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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%).