIRAQ PROJECTS SUCCESS’’

SITES DEMINING

Sites demining can be properly executed subcontracting the activity to local security companies with foreign expertise input Where required

Several local security companies offer turnkey contracts for the demining of definite areas.

2525

Local EPC contractor establishment is needed to plan the community program before mobilization.


LOCAL EXPERTISE

Local community program is a far-sighted strategy for the valorization of Iraqi available competences and indirectly drives to security profile improvement.

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TECHINT is convinced that this choice is driving to better service to the Country with higher margins to Contractor

TECHINT is committed to seek improvement of Local content in quantity and quality within the Personnel Mix


CONCLUSIONS

TECHINT choice is to be Local and to bring our Global expertise to Iraq

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October 19th 2011

thank you

iraq refinery 2012 april 17 th

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