RA-2003-Fr.Pdf

E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES

A NNUAL R EPORT 2003

27 bis, avenue Kheireddine Pacha - Tunis, B.P.367 - 1002 Tunis Belvédère Tel.: (216) 71 782 288 - Fax : (216) 71 784 092 - Telex : 15 128 / 13 877 [email protected] - www.etap.com.tn E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES ANNUAL REPORT 2003

CONTENTS

ENERGY SITUATION 7

INTERNATIONAL OIL SITUATION 7

OIL SITUATION IN TUNISIA 11

ETAP ACTIVITIES 19

INTERNATIONAL ACTIVITIES 19

EXPLORATION 21

PRODUCTION 31

EXPLORATION STUDIES 37

TRADING ACTIVITIES 43

HUMAN RESOURCES 47

FINANCIAL RESULTS 51 E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES

BOARD OF DIRECTORS

CHAIRMAN MEMBERS OF THE BOARD ALI CHINE ABDELAZIZ RASSAA TAHAR GUELLALI ABDERRAHMÄNE KOCHTALI NEJIB MAATOUG KHELIFA KAROUI HAMED GADDOUR BECHIR NAHDI SELIM BELKAHIA KHALED BEN CHEIKH AHMED TOURCHI TAHAR BEN JEBARA (*) EZZEDDINE KHALFALLAH (*) : personnel ‘s representative

ETAP ORGANIZATION CHART

Chief Executive Officier Ali CHINE

Deputy General Manager

Permanent Secretariat for Contracts and Commissions Quality & Internal Audit Director Farouk SAYMANOULI Mokhtar KRISSANE

Central Director Central Director Central Technical Director Central Director For Control & Finance For Resources For New Operations Taïeb EL KAMEL Mohamed AKROUT

New Operations Director Petroleum research and development center Ramzi GHENIMA Neila CHINE

Strategy & Planning Director Head of Production Division Head of Exploration Division Khaled BRAHAM Abdallah OUADHANI Ali M'RABET Management Control Director Mabrouk LAKHDHAR

Computer Department Director Khaled BRAHAM Projects Director Exploration Studies Director Finance Director Taïeb BEN TAÏEB Jomâa FRIHA Samir CHALLAKHI Legal Affairs Director Mohamed Sadok BAHRI Operations Director Exploration Director Commercial Director Lotfi ELGHEZAL Ridha M'RAD Fethi BOUHAMED

Human Resources Director Rafik M'BAREK

6 ANNUAL REPORT 2003

ETAP PORTFOLIO

In Thousand TD in % * In dissolution

ETAP CONCESSIONS & OPERATORS

OMV

ENI

OMV

CHERGUI

ENI ADAM 30%

PERENCO

LUNDIN ZELFA 30%

7 E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES

MAIN INDICATORS

2002 2003

EXPLORATION • Number of valid permits : 35 37 • Number of permits assigned during the year : 4 6 • Number of discoveries : 3 6 • Investments (Million of $) : 112 91

RESERVES • Remaining National Reserves (Mtoe) : 102 93 - Oil : 60 49 - Gas : 42 44 • Remaining Reserves on ETAP concessions (Mtoe) : 76 69 - Oil : 50 41 - Gas : 26 28

PRODUCTION • National Production (Mtoe) : 5,48 5,13 - Oil : 3,55 3,23 - Gas : 1,93 1,9 • ETAP concessions' production (Mtoe) : 2,42 2,36 - Oil : 1,99 1,9 - Gas : 0,43 0,46

TRADING • Exports (M MT) : 1,59 1,30 - Crude Oil : 1,56 1,27 - Petroleum products and condensate : 0,03 0,03 • Imports (M MT) : 1,90 2,03 - Petroleum products : 0,17 0,17 - Natural gas : 0,53 0,64 - Crude Oil : 1,20 1,22 • Average crude export price ($/b) : 24,05 28,68 • Average BLG/FNG gas price ($/b.equiv.) : 100,33 130

HUMAN RESOURCES • Manpower : 590 591 • Management ratio (%) : 58 59 • Training costs : 0,36 0,303

FINANCIAL RESULTS • Incomes (Million of TND) : 287,3 277,7 • Investments (Million of TND) : 64,33 44,8 • Net result (Million of TND) : 48,54 48,4

8 ANNUAL REPORT 2003

ENERGY SITUATION

• International Oil Situation • Oil Situation In Tunisia E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES

INTERNATIONAL SITUATION

During 2003, the international situation was marked by a slight improvement in world economic growth. As a result world demand for petroleum increased, reaching about 78.5 mb/d compared with 77 mb/d in 2002. The international economic situation certainly remains difficult, and particularly so since the invasion of Iraq. The situation in Middle East and the mistrust characterising European-American relations, slow down and fragilize the economic grawth in several contries.

THE PETROLEUM MARKET

The petroleum market was mainly characterised in particular by : - growth in world demand for oil - the increased supply of oil - stability of crude prices - higher investment in exploration/production at production sites

WORLD OIL DEMAND

According Oil Market Report, world oil demand in 2003 was 78.5 mb/d compared with 77 mb/d the previous year. This growth in world oil demand is equal to

1.5 mb/d, i.e an increase of 1.8% and is largely due 48,5 50 47,7 47,5 47,8 to major economic expansion in China, where 47,6 demand rose to 5.43 mb/d in 2003 compared with 40 4.95 mb/d in 2002. 30 30 N - OECD The oil demand in OECD countries was 48,5 mb/d 29,3 28,8 OECD 20 in 2003 compared with 47.5 mb/d in 2002, or an 28,4

increase of 1 mb/d. Demand in non-OECD 27,2 2003 2002 countries also increased, rising by 600,000 b/d 2001 from 29.3 mb/d in 2002 to 30 mb/d in 2003. 2000 1999

World demand for petroleum

10 ANNUAL REPORT 2003

WORLD OIL SUPPLY

In 2003, world oil supply was 79.3 mb/d compared with 76.6 mb/d in 2002. This is equivalent to an increase of 2.7 mb/d and comes largely from 48,8 50 increased production in petroleum exporting 48 46,7 countries, where output was 2 mb/d higher than 45,9 44,7 40 the previous year. In non-OPEC countries, oil supply increased by 30,5 30 N - OPEC 28,6 1mb/d, mainly in Russia, which has become the 30,1 30,8 OPEC leading world producer (8.5 mb/d). The year was 20 29,4 2003 characterised by crises in some petroleum exporting 2002 countries, specially the strikes in Venezuela, the 2001 Iraq conflit and the civil war in Nigeria. 2000 1999

World petroleum supply

World oil supply and demand 2000 - 2003 (MB/j) 2000 2001 2002 2003 Demand 76,2 76,5 76,8 78,5 - OECD 47,7 47,7 47,5 48,5 - Non OECD 28,5 28,8 29,3 30 Supply 76,7 76,8 76,6 79,3 - OPEC 30,7 30,1 28,5 30,5 - Non OPEC 46,0 46,7 48,1 48,8 Source : Oil Market report

PRICE CHANGES

The OPEC basket price was $28.10 per barrel in 2003, which was an increase of 15% over the previous year. This price is above the $22-28 per barrel range fixed by OPEC. Several factors contributed to the increase in crude price during 2003. Lower than normal temperatures resulted in an increase in consumption during the first and fourth quarters of 2003. The war in Iraq and the low level of american reserves also contributed to the increase in prices. OPEC intervened in January and April to increase quotas, with a resulting drop in prices. Nevertheless, in September 2003 OPEC announced a drop in production from 25.4 mb/d to 24.5 mb/d, starting November 1. This provoked a sharp rise in the price of North Sea Brent, which reached almost $31 per barrel.

11 The Dougga capitol. The Dougga E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES

OPEC basket price evolution

Possibly an effigy of Baal Hammon, the great god of the Punic pantheon (IInd century BC).

WORLD ENERGY PROSPECTS

2004 could be the year when the world economy gets back on track. According to economists, economic growth will reach 3.8% in the United States and 1.9% in Europe. This will undoubtedly result in an increase in the oil demand. Due to budgetary constraints in the oil exporting countries, the oil price will remain high in 2004. Petroleum experts anticipate a price range of $25-30 per barrel. This high price level will encourage non-OPEC countries, especially Russia, to increase their production. In addition, the return of Iraqi crude to the international market, probably during the second half of 2004, should not disturb the situation but will result in a drop in production in other cartel-member countries.

12 RAPPORT ANNUEL 2003

ENERGY SITUATION

• International Oil Situation • Oil Situation In Tunisia E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES

THE SITUATION IN TUNISIA

During 2003, the hydrocarbons sector in Tunisia was principally characterised by: - the drop in national production of crude oil, which was caused by the natural decline in the main producing fields - a slight increase in the production of natural gas. This resulted from the increase in production on the Miskar field, which accounts for more that 80% of national production - a slow down in the increase in national consumption of primary energy. The annual rate of 1% instead of 5% was due to the slow down in economic activity.

PRIMARY ENERGY RESOURCES

National resources of primary energy (including natural gas royalties received for the trans-Mediterranean gas pipeline) reached the equivalent of 6201 thousand tons equivalent petroleum (Ktep) in 2003, compared with 6450 Ktep the previous year. This decrease of 3.9% in national energy resources results from the decline in the production of crude oil, despite the increase in the production of natural gas. The share of natural gas in national hydrocarbon resources increased, reaching 47.1% in 2003 compared with 44.5% in 2002. This slight increase (2.5%) is due both to higher national production and the increase in royalties paid for the trans-Mediterranean pipeline.

PRODUCTION OF CRUDE OIL

Hydrocarbon resources evolution 1966 - 2003 TUNISIA OIL AND GAS INFRASTRUCTURE In 2003 national production of crude oil and condensate reached 3168 thousand metric tons (Ktm), or the equivalent of 3235 Ktep, compared with 3486 Ktm (3553 Ktep) in 2002. This represents a decrease of 9.1%. This can largely be explained by the natural decline in the main producing fields, i.e. El Borma

14 ANNUAL REPORT 2003

(-10%), Ashtart (-4%), and Sidi El Kilani (-26%). There was also a drop in the so-called recent fields such as Didon (-32%), Oued Zar/Hamouda (-20%), and Isis (-21%), although the Adam field came into production in 2003 with a figure of 114 Ktm. It should be noted that production on ETAP concessions reached 1896 Ktm in 2003 compared with 1989 Ktm in 2002. Nevertheless, the share of ETAP concessions in overall national production reached 60% in 2003, an increase of three points over the previous year.

National production of crude and condensate, 2001-2003 (thousand tons) 2001 2002 2003 - ETAP Concessions 1942 1989 1896 - Other Concessions 1407 1497 1272 Total 3 349 3 486 3 168 Source : ETAP,ONE

NATURAL GAS RESOURCES National production of tradable gas has, however, increased. It rose by 0.9% to reach 2168 million Ncu.m, or the equivalent of 1951 Ktep.

Crude oil production evolution 1966 - 2003

This, compared with 2148 million Ncu.m or the equivalent of 1934 Ktep in 2002. The slight increase is largely due to the increase in production on the Miskar field (1.4%). It should be noted that this field provided more than 80% of total national production of tradable gas in 2003. Royalties for the trans-Mediterranean gas pipeline totalled 1080 million Ncu.m in 2003, a 3.2% increase over the figure of 1047 million Ncu.m in 2002. This increase resulted from the higher quantities of gas transiting the pipeline towards European markets as

15 The Byrsa (Carthage). hill quarter E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES

the result of improved economic activity following the 11 September 2001 slowdown. Total natural gas resources therefore reached 3248 million Ncu.m in 2003. This is the equivalent of 2922 Ktep and compared with 3195 million Ncu.m or the equivalent of 2876 Ktep in 2002, representing an increase of 1.7%. The share of national production in these resources totalled 68.4% in 2003, compared with 67.2% in 2002.

Natural Gas resources 1972 - 2003

small heads of coloured glass are typical of Punic production.

Natural gas resources 2002 - 2003 in million Ncu.m

2002 2003 Miskar 1739 1763 Gaz du sud (El Borma, Franig/Baguel/ 405 398 Tarfa, Oued Zar /Hammouda) National Zinnia/Cap Bon 4 7 Production S/Total 2148 2168 (Ktep) 1934 1951 Royalty 1047 1080 Total Resources 3195 3248 (Ktep) 2876 2922 Nb : 1Mm3 # 0.9 Tep Source : ETAP,ONE

16 ANNUAL REPORT 2003

Tradable gas availabilities by origin

local Production local Production

Purchases Purchases Royalty Royalty

DEMAND FOR PRIMARY ENERGY

Overall Demand

The consumption of primary energy continued to increase during 2003, but at a slower rate than in previous years. It reached the equivalent of 6926 Ktep compared with 6860 Ktep in 2002, representing an increase of only 1%. The share of natural gas in overall consumption during 2003 increased slightly, going up by 2 points, to reach 44%. The share of petroleum products fell from about 56.7% in 2002 to 55.2% in 2003.

DEMAND FOR PETROLEUM PRODUCTS

National consumption of petroleum products in 2003 totalled the equivalent of 3821 Ktep, being a decrease of 1.7% over the previous year (3888 Ktep). This drop is mainly due to the decrease in the consumption of fuel oil (-7.6%), regular gasoline (-16.7%) and premium gasoline (-10%), which together represent more than a quarter of total consumption of petroleum products.

a Column of the Dougga capitol. 17 E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES

Evolution of consumption and production of petroleum products 2001 – 2003 In Ktm

Consumption Production Rate of Cover (%) 2001 2002 2003 2001 2002 2003 2001 2002 2003 LPG 397 415 431 102 113 103 25,7 27,2 23,9 Super Gasoline 178 163 147 179 154 142 100,6 94,5 96,6 Unleaded Gasoline 144 182 203 159 14 48 110,4 7,7 23,6 Normal Gasoline 91 82 68 94 71 73 103,3 86,6 107,4 Kerosene 203 201 187 203 207 165 100,0 103,0 88,2 Gas Oil 1711 1707 1723 468 469 506 27,4 27,5 29,4 Jet/Aviation Fuel 264 217 200 ------Fuel Oil 778 815 753 593 604 609 76,2 74,1 80,9 Others - - - 88 112 119 - - - Total 3767 3781 3712 1884 1743 1766 - - - Total (Ktep) 3868 3888 3821 1927 1779 1802 49,7 45,8 47,2 Source : ONE DEMAND FOR NATURAL GAS

Consumption of natural gas also increased, rising by 156 Ktep (5.4%) compared with the previous year, and reached 3381 million Ncu.m or 3043 Ktep. This rise was due to increased demand throughout all sectors which consume natural gas, but particularly the requirement for the production of electricity. Production of electricity accounts for 77.4% of natural gas. The remainder goes to manufacturing industries (16.6%), households (4.5%) and the services sector (1.5%).

Distribution of natural gas consumption by sector 2001 - 2003 (Mcu.m) 2001 2002 2003 Power Generation 2533 2515 2617 Industry 497 515 560 Households 135 134 153 Tertiary 44 44 51 Total 3209 3208 3381 Total (Ktep) 2888 2887 3043 Source : ONE

Fronton of capitol. Fronton Dougga the ENERGY BALANCE

Primary energy showed a deficit for the third successive year, amounting to 725 Ktep in 2003. This was 315 Ktep increase over 2002. The deficit is largely due to demand outstripping supply and the

18 ANNUAL REPORT 2003

difference between demand and supply increased between 2001 and 2003. The energy balance shows a deficit of 586 Ktep of petroleum, due to the fall in oil production indicated above and also to a bigger increase in natural gas consumption than in natural gas resources. With regard to petroleum products, the balance shows a decreasing deficit, falling from 2038 KT in 2002 to 1946 KT in 2003. Dependence on imports thus decreased from 54.2% in 2002 to 52.8% in 2003. The level of dependence varies from one product to another. For fuel oil it dropped to 20%; for LPG it is 76% and it stands at 70% for gas oil.

Primary energy balance 2001 - 2003 (Ktep) 2001 2002 2003 Supply : 6471 6450 6201 - Oil 3421 3553 3235 - Natural gas 3033 2876 2922 - Hydraulic 12 14 37 - Wind 5 7 7 Demand : 6848 6860 6926 - Oil 3868 3888 3821 - Natural gas 2888 2887 3043 - Hydraulic 12 14 37 - Coal 75 64 18 - Wind 5 7 7 Balance : -377 -410 -725 - Oil -447 -335 -586 - Natural gas 145 -11 -121 - Coal -75 -64 -18 Source : ONE

19 E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES ANNUAL REPORT 2003

ETAP ACTIVITIES

• International Activities • Exploration • Production • Exploration Studies • Trading Activities • Human Resources • Financial Results E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES

INTERNATIONAL ACTIVITIES

During 2003 ETAP’s activities outside Tunisia consisted mainly of : - Constitution of a joint Tunisian/Algerian petroleum exploration and operation company - Continued evaluation of the programme launched in 2002 to evaluate opportunities in Iraq - Continuing contacts with operators and consultants with a view to joint operations in the field of exploration and production

CONSTITUTION OF THE TUNISIAN/ALGERIAN COMPANY

Discussions with SONATRACH resulted on April 4, 2003 in the creation of a joint company for exploration and production called NUMHYD. This company will have the task of evaluating 220 blocks (a & b) in Algeria (onshore) and Kaboudia in Tunisia (offshore).

EVALUATION OF OPPORTUNITIES IN IRAK AND OTHER REGIONS

THE AL KIFL FIELD AND BLOCK NO. 1 IN IRAK

ETAP has reprocessed 200 kms of old seismic data on Block No. 1. During the first quarter of 2003, the technical/economic feasibility study done on the basis of collected geological and geophysical data concerning the Al Kifl field and Block No. 1 was completed. Workshops were carried out with Iraqi OEC experts and as a result it was decided to add a rider to the document signed on January 22, 2002 between ETAP and OEC. It was agreed to delay the date for the beginning of negotiations on the conditions for granting mining permits to ETAP in Iraq in order to integrate additional data which OEC will provide. The evaluation of the blocks in question has been suspended because of the events in Iraq during 2003.

OTHER REGIONS

1 - After contacts initiated in 2002 with the Turkish state-owned company TAPO for the purchase of part of its interests in Libya, it was decided to halt the negotiations 2 - In connection with the visit of the Minister of Industry and Energy to Sudan, the Sudanese Petroleum Company and the Sudanese Minister of Petroleum were contacted and a search for opportunities in Sudan is underway 3 - With the goal of providing the best chance for the concretization of a project outside Tunisia, ETAP is examining the following regions: • Chad - This results from the meeting between the Ministers of Industry and Energy of Tunisia and Chad. A joint agreement has been signed and includes the possibility of looking for exploration and/or development opportunities in Chad • Caspian Sea countries (mainly Azerbaijan).

22 ANNUAL REPORT 2003

ETAP ACTIVITIES

EXPLORATION

During 2003 exploration work was considerably more active than in 2002, particularly in terms of 2D seismic acquisition and the granting of new permits (6), drilling activity (10 compared with 11 in 2002) and level of investment (US$100 million). This activity resulted in six new discoveries and a real improvement in the success rate, which is now about 50%. Results of exploration activity in 2003 are as follows:

EXPLORATION OPERATIONS ON PERMITS

EXPLORATION AND PROSPECTING PERMITS

The number of valid permits totalled 37 (26 onshore and 11 offshore). They are operated by 24 national and international petroleum companies out of a total of 41 companies actively involved in these permits.

New permits granted :

• Sfax Offshore Prospection Permit : An offshore permit with a surface area of 3676 Sq km granted to GAITHER PETROLEUM CORPORATION (USA) as operator, EUROGAS (Canada) as partner, and ETAP as permit holder. • Kaboudia Prospection Permit : An offshore permit with a surface area of 4312 Sq km granted to NUMHYD (joint ETAP/SONATRACH company) as contractor and to ETAP as permit holder. • Jenein Sud Prospection Permit : An onshore permit with a surface area of 1992 Sq km, granted to OMV (Austria) as operator (50%) and to ETAP (50%) as partners. • Sud Remada Prospection Permit : An onshore permit with a surface area of 4748 Sq km, granted to STORM ENERGY (Canada) as contractor and to ETAP as permit holder. • Ksar Hadada Exploration Permit : An onshore permit with a surface area of 7012 Sq km, granted to PETROCELTIC (Ireland) as contractor and to GHAIA (Italy), DERWENT (UK) and ETAP as partners. • Nord des Chotts Exploration Permit : An onshore permit with a surface area of 4868 Sq km, granted to ETAP as permit holder and contractor.

24 the El Jem amphitheatre. ANNUAL REPORT 2003

Renewed Permits : Three permits were renewed during 2003, as follows : • Makhtar permit : An onshore permit with a surface area of 2964 s.q.km, 1st renewal granted to HTC as operator (50%) and to ETAP (50%) as partners. • Ulysee Permit : An offshore permit with a surface area of 1912 s.q.km, 1st renewal granted to BGT as operator (50%) and to ETAP (50%) as partners. • Jenein Nord Permit : An onshore permit with a surface area of 1242 s.q.km, 1st renewal granted to ANADARKO as operator (50%) and ETAP (50%) as partners.

Permits which have received time extension: extensions were requested for 17 permits, as follows: - Kerkouane, Kairouan Nord, Kerkennah Ouest, Zarat, Chorbane, Ras Marmour, Grombalia, Borj El Khadra, Anaguid, Maatoug, Nord Medenine, Les Oasis, Mejerda, Cap Bon, El Jem, Bazma and Jorf.

Concessions granted : The following two concessions were granted in 2003 : Adam Concession, with a surface area of 860 s.q.km, granted to ETAP (30%), ENI Tunisia BV (17.5%), ENI BEK Tunisia (17.5%), PIONEER (28%) and PALADIN (7%). Zelfa Concession, with a surface area of 100 sq. km, granted to ETAP (30%), LUNDIN (43.75%), ATLANTIS (22.75%) and KLABZUBA (3.5%).

Mining domain evolution (1000 sq. km)

120

98 100 102 92 90 91 80

60 Onshore

40 Offshore 32 31 20 30 2003 43 30 2002 2001 2000 1999

25 Under the arena the undergroundUnder of galleries the arena the El Jem amphitheatre. E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES

SEISMIC ACTIVITY

As of December 31, 2003, 82 sq. km of seismic 3D had been acquired in the Sabria concession and 2766 km of seismic 2D in the Mellita permit and the Adam and Djebel Grouz concessions.

Seismic acquisition 2D (km)

1400 1256 1200

1000

800 600 Onshore

82 400 Offshore 179 200 82

272 57 2003 2002 2001 2000 Seismic acquisition 3D (sq.km)

26 ANNUAL REPORT 2003

DRILLING ACTIVITY

Exploration & Appréciation wells spuded on 2002

PERMIT WELL SPUD/END OBJECTIVES DEPHT RESULTS (OPERATOR) (SIGLE) DATE Fejaj Chotts Fejaj#3A 31/12/2002 Permo- 4637 m Re-entry from 3532m to (BLIGH) (CF#3A) 24/02/2003 carboniferous (TD) 4637m. Dry hole.P&A. Onshore

Sanhar Concession Sanhar Ouest#1 12/12/2002 Silurien / 3205.6 m Oil shows on the Acacus and (ATHANOR) (SNW#1) 26/02/2003 Ordovician (TD) gas shows on the Ordovician. Onshore P&A

Exploration & Appréciation wells spuded on 2003

PERMIT WELL SPUD/END OBJECTIVES DEPHT RESULTS (OPERATOR) (SIGLE) DATE Amilcar Jugurtha#2 07/01/2003 Late 3904 m The reservoirs R1 inf. (BGT) ( JHA#2) 25/04/2003 Cretaceous (TD) & R1 sup. tested after Offshore acidification 14 MMSCFGPD with 50% CO2, 9% N2 and 3.7% H2S. P&A Jorf Jorf#1 02/02/2003 Permian 2164.5 mDry hole.P&A. (PIONEER) ( JORF#1) 12/03/2003 (TD) Onshore Grombalia Sidi Mehrez#1 01/03/2003 Bou Dabbous/ 1750 m Dry hole. P&A. (ECUMED) (SMZ#1) 23/03/2003 Abiod (TD) Onshore Anaguid Châabet El 21/03/2003 Ordovician 3470 m The Ordovican reservoirs (ANADARKO) Marcanti#1 17/05/2003 (TD) tested 550 BCPD (57° API) (CEM#1) and 4 MMSCFGPD. Onshore Suspended temporarly Anaguid Samet El 27/04/2003 Ordovician 3660 m Suspended temporarly (ANADARKO) Anaguid#1 13/06/2003 (TD) for later re-entry (SEA#1) Onshore Beni Khalled Beni Khalled 03/05/2003 Bou Dabbous 999 m Tested Oil & gas in the Concession Est#1 17/06/2003 (TD) Bou Dabbous. (EXXOIL) (EBK#1) Suspended temporarly. Onshore Kerkennah Ouest Cercina Sud#1 24/06/2003 Reineche 1445 m TheReineche Tested 850 (PREUSSAG BOPD (29°API). ENERGY Int.) (CERS#1) 13/09/2003 (TD) The well is completed for Offshore later re-entry. Cap Bon Kef Errend#1 10/09/2003 Early Cretaceous/ 1266 m Suspended well. (EXXOIL) (KER#1) 04/12/2003 Cenomanian Onshore ADAM Concession Hawa#1 17/09/2003 Silurian 4141 m The Silurian acacus (ENI) (HWA#1) 27/11/2003 (TD) sandstone tested 6300 BOPD Onshore (42° API) and 1000 BCFD (60° API) and the Tannezuft sandstone tested 14.5 MMSCFGPD. The well is completed for early 2004 production. Nord Medenine Mazrane#1 16/10/2003 Meloussi 2401m The Meloussi sandstone tested (HBS) (MZR#1) 28/12/2003 (TD) 600 BOPD (38° API). The well is Suspended for Onshore later re-entry.

27 E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES

$ Million US 120 VOLUME OF INVESTMENT 112 110

The 2003 exploration budget totaled US$91 million 100

(118 million TD). 91 90

80 74 2003 Exploration investments evolution 2002 73 2001 2000 1999

TECHNICAL EVALUATION OF PERMITS AND CONCESSIONS

Exploration operations on permits receive technical support from ETAP.. This has resulted in the realisation of numerous geo-petroleum re-evaluations on currently valid permits and on prospects to be drilled in future, as well as the revaluation of already discovered structures (5). Three (3) permits (Nord des Chotts, El Jem and Mellita) five (5) prospects (Sidi Chaouch, Est Robbana, Sidi Mehrez, Est Ben Khalled, and Kef Errand) and five (5) drilled structures (Hasdrubal, Zarat, Adam Est Ben Khalled and Hawa) have been studied and evaluated.

EXPLORATION PROMOTION

VALORISATION OF OPEN BLOCKS :

In 2003 ETAP continued its efforts to promote and valorise free zones. The studies concerned the following free blocks: • La Skhira block • Tozeur block • Fahs block

MINING MARKETING : During 2003, marketing operations carried out by ETAP to promote the mining domain in Tunisia were the following :

• Information gathering missions : Fourty-two information gathering missions were welcomed to ETAP’s headquarters. The visiting ANNUAL REPORT 2003

companies, mainly American, Canadian, European, Japanese and Middle Eastern, were particularly interested in the open blocks in the Gulf of Gabes, the Chotts region, the south of Tunisia and the northern offshore region.

• Participation in petroleum industry events and meetings via stands The terracotta grimacing mask from the and/or scientific papers: Phoenician period. ETAP participated in six international petroleum conferences and meetings: - Participation in the North American Prospect Exchange – NAPE 2003 Forum and Exhibition in Houston USA ( January 28-30 2003), via a promotional stand and a scientific paper presented at the International Forum. - Participation in the Annual Convention of the AAPG at Salt Lake City, USA (May 11-14, 2003) via a promotional stand and two written scientific communications (posters) and an oral scientific communication. - Participation in the Maghreb and Mediterranean Oil and Gas Conference in Marrakech, Morocco (May 26-28, 2003) via a promotional stand and an oral scientific communication “the Advantages for Upstream Investment in Tunisia”. - Participation in the 65th EAGE Conference and Exhibition in Stavanger, Norway ( June 2-5, 2003) via a promotional stand and an oral scientific communication - Participation in the Canadian Gas and Oil International Petroleum Conference in Calgary, Canada ( June 10-12, 2003) via a promotional stand - Participation in the EAGE First North Africa/Mediterranean Petroleum & Geosciences Conference and Exhibition in Tunis (October 6-9, 2003) via a promotional stand and 15 scientific communications (9 oral communications and 6 posters).

• Door-to-door Missions : Three door-to-door missions were carried out in connection with ETAP’s participation in various industry events and meetings : - A door-to-door mission to eleven (11) international petroleum companies based in Houston, USA ( January 27-31, 2003): Noble Energy, Occidental, Murphy, Merlon, Gaither, Kerr-McGee, Ocean Energy, EOG Resources, Vanco Energy. Deveon and Frontiera

29 E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES

- A door-to-door mission to four (4) American petroleum companies based in Dallas, USA (May 15-16, 2003): Hunt Oil, Petro-Hunt, Approach Resources and Moncrief Oil - A door-to-door mission to eight (8) Canadian international petroleum companies based in Calgary, Canada ( June 9-13, 2003): TransGlobe Energy, Storm Energy, Canadian Superior, Husky Oil, Talisman, Antrim, EnCana and Eurogas.

OPERATING IN THE NORD DES CHOTTS PERMIT

Work on a geological and geophysical evaluation of the Nord des Chotts prospecting permit operated by ETAP has been completed. After having obtained the approval of the Board of ETAP, on July 29, 2003 a request for conversion to a research permit was made and accepted by the granting authority. Signature of the convention between the granting authority and ETAP took place on December 29, 2003.

TECHNICAL ASSISTANCE FOR INTERNATIONAL ACTIVITIES

This consists to finalise evaluation study of block 1 in Iraq.

30 ANNUAL REPORT 2003

ETAP ACTIVITIES

• International Activities • Exploration • Production • Exploration Studies • Trading Activities • Human Resources • Financial Results

31 E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES

PRODUCTION

PRODUCTION ON ETAP CONCESSIONS

In 2003 production on ETAP concessions was marked by : • The decrease in oil production on certain petroleum fields such as Sidi El Kilani and Oued Zar. • The increase in gas production, mainly from the Franig field.

Oil Production of ETAP Concessions 2500 2342 2177 1989 2000 1940 1898

Ashtart 1500 Sidi el Kilani Ezzaouia Oued Zar 1000 Isis Adam Others 500

0 1999 2000 2001 2002 2003

OIL PRODUCTION

The production of oil and condensate on ETAP’s concessions reached 1898 Ktm in 2003, compared with 1989 Ktm in 2002. This represents a 4% decrease. The slight drop is mainly due to the drying up the Sidi El Kilani, Oued Zar/Hamouda and Isis wells, column from the Antonine Baths (Carthage). Baths Antonine the from column and occurred despite input from the Adam field wells and an increase in production on the Franig field. It should be noted that oil and condensate production from ETAP’s concessions represented 60% of total national production of 3169 Ktm in 2003.

NATURAL GAS PRODUCTION

Production of tradable natural gas on ETAP's concessions reached 410.7 million NM3 in 2003, equivalent to 458 Ktep. This was a 4% increase over the previous year. The difference is largely due to the increase in production on the Franig field following the reopening of the Franig#1 well in May 2003 and it's coming into production with the Franig#4 well. It should be noted that production of tradable natural gas on ETAP’s concessions represents about 20% of national production of 2285.527 million NM3.

32 UBB UB#7DUE T i 6321DvtdProducer upoftheproject fortherecuperation oflow-pressure• Start gasontheHammoudafield. compressor.• Acquisition of asecondgaslift Devitad ENI ETAP, between ofthecontract 1 andSTEGforthesaleofgas. No. • ofrider Signature • bygas-lift. The activationofthewell Producer : 2003wereActivities principally of thisfieldduring related tothedevelopment 3211 Vertical CTFRig06 CONCESSION OUED ZAR discoveries. DOULEB new andalsodevelop fields, 1459 Producer GUEB #7 ETAP ofproduction toincrease operational oncurrently ormaintainthelevel hascontinueditsefforts Devitad GUEBIBA Crosco PROJECT EL KILANI REINECHE ACACUS 4555 CER #13 ADAM #2-st CTFRig05 CERCINA ADAM BIRENO ASH#85 ASHTART DRILLING OFDEVELOPMENT WELLS ONETAP CONCESSIONS these work over aimedattheactivationofwellsbyESP were essentially andjetpumping. of Themajority onETAP were performed 20interventions concessionsin2003. work over operations, in2003(3ons wellswere drilled development new Six DRILLING AND WORK OVER explained bytheproduction fields. decrease ofcertain be Thisincrease can increased fromconsequently 4.09US$/bblin2002to4.612003. costofthebarrel has The technical representing anincrease of1millionUS$. US $in2002, theexploitationcostsofETAP concessionsamount In 2003, EXPLOITATION COST II L 0AIDGetWl 7 etclProducer Vertical 1975 Great Wall ABIOD SLK#10 SIDI OCSINWL AGTRGDPHTP RESULT TYPE DEPTH RIG TARGET WELL CONCESSION S 8EGEI T i 5327DvtdProducer Devitad 3217 CTFRig05 ELGUERIA ASH #78 ELGUERIA T i 4411DvtdProducer Devitad 4181 CTF Rig04 ideco 301 (m) oe fsoe gis ee el n20.For wells in2002. againstseven 3offshore) hore, 33 to 36.7millionsUS$against35.7million

Demeter, white marble statue. A NNUAL R EPORT 2003 E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES

FRANIG CONCESSION

The additional development project is currently being carried out and consists mainly of increasing the capacity of the Oum Chiah processing centre from 15 to 40 MMSCFD. Long lead equipment has been supplied and the contract for installation work has been signed.

SABRIA FIELD

The installation of well testing and production equipment and work linked to the project for the recovery of associated gas. Processing of the additional seismic 3D done on a surface area of 82 s.q.m has been completed. A plan for the development of the field based on the resumption of wells already drilled is being prepared.

CHERGUI FIELD

The supply of long lead equipment (process units, compressors, generators and flame) continued. Land acquisition, the beginning of pipeline construction work, and the launching of consultations for the construction and the central processing facilities (CPF) is on going.

UTIQUE FIELD

Negotiations with Tunisian Gas Industries (TSI) resulted in the signature of a contract for the sale of

CO2 gas. Preliminary studies have been carried out on plans for completion of the wells and the selection of the material to be used.

34 of production attheHAWA#1 well. andpreparation work forthestart anddrilling station, Zar the Oued oilpipelinelinkingtheHAWA#1 to well 8” ofa13km, construction asthe such outin2003, works fortheoilphasewas carried Some Zar.Oued pipeline linkingHAWA stationat totheprocessing andmetering ofa13kmgas andtheconstruction Zar, unitsatOued metering andgas ofseparation Thisphaseconsists intheinstallation STEG. The gasphaseislinkedtothepossibilitiesofacquisitionby pipeline. tothe transfer TRAPSA beviathe existing8” pipelinewill andits Zar bestored will intheexistingtanksatOued The crude • Acquisition ofdefinitive processing andinstallation andfiscal ofasecondHAWA#2• Drilling well. • Continuation ofleasingequipmentforprocessing andmetering oilpipelinelinkingHawatotheOued 8” ofa13km, • Construction consists intherealisation ofthefollowingThe development work : HAWA FIELD ADAM#1 andADAM#2 out. were wells alsocarried ofproduction atthe siteandthestart Zar equipment ontheOued of processing andinstallation Leasing stationwasbuilt. Zar linkingtheADAM#1 totheOued well pipeline, 8” A 15kmlong, ADAM FIELD should beginin2006. continueandproduction ofthefieldwill development is positive, Ifthis thisplanisforaproduction testontheproducer well. Initially storagebarge(FPSO). pipelinetoaprocessing andcrude sub-marine linkedbya aproducer wellandaninjectorwell, consisting indrilling largely planhasbeenpreparedA development bythefieldoperator, OUDNA FIELD metering equipment for crude at Oued Zar. atOued equipmentforcrude metering and ADAM #2wells. ofproduction oftheADAM#1 usedforthestart initially crude, Zar. stationatOued separation Zar 35

The Dougga capitol. A NNUAL R EPORT 2003 E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES

SECURITY AND ENVIRONMENT

ETAP continued in its role of facilitator and initiator with regard to safety, health and environment in the hydrocarbons sector. Different activities took place during 2003, mainly concerning : • Participation in safety, health and environment audit operations. • Assistance to partners and operators in order to obtain the necessary approval from the concerned authorities for the completion of studies concerning the impact on the environment. • Opening of the headquarters of the Permanent Secretariat of the Mediterranean Oil industry Group (MOIG) in Tunisia.

36 ANNUAL REPORT 2003

ETAP ACTIVITIES

EXPLORATION STUDIES

The studies carried out during 2003 form part of the technical support provided to the Exploration and Production Departments and to the operators. Other medium term studies were also carried out. Their goal was to define the potential of the country and generate new ideas to improve future exploration. The principal projects and studies carried out during 2002 were the following :

• Project : Study of the petroleum Systems in the Grombalia/Cap Bon and Kairouan Nord/El Jem regions Carthage. The main objective of these studies is to better define the petroleum systems, by identifying the main zones generating hydrocarbons, the timing of the generation, and the principal directions of hydrocarbon migration.

• Project : Study of deep targets in Tunisia With a view to consolidate the promotion of exploration by the search of new plays, the evaluation of the deep targets initiated in 2001 is being finalised in the Chotts region, the southern part of the Gulf of Gabes, and the Ghadames Basin. The goal is to identify the deep structures and estimate their hydrocarbon reserves.

• Project: Model of the Bireno and Acacus deposit plays - Bireno : The study of the Bireno play, the principal target of the Rhemoura, Guebiba and Mahres concessions, in order to identify the origin of H2S and define the model of the Bireno reservoir deposit is being completed. - Acacus : Following the discovery of oil in the Acacus reservoir after the successful re-entry of Oued Zar#1 and the drilling of other positive wells (Hammouda #1 Adams and Hawa #1), a multi- disciplinary study was initiated to establish the deposional model of the Acacus reservoir and facies distribuation completed.

• Project : Diagnostic of drilled prospects The evaluation of drilled prospects has continued and has enriched the map of exploration risks. The goal is to establish a regional maps for each of the petroleum system component. During 2003, four additional wells were studied, bringing up to 112 the number of wells which have been reviewed and analysed.

38 ANNUAL REPORT 2003

• Project: Study of hydrodynamics in the Sahel region This project is underway and is developing information drawn from this new theme and its contribution to a better understanding of hydrocarbons migration in active aquiferous basins.

• Preparation of a catalogue of Tunisia’s Tertiary series Following the series of catalogues and standard sections concerning the Trias, Jurassic and Cretaceous already published by ETAP, the catalogue of tertiary standard sections was initiated in 2003.

• Evaluation of the El Fahs and Tozeur open blocks As part of the plan to assess open blocks, geological and geophysical studies were carried out on the El Fahs and Tozeur blocks.

ACTIVITIES ON THE PERMITS

This consists of a 1D modelling of real and pseudo wells on the

Jelma permit. The goal is to determine the timing of the generation The Licinian baths (Dougga). baths Licinian The and expulsion of hydrocarbons from the Bahloul and Fahdene source rocks.

VARIOUS JOINT PROJECTS

Continuation of cooperation with academic organisations, particularly ENIS, FST and ENIT, through the following projects : • Thermal modelling and transfer of the mass of petroleum reservoirs in the Gulf of Hammamet (ETAP-ENIS) • Study of the effects of volcanic manifestations on the overhanging rocks in the Sahel and Gulf of Gabes regions (ETAP-FST) • Modelling of the flows and transfers from the Trias sheet in the Ben Gardene-Remada region (ETAP-ENIT).

39 E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES

PETROLEUM AND PATRIMONY DATA BASE

The Petroleum Data Base, which ETAP acquired at the end of 1998 in order to ensure the safeguard and perenniality of the E&P data patrimony now operates regularly. This safeguard covers the following aspects : • Storage of the mass : migration on a high density support of the stored seismic and diagraphical data supports of which there about 130,000; • Scanning and indexing of technical documents; • Loading the geographical data concerning 875 wells and production data (production, drilling, reservoir, completion); • Migration of seismic and mining navigation data.

In 2003, the volume of data migrated in the bases included : • 40,000 seismic bands, i.e. 34% of the total volume; • logs for 365 wells, (100% of the existing volume) in digital form; • geological cut-outs (initial version) of 337 wells (122 in the south of Tunisia, 176 in the Gulf of Gabes, and 39 in Central Tunisia); • co-ordinates of 875 wells, the limits of 123 leases (concessions, permits and free blocks) and the navigation of 5700 seismic lines (out of a total of approximately 15,000); • scanning of 700 final geological reports on wells, out of a total of 732.

In addition to ensuring the safeguard and management of this patrimony, the data base staff have worked with other end-users within ETAP and with operators. This work particularly involved the transcription of bands, duplication, consultation of technical documents, seismic and diagraphical vectorisation and seismic navigation.

LABORATORIES

ETAP has impressive laboratories which provide analytical and technical support for the exploration and production activities carried out by both ETAP and the operators. Specialities which are indispensable to this work, such as bio-stratigraphy, sedimentology organic geo- chemistry, physio-chemical analysis of petroleum fluids and the impact on the environment have been developed.

40 ANNUAL REPORT 2003

In 2003, these laboratories covered a very varied sector and provided their services to about 20 petroleum operating companies and national organisations, either for analytical services or for carrying out joint study projects. In addition, these units have been active partners in work done between companies to further the management of the petroleum patrimony and petroleum exploration. This has included : • The hydro dynamism project in the Sahel region • The evaluation project on the Nord des Chotts permit • The re-evaluation project of the Bireno play in the Sahel region • The project to study the petroleum systems in the Grombalia- CapBon and Kairouan-Nord El Jem regions • The project for a bio-stratigraphical and sedimentological study of the Abiod • The project to catalogue reservoirs • The project to catalogue the Tertiary

INFORMATION TECHNOLOGY

During 2003, ETAP continued to develop information technology and the steps taken in this direction included: • the establishment of modules for the management of human resources and the testing of administrative and organisational models. • a final decision on the choice of a detailed solution for the security of ETAP'S network and its systems. • acquisition of a NetWork Attached Storage System for the mass storage of the company's data, particularly information produced for technical applications. • the up-dating of its mass storage robot (BDP) in order to increase its storage capacity from 6 to 12 terabytes.

41 The Dougga Forum and Capitol. Forum The Dougga E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES ANNUAL REPORT 2003

ETAP ACTIVITIES

TRADING ACTIVITIES

During 2003 ETAP's trading activities included in particular : The export of 1,307 KTM of crude and condensate and the import of 2,025 KTM petroleum products, natural gas and crude.

EXPORTS

The quantity of crude and condensate exported fell by 18% during 2003 compared with the previous year whereas the global dollar value of these exports only fell by about 3%. This was the result of the increase in prices during the year, which exceeded $4 per a barrel.

Crude oil Total exports of crude oil, all qualities included, were 1,278 KTM in 2003 compared with 1,565 KTM in 2002. This decrease of 18.4% can largely be explained by the natural drop in production on certain fields and well as the halting of the Didon well for technical reasons.

Crude oil exports

(KMT) QUALITY 2002 2003 ZARZAITINE 635 473 ASHTART 450 455 EZZAOUIA 66 43 RHEMOURA 173 127 DIDON 104 109 ISIS 137 71

The value of these exports also fell, from $283 million in 2002 to $274 million 2003. This decrease of about 3% in dollar terms and 11% in dinar terms occurred despite the increase in prices. The average FOB selling price per barrel, all qualities included, was $28.68 per barrel in 2003 compared with $24.05 per barrel in 2002. This compares with the average dated Brent price of $28.84 and $24.98 per barrel respectively following the increase in prices on the international oil market.

44 ANNUAL REPORT 2003

The average sale price by quality of exported crude oil is as follaus :

Average FOB prices by quality of crude (US$ /b) QUALITY 2002 2003 ZARZAITINE 23,99 29,36 ASHTART 22,76 28,47 EZZAOUIA 27,83 28,09 RHEMOURA 23,55 26,38 DIDON 23,09 29,83 ISIS 27,91 27,87

Condensate

At 29 KTM, the quantity of condensate export in 2003 was almost the same as the previous year, whereas the dollar value rose to $8 million, the Dougga mausoleum is being an increase of about 23%. This was the result of the increase in one of the finest examples international prices during the year. of Numidian architecture.

IMPORTS

Supplying the local market in petroleum products, natural gas and crude oil necessitated the import of 2,025 KTM during 2003 compared with 1898 KTM in 2002. This represented a 7% increase and the value rose from i$313 million to $394 million.

Crude Oil Imports of crude oil from Libya rose slightly in quantity, going up to 1140 KTM in 2003 compared with 1120 KTM the previous year. However, the value of these imports increased by 22% over the previous year, rising from $210 million to $256 million as a result in increased import prices ($29.73 per barrel in 2003 compared with $25.04 per barrel in 2002).

PETROLEUM PRODUCTS Although similar quantities of bitumen and lube oils were imported in 2002 and 2003, their value rose by $5 million, going up from $31 million in 2002 to $36 million in 2003.

45 E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES

NATURAL GAS The dollar cost/freight value of purchases of Algerian natural gas delivered to the STEG increased by 52%, rising from $29 million in 2002 to $85 million in 2003. This was the result of the rise both in prices (+26%) and the quantity imported (+19%).

Other commercial operations carried out by ETAP during 2003 can be summarised as follows • Cession to the STIR of 1,814 KTM compared with 1,753 KTM in 2002. • Sale to the STEG of 101 KT of gas from the Franig and Baguel fields and 119 KT of Oued Zar gas, compared with 96 KT and 107 KT respectively in 2002. • Sales of some partners' share of crude oil, amounting to 80 KTM, either on the local market (Zinnia and El Menzah crude) or on the international market.

46 ANNUAL REPORT 2003

ETAP ACTIVITIES

HUMAN RESOURCES

In 2003, Human Resources activities concerned mainly the following :

• completion of preparatory work and the start-up of the new ETAP Technical Centre for Petroleum the temple of Juno Caelestis (Dougga). Research and Development. • signature of an agreement on triennial salary increases for the period 2002-2004. • reinforcement of the Technical and Management departments by the recruitment of three production engineers and three auditors. • discussions with the union which dealt mainly with the revisions of expertise criteria for engineers, its extension to management positions, and the company's staffing pattern. • Continuation of training in new technologies using better targeted programs.

STAFF

For the eighth consecutive year, the number of staff has remained stable. As of December 31, 2003, the staff totalled 591, the same figure as the year before. The management ratio and the staffing pattern based on administrative classification or principal activity has not undergone any significant change since last year :

Evolution in the number of staff during

YEAR 2000 2001 2002 2003 CATEGORY - Management 342 337 350 352 - Supervisory 187 187 187 185 - Agents 59 58 53 54 TOTAL 588 582 590 591

PROFESSIONAL TRAINING

During 2003 priority was given to training in new technologies, particularly in-house training. The main training programmes during the year were : • Participation of engineers and technicians in various national and international events (congresses, conferences, seminars, etc). • In-house training which consisted in nine programmes dealing with both technical and management operations. • on-going English language and IT training programmes; both of these are indispensable tools for capitalising on expertise and know-how.

48 ANNUAL REPORT 2003

The training budget reached 303,000 TD in 2003, which is equal to 3.2% of the pay-roll.

SOCIAL DIALOGUE

As part of the policy to encourage social consultations and dialogue, a large number of meetings and get-togethers with the social partners were held in 2003. These meetings covered many aspects of company life and resulted in the signature of a triennial agreement on salary increases (2002-2004).

SOCIAL ACTIONS

Steps taken during 2003 resulted in consolidation of the company's The gigantic public square on Byrsa hill. policy towards preventive medicine in the workplace and the (Carthage). improvement of social advantages. The medical service continued its prevention and health coverage programmes for the company's personnel. The company's social fund continued its contribution to the financing of various loan operations, restaurant facilities and assistance to personnel. The company's programme of sport and social/cultural activities for its personnel and their families continued to develop and included sport activities, childrens' clubs, holiday camps, and cultural excursions.

49 E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES ANNUAL REPORT 2003

ETAP ACTIVITIES

FINANCIAL RESULTS

The principal financial results for the 2003 exercise show a slight drop compared with 2002. This is essentially due to an unfavourable economic climate which saw a decrease in the quantity sold, accompanied by a depreciation in the average exchange rate. Analysis of the evolution of the various revenues and expenditures is as follows :

OPERATING INCOME

ETAP's income amounted to 277.772 MDT for the 2003 exercise, compared with 287.279 MDT for 2002. This drop of 9.557 MDT (about 3.3%) is partially due to an increase in the average sale price, and the decrease in the quantity of crude sold. Coupled with the depreciation in the average exchange rate, which fell from 1.4187 in 2002 to 1.2855 in 2003. Gas turnover rose, to reach 33 MDTcompared with 29 MDT, being an increase of 4 MTD.

Details of income by principal items is as follows

2002 2003 Crude Sales 242.447.843 248.982.171 Bow of a Punic warship -Local 105.606 430 109.299.911 (IIIrd-IInd century BC stele). -Exports 136.841.413 139.682.260

Royalty income in kind 39.938.405 24.004.641

Commission 3.407.405 3.412.847 -On sales of crude petroleum 1.975.215 1.898.268 -On sales of finished products 1.322.708 1.412.354 -Others 109 482 102.225

Studies and services 1.484.875 1.322.407 -Laboratory work 26.956 22.800 -Seismic work 76.960 42.197 -Assistance on concessions 1.150.453 1.160.830 -Studies 65.578 55.130 -Others 164.928 41.450

TOTAL IN DINARS 287.278.528 277.722.066

52 riaylse oald03MT Theselossesare duetothe • 0.3MDT. lossestotalled ordinary • gainsfellfrom 1.2MDTin2002to0.82003. ordinary from 12.3MDTin2002to11,3 investment incomefellby1MDT, • by1.3MDTto1.1in2003compared net financialcostsfell • inincomeandexpenditure are variations asfollowsOther : OTHER INCOMEANDCOSTS resulting • An increase of1.2MDTinotheroperatingexpenses, 2003 • Total taxesamountedto25.3MDTasofDecember31, • onprovisions forprovisionsappropriation andbrought forward a 9.2MDTdrop tothedepreciation inappropriation andresorption • rose which to10.8MDTin2003 • an increase inpersonnelcosts, • a slightincrease from of0.3MDTinconsumedpurchases (rising ofcrude. instocks • a-5MDTvariation inthefollowing items: Thiswasduetovariations year. previous Total by7.8MDTin2003compared withthe costsfell operating OPERATING COSTS certain concessions certain forincidentson repayments consistsofinsurance This itemmainly cession ofsecurities. duetothedrop ingainsonthe Thiswasessentially MDT in2003. inexchangelossesandgains. variation from Thisresulted the largely year. with 2.4MDTtheprevious from theincrease costs. mainly ininsurance 2003compared with25.5MDTin2002. December 31, amountedto24.6MDTasof which toproduction, in proportion ofduespayable Thesetaxesconsistessentially compared for2002. onprovisions compared year. withtheprevious brought forward in duetothefall ismainly Thisvariation with -0.7MDTin2002. 2003compared showing atotalof4.5MDTasDecember31, fordepreciationappropriation oftangibleassets. depreciation ofintangibleassetsanda7.8MDTdrop in for from inappropriation This resulted a1.4MDTfall mainly accounts (54.1MDTin2003compared with63.3MDTin2002). increases. and statutory duetolegal Thiswasmainly compared with10.3MDTin2002. 61.5 MDTin2002to61.82003). 53

Victory, low relief. IInd century AD A NNUAL R EPORT 2003 E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES

abandon of investments on the Gremda concession, which resulted in a loss of 0.3 MDT. • taxes on profits amounted to 77,2 MDT, a 6.5 MDT increase over the level of 70.7 MDT in 2002. This is mainly due to an improvement in income on certain concessions following the increase in the average selling price.

NET RESULT

The net result for the 2003 exercise amounted to 48.4 MDT compared with 48.5 MDT in 2002, therefore showing a slight increase of 0.1 MDT. This result is mainly due to the following activities :

OUED ZAR 14MDT SIDI EL KILANI 4MDT ASHTART 12MDT BAGUEL 3MDT FRANIG 7MDT ADEM 3MDT

The “House of the Aviary”, a vast dwelling in which courtyards bordered with porticos alternated with reception rooms, gardens, ponds and cascades. ANNUAL REPORT 2003

INCOME STATEMENT

(in TD) 2002 2003 OPERATING INCOMES Revenues 287.278.527.850 277.722.066.197 Other Operating Incomes 2.758.849.624 3.125.225.089 TOTAL OPERATING INCOMES 290.037.377.474 280.847.291.286 OPERATING COSTS Crude-Oil stock variation -4.177.131.705 823.436.715 Supply Purchases -62.904.357.242 -62.997.561.692 Supply stock variation 1.364.062.341 1.167.678.419 Consumed Supply Purchases -61.540.294.901 -61.829.883.273 Manpower Costs -10.286.276.363 -10.780.164.236 Appropriation to Amortizations and Absorptions -63.378.375.075 -54.126.577.892 Appropriation to Provisions/Bringing Forward on Provisions 732.840.519 -4.555.134.311 Taxes and Duties -26.124.657.789 -25.344.522.907 Other Operating Costs -8.728.960.421 -9.893.910.855 TOTAL OPERATING COSTS -173.502.855.735 -165.706.756.759 OPERATING PROFIT 116.534.521.739 115.140.534.527 Net Financial Costs -2.386.680.082 -1.287.522.367 Investment Incomes 12.320.365.563 11.282.007.008 Other Ordinary Earning 1.178.572.840 808.297.396 Other Ordinary Losses -8.445.275.045 -332.065.663 ORDINARY ACTIVITY INCOMES 119.201.505.015 125.611.250.901 BEFORE TAXATION Corporate Tax -70.663.054.186 -77.172.776.942 ORDINARY ACTIVITY INCOMES 48.538.450.829 48.438.473.959 AFTER TAXATION Extraordinary Items - - Net Profit 48.538.450.829 48.438.473.959 Effects of Accounting Modifications (Net Taxation Amounts) 0.000 0.000 PROFIT AFTER ACCOUNTING 48.538.450.829 48.438.473.959 MODIFICATIONS

55 E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES

BALANCE SHEET

(in TD) ASSETS 2002 2003 NON-CURRENT ASSETS Fixed Assets Intangible Assets 151.565.175.268 168.182.378.111 Minus Amortizations -146.799.275.564 -162.993.559.744 4.765.899.704 5.188.818.367 Tangible Assets 579.275.677.967 610.487.328.111 Minus Amortizations -473.118.032.012 -503.248.702.998 106.157.645.955 107.238.625.113 Capital Assets 142.102.807.462 139.730.887.733 Minus Provisions -217.446.650 -42.649.280 141.885.360.812 139.688.238.453 Other non-currant Assets Others non-current Assets & Costs Carried Forward 194.797.740 37.656.467 Minus Provisions CUSTOMERS AND RELATED ACCOUNTS 253.003.704.211 252.153.338.400 CURRENT ASSETS Stocks 16.474.403.373 18.465.518.505 Minus Provisions -3.213.048.066 -3.144.674.060 13.261.355.307 15.320.844.445 Customers and Related Accounts 361.777.469.716 298.309.301.397 Minus Provisions -2.056.187.330 -2.056.187.330 359.721.282.386 296.253.114.067 State 122.881.125.913 95.982.989.301 Current Accounts for Oil-Partnerships 42.289.493.864 30.259.506.498 Minus Provisions -4.042.382.206 -9.416.591.610 38.247.111.658 20.852.914.888 Others current Assets & Adjustment Accounts 7.164.610.088 7.225.067.864 Minus Provisions -729.951.560 -763.385.910 6.434.658.528 6.461.681.954 Investments and Other Capital Assets 1.214.010.591 1.443.376.750 Liquidities & Liquidity Equivalent 209.157.820.022 235.354.050.180 Minus Provisions -2.162.422 -2.162.422 209.155.657.600 235.351.887.758 Total Currents Assets 750.915.201.983 671.666.809.163 Total Assets 1.003.918.906.194 923.820.147.563

56 ANNUAL REPORT 2003

BALANCE SHEET

(in DT) STOCKHOLDERS’ EQUITY AND LIABILITIES 2002 2003 Stockholders’ Equity Appropriation Funds 138.555.058.000 138.555.058.000 Reserves 950.000.000 950.000.000 Other Stockholders’ Equity 4.520.360.747 4.772.065.459 Results Carried Forward 72.859.457.126 75.997.907.955 Profit 48.538.450.829 48.438.473.959 Total Stockholders’ Equity 265.423.326.702 268.713.505.373 OTHER LIABILITIES Non-current Liabilities Loans 154.542.679.797 125.068.749.085 Provision for risks and costs 4.963.105.758 4.389.978.312 Liabilities Translation-differential 4.591.541.622 7.424.836.621 Total non-current Liabilities 164.097.327.177 136.883.564.018 Current Liabilities Suppliers and related Accounts 56.516.497.646 75.076.535.057 State 430.340.587.909 345.776.894.686 Current Account of Oil-Partnerships 57.318.838.419 44.971.445.406 Other Current Liabilities 2.782.208.555 3.674.097.454 Loans 27.440.119.786 48.724.105.569 Total currents Liabilities 574.398.252.315 518.223.078.172 TOTAL OTHER LIABILITIES 738.495.579.492 655.106.642.190 Total Stockholders’ Equity and Liabilities 1.003.918.906.194 923.820.147.563

57 E NTREPRISE T UNISIENNE D’ACTIVITÉS P ETROLIÉRES

58 ANNUAL REPORT 2003

59 Tél. : 71 236 111 - Fax : 71 232 303 - E-mail : [email protected]