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République Tunisienne Ministry of Industry & SMEs

République Tunisienne Ministry of Industry & SMEs. The Tunisian Energy sector - Reality-Challenges & Opportunities. London October 2018. Summary. Introduction General Overview Context and reality New Vision For an Energy Transition

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République Tunisienne Ministry of Industry & SMEs

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  1. République Tunisienne Ministry of Industry & SMEs The TunisianEnergysector- Reality-Challenges & Opportunities London October 2018

  2. Summary • Introduction • General Overview • Context and reality • New Vision For an Energy Transition • Opportunities to invest in Tunisia in the Energysector

  3. Tunisia post Jasmin revolution is in the process of achieving its democratic transition • The next challenge is to achieve the economic transition for a new, prosperous Tunisia. • The energy sector will play a decisive role in meeting this challenge and participating in the country's economic growth.

  4. Organization of Tunisian Energy Sector Ministry of Industry & sme Mines General Department Electricity & Renewable General Department Strategy General Department Hydrocarbon General Department Direction Générale de l’Energie STEG ONEM S N D P ONM E T A P S T I R CPG ANME GCT

  5. Upstream Activities Main Operators, Fields and development projects Main Operators Shell* (Ex BG) DNO ENI ETAP Joint Oil Mazarine Energy Medcoenergie Numhyd OMV Perenco* Petrofac* (Perenco) Main Producing Fields El Borma: South. Onshore, O&G Adam: South. Onshore, O&G Chourouq: South. Onshore, O Ashtart: East. Offshore, O Miskar: East. Offshore G Hasdrubal: East. Offshore G&C Main Development Projects Zarat: Offshore,O&G Cosmos: Offshore, O Nawara: South Onshore, G&C

  6. British companies in Tunisia for upstreamactivities 71% of the National NG Production 18% of the National Oil Production • Shell (BG) operates 2 offshore concessions: • Miskar (1996)& Hasdrubal (2009) • invest 240 million $ in exploration and 4 Billion DT in Development • Petrofac (Perenco) 1 offshore concession • Chergui (2007) • Dev Invest: 177 Millions DT • And RecentlyUplandResources Limited for an exploration permit

  7. Upstreamactivities Wells Drilled & OilInitially in Place by Basin Gulf of Hammamet Basin: Wells: 103 Reservoirs: Miocene & Cretaceous OIIP: 940 MMBLS Produced up to 12/31/2017: 53 MMBLS Gulf of Gabes Basin: Wells: 256 Reservoirs: Eocene, Cretaceous & Jurassic OIIP: 2245 MMBLS Produced up to 12/31/2017: 475 MMBLS Ghadames Basin: Wells: 355 Reservoirs: TAGI, Devonian, Silurian & Ordovician OIIP: 2700 MMBLS Produced up to 12/31/2017: 890 MMBLS

  8. Resources & Reserves • Initial In Place: • 7.30 BBLO • 11 TCFG • Production up to 12/31/2017 • 1.60 BBLO • 2.95 TCFG • Remaining Proven Reserves:(46% Oil & 54% Gas). • 350 MMBLO • 2. 35 TCFG • Estimated Possible and Probable Conventional Resources: • 970 MMBLO • 3.5 TCFG • Estimated Shale Resources*: • 1.5 BBLO ( only in Ghadames Basin) • 23 TCFG ( only in Ghadames Basin) • * Source : EIA

  9. During the last years, the Tunisian energy balance goes through a considerable deficit as shown by the following KPI’s:

  10. EnergyIndependance rate 142% 51% • 1990-2000: Surplus • 2001-2010: Balance • 2011-2017: Deficit

  11. Main KPI’s • Energysecurity • A recurrent deficit in the energy balance (decrease in resources and continuous increase in demand) • Total Primary Energy Resources: 4.9Mtoe in 2017 ( 90Kboe/d) Vs 7.8 Mteo in 2010 (150kboe/d) • Energy Consumption: 9.6 Mtoe in 2017 vs 8.3 Mtoe in 2010 • Decrease of Energy independence rate: 51% vs 94% in 2010 (in 2017, 50% of National energy needs were imported) • Low RE penetration rate in the energy mix (3%) • A slowdown in E & P activities • Number of permits: 23 in 2017 Vs 52 in 2010 • Number of wells drilled: 2 in 2017 Vs 38 in 2010 • Seismic acquisitions: 550 in 2017 Vs 4800 in 2010 • Investments in exploration: 70 m US$ in 2017 Vs 375 m US$ • A production of electricity based almost entirely on Gas (97%) • No backup solution for gaz supply

  12. KPI’s • An electrification rate of around 100% • A good evolution of the gas infrastructure • An advanced energy efficiency program

  13. Evolution of the Energy Balance Million de tep-pci RecuringDeficit * Prévisions mai 2018

  14. Slowdown of E & P Activities * Prévisions mai 2018 • The non-attribution of new licenses from 2014 until June 2017 (conformity of the HC with article 13 of the constitution) • Decrease in the average number of valid permits from 52 in 2010 to 23 permits in 2017. • Decrease in the number of development wells involving a drop in hydrocarbon production

  15. Investment in Exploration • Investment in exploration declined from 375 million US$ in 2010 to 70 million US$ in 2017

  16. Mix electric 2,4% ER 97% NG Electricity generation is 97% based on natural gas. 72% of total natural gas demand is for electricity generation

  17. This regression of the E&P activitycanbeexplainedmainly for the followingreasons: • 1- The naturaldecline of the major feilds (Ashtart, Miskar, ElBorma, Adam) • 1- The volatility of the price of a barrel (around 110 US $ / bbl between 2011 and 2014 to fall to an average of 50 US $ between 2015 and 2017) • 2- The non-attribution of new licensessince 2014 untilJune 2017 following article 13 of the new constitution (licence have to begiven by lawvoted by ARP) and the need to adapt the hydrocarbons code accordingly • 3- Demonstrations and social demands • Thesereasons no longer have anyreason to be: • • Prices have picked up since the last quarter of 2017 and are nowaround 75-80 US $ / bbl • • The hydrocarbons code has been adapted to Article 13 of the new constitution, whichallowed the unfreezing of the licensingprocess in June 2017 and the granting by law of two new licenses (Douiret and Nefzaoua). • • Lastly, protests and social demands are less intense following the long process of negotiationsbetween the government and protesters • GovernmentDecision to institute the production areas as military zones.

  18. Tunisia Energy New Vision 1st Stage (acceleration of reforms) Transitionalperiod: implementation of actions to relaunch of the conventional and non conv hydrocarbure and accelerate the renewableenergyprojects 3rd State (End of generation) Development of a clean energy model thatprotects and fully respect the environment Facedwiththis situation, Tunisiarecently has put in place a strategic vision with a multi-temporal horizon based on a balance of three strategic dimensions: i)Energy Security, ii)Energy Equity and Governance, and iii) Sustainable Development. 2nd Stage (Intermediate stage) Renewableenergyispre-eminent, and completion of infrastructure improvement

  19. Securing the energysupply energy transition RE & EE renewal of hydrocarbonreserves The Priority Areas declinedfrom the Vision Development of infrastructures Increase production Supplyequity Industrialpolicy Social policy Economiccompetitiveness Regulatoryagencies Governance & Transparency

  20. ENERGY SECURITY: Requires the relaunch of E&P Activities, the diversification of the energy mix and the upgrade of oil, gas and electricity infrastructure. • EnergyEquity & Governance: Ensure equitable supply to all regions under the best conditions as well as participatory and developed governance of the sector. • SustainableDevelopment: A program based on competitive energy respecting the environment Approvisionnement équitable

  21. ENERGY SECURITY: • I- The relaunch of E&P Activities • Action’s Taken and Project In Progress: • Adaptation of The hydrocarbon code to the new constitution, • Negotiationsbetween the government and protesters • Institution of production areas as military zones. • Strategic revision of the HC • Strategic study on the Exploration of Shale Gaz. • A more attractive promotional policy of free blocks • Incentive for exploration in the north, center and offshore north • Deep target exploration • Restructure ETAP to bring it to its real role as a national energy operator and strengthen the regulation role of the Ministry: PIP Tunrep Project Approvisionnement équitable

  22. ENERGY SECURITY • II- Energy Transition: based on acceleration of RE Production • Renewable energy holds strong potential in Tunisia. • A capacity factor of 35.0% for wind and 19.4% for solar PV (The strongest solar radiation is in the south of the country ). • Wind and solar photovoltaic (PV) provide the opportunity to improve Tunisia’s energy security, to meet growing energy demand, and to create a future power-export industry for Tunisia Approvisionnement équitable

  23. ENERGY SECURITY • II- Energy Transition • Objectives: • The Tunisian Solar Plan (TSP) has an official target for total RE share of 30% of the power mix by 2030 • The Tunisian Efficient Energy Program has an official target of 30% consumption reduction by 2030 Approvisionnement équitable

  24. Current Status of Renewable Energy in Tunisia • Favorable wind sites are found along the northern coast, as well as in central and southern regions • A capacity factor of 35.0% for wind and 19.4% for solar PV (The strongest solar radiation is in the south of the country )

  25. PLAN SOLAIRE TUNISIEN : Objectifs 30% of Electicityproduced by RE in 2030 Rate of RE in the Mix Electric Estimated cumulative power to install (MW) 12% • Global investment of around 4 billion Euros by 2030

  26. Purchase Power Agreement PPA • Ten companies have just been granted permission to operate in Tunisia. Six for photovoltaic projects with a capacity of 10 MW and four for a capacity of 1MW. • Offers received presented by dynamic and ambitious promoters, alone or in partnership with confirmed foreign operators. Some Tunisian candidates are also manufacturers of photovoltaic panels. Also, the proposed prices are doubly incentive for both the candidates and the Steg who will buy the electricity produced.

  27. I- Oil & Gaz Opportunities & Advantages to invest in inTunisia • PoliticalStability & Democratic institutions: Long termvisibility for investors • Unexploredpotentialmainly in North offshore and Center (only a total of 1200 Wells drilledsince 50 years, needs of more sismic high tech acquisition, Greece, Egypt, Cyprusgeolanalogy) • Gaz opportunitiesmainly for deeptarget • Incentive fiscal terms and taxation (10 MM BBlreserve in Tunisiaisequivalent to 40 MM BBL in neighbor’s countries) • Transparency and good governance • Availability of highlyqualifiedlaborskills • The quality and the facility of access to the geologicaldatabase • Quality of infrastructure (specifically in Gas) • The environmentregulation • The geostratigicalpostion of the country (Energy Hub) • The excellent relations withneigbor countries • The repetuation and performance of British Companies operating in Tunisia • Quality of life in Tunisia for long investment

  28. II- Renewable Opportunities & Advantages to invest in inTunisia • Legalframework (Authorization, Concessiona, Self GenerationLegislativeRegimes): long termvisibility • Single Buyer: Sale guarantee • Power network management and maintenance provided by STEG Reduce Risk’s for Investors • the identification and the choice of the site responsibility of STEG • Interconnection with Italy (Elmed Project 600 MW) Possibility of selling electricity to Europe in the long term • Maghreb Interconnection (Algeria and Libya) regional opportunities • Support Tunisia’s contributions to climate change • Transparency & Equity • Help Desk in ANME to assist investors in all project stages

  29. The commitment of ourGovernment and the initiatives we have justlaunched encourage the investors in Energysector to establish a win-winrelationshipthatwillenableTunisia to ensureitsenergysecurity and itspartners to enjoy profitable and sustainableinvestments.

  30. Thanks for yourattention

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