Kazakhstan Project

Pietro CavannaDeputy Chief Operating Officer

E&P Division

October 3, 2003

Eni in Kazakhstan

Agip Karachaganak B.V. 32.5 % PSA

Agip Caspian Sea B.V. 20.37% PSA

G R O U P

G R O U P

Agip Kazakhztan North Caspian Operating Co. N.V.

Karachaganak Petroleum Operating B.V.

(Agip Karachaganak BV: 32,5%)

KarachaganakFPSA

Eni Upstream Participations

Co-operators

15%

20%

32,5%

32,5%

North Caspian Sea PSA

At present

Eni Upstream Participations

Next

Operator

20.4%

20.4%

20.4%

10.2%20.4%

8.3%

16.6%

16.6%

16.6%

16.6%

16.6%

8.3%

8.3%

! North Caspian Sea PSA(valid up to 2041)

PRODUCTION SHARING

AGREEMENTS

" Kashagan field

Typology of Contracts

! PSA (valid up to 2037)

" Karachaganak field

1992: Eni gained the exclusive right to negotiate the development of Karachaganak field under PSA regime

1993: The KCS Consortium Agreement was signed, this later provided 11 blocks in the North Caspian Sea with acreage 5.500 km2

1995/ Eni engaged for Karachaganak in the frame of the1997: Producton Sharing Principle Agreement (PSPA) in field

production and maintenance1997: Both the Karachaganak and the North Caspian PSA

were signed1999: Karachaganak field expansion

(Phase 2) started2000: Kashagan discovery

Eni’s History in Kazakhstan

2001: Agip Caspian Sea selected as “Sole Operator” on North Caspian Sea PSA

2002: Declaration of Kashagan Commercial Discovery in June

2002: Presentation of Kashagan Development Plan & Budget in December

2003: The Karachaganak Phase 2 of development completed

2003: NCS exploration campaign still ongoing

2003: NCS appraisal campaign on Kashagan field near to conclusion

2003: Kashagan field development activities started

Eni’s History in Kazakhstan

Kazakhstan

Karachaganak Field

AKSAI

TUNGUSH VillageTUNGUSH Village

UNIT 2 AND GAS RE-INJECTIONRE-INJECTION

KPCKPC

UNIT 3UNIT 3

THIRD PARTY REFINERY

THIRD PARTY REFINERY

LIQUID/GAS EXPORT

TO ORENBURG

LIQUID EXPORT TO CPC

RAILWAY CONNECTION

Gas PipelineOil PipelineRoadRailwayRiver

Field boundaries

Facilities

30 km

Karachaganak PSA Contract Area

Karachaganak Project

# Discovered in 1979

# Development concept: Orenburg satellite field

# Production since 1984

# Project objectives

" Increase oil and gas production to 350,000 boepd

" Access higher value markets for oil

" Upgrade safety

" Environmental protection

# Develop additional gas and liquid reserves

SUPER GIANT OIL AND GAS CONDENSATE FIELD

Phase 2: production target and costs

# July 15th, 2003: first oil from the new Karachaganak Processing Centre for export

# Full production capacity:

225,000 bopd of liquids150,000 bopd (7 Mton/y) exported via the CPC66,000 bopd (3 Mton/y) to Orenburg9,000 bopd (0.4 Mton/y) to the MiniRefinery

7 Bcm/y of gas exported to Orenburg

# F&D cost ~$2.5/boe (full field)# Opex ~$1.8/boe (full life, escluding CPC)

Phase 1

Liquid Production

FPSA – Contractor ObligationsPhase 2

# Carry out workovers/drilling 98 wells

# Construct facilities, increase capacity to 8 million t/yr

# Install gas re-injection equipment

# Construct pipeline from Karachaganak to Atyrau, 635 km

# Construct a Power Plant, 20 MW to community

# Undertake Social Expenditure, $10 million/yr

0

50.000

100.000

150.000

200.000

250.000

300.000

350.000

400.000

450.000

500.000

2.001

2.003

2.005

2.007

2.009

2.011

2.013

2.015

2.017

2.019

2.021

2.023

2.025

2.027

2.029

2.031

2.033

2.035

2.037

BOE/

d

100% Eni share

Karachaganak Production ProfilePhase 2

0

5.000

10.000

15.000

20.000

25.0002.

001

2.00

22.

003

2.00

42.

005

2.00

62.

007

2.00

82.

009

2.01

02.

011

2.01

22.

013

2.01

42.

015

2.01

62.

017

2.01

82.

019

2.02

02.

021

2.02

22.

023

2.02

42.

025

2.02

62.

027

2.02

82.

029

2.03

02.

031

2.03

22.

033

2.03

42.

035

2.03

62.

037

M S

m3/

y

Gas Injection Sweet Gas Gas sales 100%

Karachaganak Gas Production ProfilePhase 2

Phase 2 – Operations & Outputs

SamaraOrenburg

Tengiz

CaspianSeaBlack

Sea

Atyrau

Karachaganak

Uzb

ekis

tan

KazakhstanRussian

FederationUkraina

Novorossiysk

Georgia

Kropotkien

Komsomolsk

BolshoiChagan

Orenburg existing pipeline

Smara-Atyrau pipeline

CPC

KPO export pipeline

KPO Export Pipeline

24 “ Pipeline

L = 635 kmKPK – Balshoi Chagan: 181 km

Balscioi Ch. – Atyrau: 454 km

Nr 2 pumping stations (KPK,

Bolshoi Chagan)

Karachaganak Export Pipeline Routes

KAZAKHSTANKashagan Field

AKT OT E

KAIRAN

KAL AMKAS

KASHAGAN SW

KASHAGAN

AKT OT E

KAIRAN

KAL AMKAS

KASHAGAN SW

KASHAGAN

North Caspian Sea PSA Area

Project Main Challenges

# HSE CHALLENGES" Very shallow waters (1.7m at Kairan) " Harsh environment (4-5 months of iced sea per year)" Environmental sensitivity" Minimum discharge " Sulphur management

# TECHNICAL & TECHNOLOGICAL COMPLEXITY" High reservoir pressure" High H2S content " Raw gas re-injection (pressure of 800 bars)" Carsic reservoir

NCS - Environmental Challenges

Bathymetry:

" Water depth ranges 1.5-10m across main prospects

" Storm induced surges of+/- 1.5m common

1

12

3

1

1

1

4

5

6

6

8

7

9

9

9

9

8

88

8

8 8

8

88

8

8

8

8

8

8

7

7

7

7

77

6 6

6

6

6

6

6

5

5

5

5

5

5

5

4

4

44

44

5

5

5

5

4

4

4

4

4

4

4

3

3

3

3

3

3

3

3

3

3

3

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

11

1

1

1

1

1

1

1

1

5

6

5.198.000

5.178.000

5.158.000

5.138.000

5.118.000

5.098.000

5.198.000

5.178.000

5.158.000

5.138.000

5.118.000

5.098.000

5.078.0005.078.000

9.51

0.00

0

9.53

0.00

0

9.55

0.00

0

9.57

0.00

0

9.59

0.00

0

9.61

0.00

0

9.63

0.00

0

9.65

0.00

0

9.67

0.00

0

9.69

0.00

0

9.51

0.00

0

9.53

0.00

0

9.55

0.00

0

9.57

0.00

0

9.59

0.00

0

9.61

0.00

0

9.63

0.00

0

9.65

0.00

0

9.67

0.00

0

9.69

0.00

0

5 1 º 3 0 5 2 º 0 0 5 2 º 3 0 5 3 º 0 0 5 3 º 3 0

4 6 º 3

4 6 º 0

4 6 º 3 0

4 6 º 0 0

5 1 º 3 0 5 2 º 0 0 5 2 º 3 0 5 3 º 0 0 5 3 º 0 0

Site A

Site B

Site C

Regional Bathym

etry Map (based on KC

S exploration data) - Survey AreasFigure 1

0 1 2

NORTH CASPIAN SEA Tengiz

Contour interval: 0.5 m

ONSHOREKAZAKHSTAN

NCS – Sea Level Variations

# Long-term changes in sea level# Seasonal changes in sea level# Short-term surges and retreats

Kashagan – Temperature and Ice

# Temperature in summer above +30 °C

# Minimum temperature registered in winter -°37 C

# 100% of ice in winter

# Seabed scouring

NCS - Environmental Sensitivity

Sulphur Management Strategy

Resource

Gas Re-injection

Long term storage & possible re-use

Reservoir Prevent

Industrial Use, or sales

" Road gravel & paving

" Concrete component

" Fertilizer’s industry

" Chemical industry(H2SO4)

" Leatherware industry

" Others

" Exausted uraniumclaystone open mines

" Depleted cap-rock integer onshore reservoir

" Licenced area

Pumping Water at High Pressure (up to 7,500 psi)

Filling Annulus with Heavy Mud

Rotating Preventer

Mud Cap

Casing

Drill String

Drill Bit

Mud Cap Drilling Schematic

Year 2000 – Kashagan Discovery

DEP

TH

(m

) S.

S.L.

(Ba

ltic

sea

)

40 Km

SWSW NE

4000

4500

5000

T .D .5172.0m

(-5175.5)

UNIT - 1

UNIT - 2

UNIT - 3

4036m (-4042)

4402m (-4406)

4482m (-4485)4536m (-4539) ODT

4623m (-4625) OW C

4844m (-4844)

T IGH TUNIT - 2

UNIT - 3

4311m (-4318.5)

T .D . 4982 m

(-4991 m)

4690m (-4703)

4782m (-4795)

KE-1KW-1

DEP

TH

(m

) S.

S.L.

(Ba

ltic

sea

)

40 Km

SWSW NE

4000

4500

5000

T .D .5172.0m

(-5175.5)

UNIT - 1

UNIT - 2

UNIT - 3

4036m (-4042)

4402m (-4406)

4482m (-4485)4536m (-4539) ODT

4623m (-4625) OW C

4844m (-4844)

T IGH TUNIT - 2

UNIT - 3

4311m (-4318.5)

T .D . 4982 m

(-4991 m)

4690m (-4703)

4782m (-4795)

KE-1KW-1

Distance between the two wells 40 km

5000m4500m

4350m

Platforminterior

Platforminterior

Platformmargin

Platformslope

contour lines depthP2 horizon

4km distance to 4350m tour line of P2 horizon

stance to 4650m contourP2 horizon

KEKE--11

KWKW--11

" In year 2000, the first NFW, well KE-1, has been successfully drilled with the Sunkar Rig, resulting in the Kashagan East discovery

" The second exploratory well on Kashagan West, KW-1, terminated in may 2001 confirming the world class of the North Caspian Sea discoveries

Carbonatic Platform withextension of about 1,200 km2Average Depth: 4,300 m slmMax. Oil Column: 600 mOIP: 38.2 GstbOil reserves (gas re-inj.): up to 13 GstbInitial pressure: 11,500 psi

Carbonatic Platform withextension of about 1,200 km2Average Depth: 4,300 m slmMax. Oil Column: 600 mOIP: 38.2 GstbOil reserves (gas re-inj.): up to 13 GstbInitial pressure: 11,500 psi

Kashagan Fieldfollowing the KCD in June 2002

Undersaturated oil (Pb 3,600 psi)

API gravity: 46°API

Productivity/well: 10 – 30 kbopd

GOR: 2,800 scuft/bls

H2S: 16-18%

Undersaturated oil (Pb 3,600 psi)

API gravity: 46°API

Productivity/well: 10 – 30 kbopd

GOR: 2,800 scuft/bls

H2S: 16-18%

Concepts for KashaganDevelopment Plan

# Gas reinjection of the associated gas

# Development by phases

# Artificial island construction in offshore

# Two phase transfer onshore to oil & gas treatment

Kashagan Field – Development Schematics

EP – Offshore Facilities

CompressorsOperator

Kashagan Gas Re-injection# Each unit designed for 2.2 BCMY and 800 Bar, driven by a FRAM

5 gas turbine# The Kashagan units are an evolution of the Karachaganak ones

(already in operation) and of the Tengiz one (already successfully tested at full load)

Karachaganak Acid Gas Compression Complex (550 bars)

A Comparison between Karachaganak & Kashagan compression requirements

Characteristic Karachaganak Kashagan

Pressure: 550 bar 800 bar

H2S Content: 5% 16-18%

Environment: continental marine

Offshore

Drilling Operations

Drilling Activities

0

1

2

3

4

5

1998 1999 2000 2001 2002 2003

Nr. Drilling Rigs

Since 1999 the well operations activities have increased continuously. In year 2003, four Rigs are being operated

during the Ice free season

0

5000

10000

15000

20000

25000

1998 1999 2000 2001 2002 2003

MetersDrilled

AKTOTE PROJECT

1st WELL drilling

Bautino Base & Marine

KALAMKAS PROJECT1 WELL drilled in

2002

KAIRAN PROJECT1st WELL drilling

KASHAGAN PROJECT7 WELLS

1st WELL drilled in 1999/2000

KASHAGAN SW PROJECT1 WELL drilled in 2003

Wells Drilled or Being Drilled

Transportation

Atyrau to Samara

Aktau

Teheran

Makhachkala

Astrakhan

Baku

NekaTo Ceyhan

Novorossiysk

B TC

CPC

Trasneft 1

T ransneft 2

Atyrau

Bautino

Supsa

Oil Transportation Routes for ExportFrom Samara

Social Infrastructure

Projects

Social & Infrastructure Projects

# NCS in Mangistau and Atyrau region are beingspent ~ $ 24 million for projects such as:" New schools" Medical equipment for rural hospitals" Gas distribution in a number of communities" New & renovated sport facilities for youth schools,

etc.# KPO in West Kazakhstan spent $ 50 million for the

same type of projects as outlined above

Of particular importance is the projects of water supply and electrical power in Aksai

Agip KCO Atyrau Training Center Project

Pilot plants

Oil Production & Demo areas

Oil Production

Plant

Well area Equipment& Demonstration

Practical Area

Simulator of Process

Laboratories

Workshops

13000 Square Meters

Theoretical Training Area

Classrooms

Conference Room

Common areasOffices

CanteenRecreationCar park

Green area

“Baldauren” Children Center

Located in Shchuchinsk on the Chuchye lake, with hospitality for 280 children (500 people with child-care. Works started in August 2001 and are now completed

Health centre for vacation/treatment in the Burabai National Park, excellent for air quality and spring water, includes 7 buildings. Worksstarted in September 2001 and are now completed

The 5-floor building will consist of a reading room for 500 people, audio room, internet room, and an availability of 1,100,000 books. Works started in December 2001 and will be completed by Spring 2004

The National Library

Eni’s Social Projects

Sanatorium “Ok-Zephtes”

Local Content

Karachaganak PSA

North CaspianSea PSA

Karachaganak Phase 2Value of assigned contracts

30,0%70,0%

Non Kazak Kazak

Occupation generated10,000 Workers & Employees

20,0%

80,0%

Non Kazak Kazak

Value of assigned contracts

52,0% 48,0%

Non Kazak Kazak

Forecast of direct and induced Occupation 15,000 Workers &

Employees18,0%

82,0%

Non Kazak Kazak

Local Content