Suez: Answers to water shortage challenges. or acquired for the Barka Phase II - Rusail Projects.

Transcription

1 Suez: Answers to water shortage challenges Thierry MALLET CEO of Degrémont Mario SAVASTANO CEO of the Companies formed or acquired for the Barka Phase II - Rusail Projects. February 7, 2007

2 Information Meeting February 5-8, 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 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 or directly from Gaz de France on its web site at: or directly from Suez on its website at: 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 ) and in the Document de Référence and its update filed by Suez on April 11, 2006 (under no: D ), 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, Except as required by applicable law, neither Gaz de France nor Suez undertakes any obligation to update any forward-looking information or statements.

3 Information Meeting February 5-8, Agenda Water shortage 2 alternative water solutions Desalination Reuse

4 Information Meeting February 5-8, Water shortage: a worldwide situation 2.5 billion people are facing water stress or scarcity: Water stress < m3/p/year of resource renewable Water scarcity < m3/p/year of resource renewable Example Australia: No National scarcity but local scarcity opportunities: Western & Southern face chronic water shortages.

5 Information Meeting February 5-8, Water shortage: 2 alternative water solutions Complementary resources Drinking water Desalination Irrigation REUSE Industry 2.4 Billion people live near the sea Desalination, already an alternative for more than 200 million people 368 km3/year wastewater collected in the world Only 160 km3/year wastewater are treated and 7,1 km3/year (4,5%) recycled.

6 Information Meeting February 5-8, Agenda Water shortage 2 alternative water solutions Desalination - Technologies - Middle East specificities Reuse

7 Information Meeting February 5-8, Two major families: Reverse Osmosis and Thermal: Leading desalination technologies Membrane technologies (Reverse Osmosis) Sea water is filtered, by applying pressure across a membrane separating permeate on one side, and brine on the other 32 to 80 bars from brackish to seawater Thermal technologies Sea water is evaporated, and condensed to form a salt-free distillate Multi-Stage-Flash (MSF) Multi-Effect-Distillation (MED)

8 Information Meeting February 5-8, Reverse Osmosis and Thermal: Leading desalination technologies Thermal process: Separate water and dissolved salts by evaporation Reverse Osmosis: Retain by a filter membrane the salts dissolved in water Installed capacity (million m3/day) World RO CAPEX ( ): 17 billion USD Reverse Osmosis Thermal process Reverse Osmosis: a a competitive technology, supplanting the the thermal solution

9 Information Meeting February 5-8, Gas price increase favors less energy intensive technologies As gas costs increase to international levels, RO clearly becomes more competitive Under high gas price scenarios, fuel becomes the dominant cost component in an MSFproduced m3 of water MSF and MED technologies require more capex than RO Water cost vs Fuel prices ( cents/m 3 ) Capital cost O&M Chemicals cost O&M Renewal cost O&M Manpower cost Electricity cost Fuel cost RO MSF 0.8$/Mmbtu MSF 2$/Mmbtu MSF 3$/Mmbtu MSF 4$/Mmbtu RO RO is is the the most competitive technology and and even better in in a a context of of high energy cost

10 Information Meeting February 5-8, Reverse Osmosis technical advantages Versatility: For the treatment of all types of water: brackish water sea water Adapted to all sizes of installations and any sources of energy: steam, electricity Setting up in all geographic zones possible Curacao, Caribbean Sea water m3 Flexibility: Plant sizing according to the present needs (possibilities to increase production capacity) Operating cost is proportional to flow variations El Atabal, Spain Brackish water m3

11 Information Meeting February 5-8, Reverse Osmosis: a competitive solution optimized by DEGREMONT as a BUILDER Index price Mature solution Key factors masterised: Standardization Short delay completion. Perth plant was built in 18 months

12 Information Meeting February 5-8, Reverse Osmosis: a competitive solution optimized by DEGREMONT as an OPERATOR Electrical consumptions / kwh/m Beginning of RO story 11,8 Pelton turbine 8 High efficiency pump and motors 5 Low energy RO element with salt rejection improved 3.2 Total water cost (CAPEX + OPEX): USD/m 3 Efficiency energy recovery device General optimisation : Better engine efficiency Better membrane permeability 2.3 < Evolution of of electrical consumption for for sea sea water first first pass RO RO

13 RO: the choice of flexibility and versatility Pioneer of the reverse osmosis technology: first installation in 1972 in Houat Island, France 250 references worldwide 1,9 million m3/d desalinated water 8 plants operated by DEGREMONT, m3/day Information Meeting February 5-8,

14 Information Meeting February 5-8, Agenda Water shortage 2 alternative water solutions Desalination - Technologies - Middle East specificities Reuse

15 Information Meeting February 5-8, In the Gulf, desalination market is linked to energy one Gulf countries today have a 53,500MW installed capacity in 2006 Capacity due to expand by 24,000 MW by 2010, of which circa 15,000 MW accounting for IPPs and IWPP Installed generating capacity in 2006 (MW) Additional capacity by 2010 (MW) Saudi Arabia Oman UAE Qatar Bahrein Desalination plants in the Gulf + Red Sea: Total CAPEX forecast : 14 billion USD

16 Information Meeting February 5-8, Combining power generation and desalination: a significant booster to energy efficiency Stand alone CCGT (Gulf ambient conditions) 2.22 Gwh gas 1.00 Gwh electricity 1.22 GWh losses Stand alone MSF 0.45 GWh gas m3 Water Total=2.67 GWhgas gas used per per day day

17 Information Meeting February 5-8, Combining power generation and desalination: CCGT + MSF Dual purpose plant: CCGT+MSF combined GWh gas 1.00 GWh13.2 Electricity GWh electricity 1.5 GWh loss m3 Water Total=2.5 GWhgas gas used, i.e i.e 6.5% energy savingsin in the the overall system

18 Information Meeting February 5-8, Combining power generation and desalination: CCGT + RO Dual purpose plant: CCGT+RO combined 2.33 GWh gas 1.00 GWh13.2 Electricity GWh electricity 1.35 GWh loss m3 Water Total=2.3 GWhgas gas used, i.e i.e 12% energy savingsin in the the overall system => => Combining RO RO and CCGT is is the the most fuel efficient solution

19 Information Meeting February 5-8, Combining power generation and desalination: RO takes advantage of local seasonality of electricity consumption Address simultaneously two key issues in this region: power and water production within one facility Significant synergies and economies of scale in development costs, financing, and operation Less gas consumption Significant energy savings Additional flexibility of system usage with RO by taking advantage of seasonality and peak/off-peak periods (use RO during off-peak periods, taking advantage of low-cost electricity).

20 Suez masters key technologies to provide robust solutions to power & water issues in the Middle East High growth of electricity consumption Scarcity of water resources Prime access to oil and gas Increased importance of private investment a combination of factors matching Suez competencies A leading power player, mastering cogeneration technology A leader in desalination technologies A competent and reputable developer and operator of complex infrastructure projects Proven track-record in large project-financed developments Optimize best solution for local market conditions Information Meeting February 5-8,

21 Information Meeting February 5-8, Agenda Water shortage 2 alternative water solutions Desalination - Technologies - Middle East specificities Reuse

22 Information Meeting February 5-8, Reuse: three applications REUSE Domestic use (watering ) Irrigation Industry Pimpama (Australia) m 3 /d reused in domestic water uses (watering ) Lusail (Qatar) m 3 /d reused in farm irrigation Sempra (Mexico) m 3 /d for ICA Fluor / Sempra energy

23 Information Meeting February 5-8, Reuse: worldwide market trend Million USD v year CAPEX Annual OPEX Today, the market is mainly new plants Year New wastewater treatment plants to be build can be designed for Reuse in water shortage countries Industrialised countries can upgrade their existing facilities, under the pressure of their population s environmental consciousness

24 Reuse: market trend in the gulf Treated wastewater can satisfy the water growing needs (demographic & economic) Reuse plants in the Middle East + North Africa Total CAPEX forecast : 7 bn USD Doha West, Qatar m 3 /d reused in farm irrigation Projects : UAE - Dubaï, Palm Water projects, Reuse plant, DBO - Abu Dhabi, reuse plant, m3/d, BOT - Al Ain, reuse plant, m3/d, BOT Qatar - Doha North, reuse plant and regional sludge treatment platform, m3/d / p.e. - Dhakhira, Reuse plant, m3/d / p.e. Information Meeting February 5-8,

25 Reuse: Degrémont experience More than More than Almost 50 2,4 million m3/day installed 10% of the worldwide installed capacity references worldwide England m3/d France Portugal 100 m3/d m3/d Italy Spain m3/d Qatar m3/d m3/d USA m3/d Mexico m3/d Saudi Arabia m3/d China m3/d India 1500 m3/d Venezuela m3/d Australia m3/d Information Meeting February 5-8,

26 ANNEXES

27 Information Meeting February 5-8, Multi-Stage Flash (MSF) Sea water is heated by steam in a brine heater Boiling water evaporates (flash) under lower pressure than saturation pressure Evaporated water condensates to form distillate Evaporation and condensation are repeated in successive chambers under reduced pressure levels

28 Information Meeting February 5-8, Multi-Effect-Distillation (MED) Sea water Is sprayed on heated tubes circulated by steam Water vapor goes to the next effect vessel in the heating tubes Evaporated water is condensed in the heating tubes of next effect vessel cooled by spraying of sea water Successive effect vessels at lower pressures and temperatures Distillate is collected at each vessel from the heating tubes Generally operates at lower temperatures than MSF to reduce scaling (CaSO4)

29 Reverse osmosis technology (RO) Reverse osmosis phenomenon takes place through layers of membranes within each RO module For seawater, pressure ranges up to 80 bars To optimise the energy consumption, HP pumps are coupled to energy recovery systems Information Meeting February 5-8,

30 Information Meeting February 5-8, Some references in the world 2008 Barka Oman m 3 /d 2008 Barcelone Spain m 3 /d 2007 Perth Australia m 3 /d 2006 Cartagena Spain m 3 /d 2006 Wadi Ma In Jordanian m 3 /d 2006 Minera La Escondida Chili m 3 /d 2006 Curaçao West Indies m 3 /d 2004 Fujairah UAE m 3 /d 2003 El Atabal Spain m 3 /d 2003 Bredeah Algeria m 3 /d 2001 Carboneras Spain m 3 /d 1999 Bahia Spain m 3 /d Under construction Completed Operated by DEGREMONT

31 Information Meeting February 5-8, Reuse: tailored processes depending on the final use Expertise of the water treatment specialist to define the adequat treatment line depending on the final use Domestic uses : golf irrigation, street cleaning, Agriculture irrigation Industry : cooling system, air cond, The implementation of membranes (UF / RO) secures Public Health and is to ensure the public acceptance especially for domestic uses.

32 DEGREMONT presence in the Middle East Information Meeting February 5-8, , Doha West, DBO, Reuse plant 10 years, m3/d. 260 million USD 2006, Tripoli, WWTP & sludge treatment plant 1 million p.e., 77 million 2006, Amman, Wadi Ma In desal plant, m3/d AMMAN RIYADH Bahrain United Arab Emirates 2007, Lusail, DBO Reuse plant 10 years operation, m3/d. 188 million USD DOHA Gulf of Oman 2007, Amman, BOT As Samra WWTP, m3/d 150 million USD Red Sea Saudi Arabia Oman 2003, Fujairah, DB, RO plant within the first hybrid desal plant m3/d. 100 million USD Arabian Sea 1983, Riyadh, DB, m3/d. First large RO desal plant in the region 2009, DB Barka, desal plant, m3/d