sultanate of oman: barka ii greenfield and rusail · pdf filesultanate of oman: barka ii...

Sultanate of Oman:Barka II Greenfield

and Rusail AcquisitionThierry MALLET Mario SAVASTANOCEO of Degrémont CEO of the Companies formed

or acquired for the Barka Phase II - Rusail Projects.

February 7, 2007

Information Meeting – February 5-8, 2007 22

Disclaimer

This communication does not constitute an offer to purchase or exchange or the solicitation of an offer to sell or exchange any securities of Suez or an offer to sell or exchange or the solicitation of an offer to buy or exchange any securities of Gaz de France, nor shall there be any sale or exchange of securities in any jurisdiction (including the United States, Germany, Italy and Japan) in which such offer, solicitation or sale or exchange would be unlawful prior to the registration or qualification under the laws of such jurisdiction. The distribution of this communication may, in some countries, be restricted by law or regulation. Accordingly, persons who come into possession of this document should inform themselves of and observe these restrictions. To the fullest extent permitted by applicable law, Gaz de France and Suez disclaim any responsibility or liability for the violation of such restrictions by any person.

The Gaz de France ordinary shares to be issued in connection with the proposed business combination to holders of Suez ordinary shares (including Suez ordinary shares represented by Suez American Depositary Shares) may not be offered or sold in the United States except pursuant to an effective registration statement under the United States Securities Act of 1933, as amended, or pursuant to a valid exemption from registration.

In connection with the proposed business combination, the required information document will be filed with the Autorité des marchés financiers (“AMF”) and, to the extent Gaz de France is required or otherwise decides to register the Gaz de France ordinary shares to be issued in connection with the business combination in the United States, Gaz de France may file with the United States Securities and Exchange Commission (“SEC”), a registration statement on Form F-4, which will include a prospectus. Investors are strongly advised to read the information document filed with the AMF, the registration statement and the prospectus, if and when available, and any other relevant documents filed with the SEC and/or the AMF, as well as any amendments and supplements to those documents, because they will contain important information. If and when filed, investors may obtain free copies of the registration statement, the prospectus as well as other relevant documents filed with the SEC, at the SEC’s web site at www.sec.gov and will receive information at an appropriate time on how to obtain these transaction-related documents for free from Gaz de France or its duly designated agent. Investors and holders of Suez securities may obtain free copies of documents filed with the AMF at the AMF’s website at www.amf-france.org or directly from Gaz de France on its web site at: www.gazdefrance.com or directly from Suez on its website at: www.suez.com, as the case may be.

Forward-Looking Statements

This communication contains forward-looking information and statements about Gaz de France, Suez and their combined businesses after completion of the proposed business combination. Forward-looking statements are statements that are not historical facts. These statements include financial projections, synergies, cost-savings and estimates and their underlying assumptions, statements regarding plans, objectives, savings, expectations and benefits from the transaction and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements are generally identified by the words “expect,”“anticipates,” “believes,” “intends,” “estimates” and similar expressions. Although the managements of Gaz de France and Suez believe that the expectations reflected in such forward-looking statements are reasonable, investors and holders of Gaz de France and Suez ordinary shares are cautioned that forward-looking information and statements are not guarantees of future performances and are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Gaz de France and Suez, that could cause actual results, developments, synergies, savings and benefits from the transaction to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the public filings with the Autorité des marchés financiers (“AMF”) made by Gaz de France and Suez, including those listed under “Facteurs de Risques” in the Document de Référence filed by Gaz de France with the AMF on May 5, 2006 (under no: R.06-050) and in the Document de Référence and its update filed by Suez on April 11, 2006 (under no: D.06-0248), as well as documents filed by Suez with the SEC, including those listed under “Risk Factors” in the Annual Report on Form 20-F for 2006 that Suez filed with the SEC on June 26, 2006, and in the Amended Annual Report on Form 20-F/A filed with the SEC on February 1, 2007. Except as required by applicable law, neither Gaz de France nor Suez undertakes any obligation to update any forward-looking information or statements.


Project description

Transaction composed of two elements:• a greenfield IWPP at Barka and• an acquisition (privatisation) of Rusail.

Barka II:Greenfield next to AES Barka I, in operation. Located on the coast, 50 km NW of Muscat.Capacity 678 MW and 26.4 MIGD (120,000m3/h our selected technology is RO, by Degrémont).EPC Contractor: Doosan(also our contract for the Sohar IWPP).

Rusail:Existing plant inland at 40 km W of Muscat.Composed of 8 Frame 9Es in open cycle, commissioned between 1984 and 2000.Total Capacity: about 665 MW.Some revamping works necessary.± 70 employees to be taken over.

Oman

Gulf of Oman

Persian Golf

United ArabEmirates

Muscat

Salàlah

Al Ghaydah

Rusail

Barka IIManah

SoharAbu DhabiDubai

Doha

Taweelah

QatarManama

Al HiddAl Ezzel

Marafiq


Project Contractual Framework

SFSA

Government Guarantee

MOF PWP

NGSA

MOG

UsufructECA

PWP

Government Guarantee

MOF

NGSA

MOG

EHC = Electricity Holding Company PFA = Project Founders AgreementMHEW = Ministry of Housing Electricity & Water SFSA = Shared Facilities Shareholders AgreementMEDC = Muscat Electricity Distribution Company ECA; WCA = Electrical & Water Connection AgreementOETC = Oman Transmission Company SPA = Share Purchase Agreement

NGSA = Natural Gas Sales Agreement

PWPAPPA

BARKA II Project Company IWPP

MHEWOETC AES Barka SAOG

Successful Bidder

SPA

Successful Bidder

PFA

EHCMOFEHC

MHEWOETCMEDC

AL RUSAIL POWER CO.

Usufruct

WCA

ECA


Project Time Schedule

December 14th, 2006Signing of EPC Contract

November 2nd, 2005Request For Proposal (“RFP”)

April 1st, 2009Barka II (full) Commercial Operation DateSeptember 30th, 2008Last Day of Barka II Early Power PeriodMay 29th, 2008Barka II Early Power Commencement DateFebruary 2007Financial CloseJanuary 31st, 2007Completion under Al-Rusail SPA

December 6th, 2006Signing of the Project DocumentsOctober 4th, 2006Shortlisted Bidder StatusJune 26th, 2006Bid Submittal

DatesMilestones


Strategic Interest

Sound fundamentals, tested and bankable project structureand documentation, in a country where Suez has one of its bestand longest experiences.

Perfect fit with strategy: « more of the same » a joint project with Degrémont as a complementary partner for SEI.

No price or quantity risk under the 15 year firm / dollarized offtake agreements P(W)PA, with a creditworthy offtaker (owned by the government, and enjoying a government payment guarantee).


Development Process

Detect opportunity very early on.Seek Suez’ in principle interest.Secure best options: partners, lenders, contractors, advisors.Mobilize multidisciplinary team managed by the project developer:corporate and project finance, tax and accounting, legal, engineering, operations, insurance, etc.Optimize/develop the bid in order to be competitive and attractivefor the Client and meet Suez’ investment criteria(economics, contractual risk allocation).Get approval from SEI Investment Committeeand then Suez Commitment Committee.File binding bid.If selected, negotiate with the Client.Finalize all contracts.Close financing.


Project Funding Features

Project FinanceSuez issues Pre-Bid a “Funding RfP” to leading Project Finance banksThe banks proposals’ Pricing and Tariff Enhancing Featuresare evaluated using a financial model and the Qualitative parameters must meet Suez’ strict standards.Banks are very familiar with the Suez project finance team’s pre-bid finance documentation reducing the lead time to achieve fully underwritten limited recourse project financing before bid submission

Mandated Lead Arrangers for Barka II / Rusail are HSBC and SMBCDebt to Equity ratio: 87/13, Total Investment Costs: about 810 MUSD, SUEZ 47.5% share of the equityConsistent with the Omani model, an IPO of a 35% share has to take place 4 years from incorporation.


Partnership & Shareholding Structure

Suez (47.5%), Mubadala (47.5%), NTC (5%)

Mubadala is an investment company of the government of Abu Dhabi, ownerof a diversified portfoliothat includes 51% of Dolphin Energy together with Total and Occidental Petroleum.

NTC is an Omani companyand long term partner of Suez (co-shareholder in UPC and in Sohar)

SEI

47.5%

Mubadala

47.5%

NTC

5%

Holding Co(Offshore)EBL

Al Russayl(SAO G)

Barka II(SAO G)

Senior loan Senior loan

Individual 1 Individual 2

EquitySh LoanBank Loans


A key bid driver: tariff evaluation method

As part of the Request for Proposal, the Client specified the methodhe would use to evaluate the Bidders’ offered tariff. In Barka II,the complexity of the method went further than on any other previous project in the region:

In each evaluation year, 30 plant dispatch scenario points insteadof typically 4 to 8.

For each scenario point, Bidder can optimize its dispatch level betweena min-max, taking into account grid stability requirements.

System avoided costs depending on demand level used to “credit”the Bidder if he competitively displaces other generators.

Explicit possibility to produce needed water without necessarily power.


Key success factors (1)

No single magic element, but rather a combination of ingredients:

SEI development and operational experience, knowledge of the region and Oman in particular, creativity, commitment.

Choice of equity partners: eagerness, complementary skills.

Choice of EPC Contractor: experience, competitiveness, flexibility.

Choice MLA: commitment, competitiveness, flexibility.

Financing engineering: looks beyond pricing, looks at the structure.

Operational synergies with our portfolio along the coast line (Sohar, Taweelah …), among others adding 11 gas turbines to Tractebel P&R business. Gas turbines are the same as for our Sohar andAl-Ezzel projects: economies of scale.


Key success factors (2)

7. Use of global relationship. Example: Wood Group, after Thailand,selected for Rusail under competitive terms.

8. Technological Optimization

→ In particular, amongst the various desalination technologies (thermal or Reverse Osmosis membranes), the RO of Degrémont quickly appeared as the most competitive option:

Low all-in costs.

Ability to operate without steam, i.e. without the power plant.

Cooperation with Degrémont enabled to increase the power plant cooling water flow by using the brine, increasingthe output and improving the competitiveness.


Desalination technology: Reverse osmosis

Degrémont to design + build the complete desalination plant to produce 120,000 m3/day potable water

Reverse osmosis (RO) technologyReliable solution based on Degrémont expertise and experienceOptimization of the electricity generationCompetitive construction + operation costs

Pre-treatment Reverse Osmosis PostDouble filtration + Cartridge filters First pass + Second pass Treatment


Seawater pre-treatment:Double-stage filtration

Two stages of dual-media filters in serial23 horizontal pressure filters

Filtration rate: 11-14 m/h, Filtering media: 0.55 mm sand + 1.65 mm anthracite16 horizontal pressure filters

Filtration rate: 17-19 m/h, Filtering media: 0.30 mm sand + 1.95 mm anthracite

Robust designSuccessive stages of filtrationto remove suspended solids,algae, plankton, etc.Operation as per seawater quality

ReliabilityWell-proven pressure filtersBench-scale and pilot teststo fine tune operating parameters


Reverse osmosis: Two-pass configuration

Two-pass RO configuration14 first-pass RO Trains

14 HP pumps + Energy recovery turbines12,250 seawater membranes

7 second-pass RO Trains3,724 brackish water membranes

Optimum designWell-proven energy recovery turbineBrine re-circulated to power plant

ReliabilityConservative flux and conversion ratioto mitigate membrane fouling risksConfiguration in successful operationFujairah (UAE), Carboneras (Spain), etc.