ENTREPRISE TUNISIENNE DACTIVITES PETROLIERES TUNISIA APRIL 2007 OIL

ENTREPRISE TUNISIENNE D'ACTIVITES PETROLIERES TUNISIA APRIL 2007

OIL & GAS EXPLORATION OPPORTUNITIES IN TUNISIA INTRODUCTION Tunisia has a continuous open policy towards international oil companies. Besides a prospective and challenging geology, Tunisia offers an excellent working climate and very friendly terms. These values have proved quite successful and they represent the key elements of our present and future strategy. LEGAL & FISCAL TERMS The legal and fiscal terms for Exploration and Production in Tunisia are included in a new Hydrocarbon Law n° 99 – 93 that has been promulgated on 17 August 1999. This New Hydrocarbon Law is a unique document gathering all fiscal and legal regulations related to the hydrocarbon Exploration and Production activities in Tunisia. It also includes new incentives with new favorable fiscal regulations and additional legal flexibility of licensing procedures and terms. The main characteristics of these terms are the followings : * Simple procedures and easy granting of licenses, * Flexible Joint Venture or Production Sharing Agreements approved by Decree, * A taxation system giving the priority to the investors to recover costs enabling a quick pay out and a high rate of return, * An incentive gas price linked to the price of fuel oil with low sulfur content. * Independent Power Production (IPP) opportunities from produced gas. HOW TO EXPLORE IN TUNISIA The exploration procedures and ways together with agreements characteristics are summarized as follows.

Choice of Block PROSPECTING AUTHORIZATION (Geological Option) Geological Work 1 Year PROSPECTING PERMIT (Seismic Option) Geological & New Geophysical Acquisition 2 Years with Possible Extension in Time (12 months maximum) EXPLORATION PERMIT New Geological/Geophysical Acquisition & Drilling 5 Years maximum - Renewal Rights with Possible Extension in Acreage and Time DISCOVERY PRODUCTION LICENCE 30 Years

JOINT VENTURE PRODUCTION SHARING DOCUMENTS * Convention with the Granting Authority * Joint Venture Agreement with ETAP * Convention with the Granting Authority * Production Sharing Agreement with ETAP PERMIT HOLDERS * ETAP and Partner as Co-Holders * ETAP as a Holder * Partner as a Contractor EXPLORATION - Operating - Financing * Partner as Operator * Partner * Contractor * Partner DEVELOPMENT & PRODUCTION - Participation * ETAP may elect to participate after Partner development decision - Financing * ETAP pays by cash call its share of development & operating costs and reimburses its share of exploration expenses * Partner finances all expenses and is paid back on cost oil (rate negotiable) ROYALTIES & TAXES * Progressive rates according to profitability * Profit oil is shared between Contractor & ETAP (rate negotiable) - Royalty * As low as 2% paid by ETAP and Partner * As low as 2% paid only by ETAP with its share of the profit oil - Tax * As low as 50% paid by ETAP and Partner * Paid by ETAP on the contractor behalf, it’s equal to the value of the contractor share of the profit oil * If ETAP elects to participate at a rate equal or more than 40%, the Income Tax will be due at a flat rate of 50%.

LEGAL TERMS FOR EXPLORATION AND DEVELOPMENT OF HYDROCARBON RESERVES IN TUNISIA NEW INCENTIVES

NEW INCENTIVES OF THE 1999 HYDROCARBON LAW 1. RIGHT TO USE ASSOCIATED OR NON ASSOCIATED GAS FOR POWER GENERATION 2. RIGHT TO BUILD UP A TAX DEDUCTIBLE PROVISION FOR ABADONMENT COST 3. RIGHT TO BUILD UP A DEDUCTIBLE PROVISION UP TO 20% OF ANNUAL PROFITS FOR FURTHER EXPLORATION ACTIVITIES 4. RIGHT TO TREAT THE CUSTOMS HANDLING FEE (R. P. D. ) ON EXPORTS OF HYDROCARBONS AS A CREDIT AGAINST ANY INCOME TAX DUE

GAS TERMS �Priority to supply the domestic market with any Gas discovered and which is in excess of the holder’s own needs. The state guarantee priority of access to the local market to the extent of the demand. �Price for Gas sales to the local market is fixed by Decree, it’s set at 80% of the FOB price for low sulphur content fuel oil (1%). � Holder will have the right to use Associated or non Associated Gas for power generation.

POWER GENERATION REGIME �The Holder of the Hydrocarbon Concession may be Authorized to develop non Commercial Gas for Power Generation. �The electricity will be exclusively sold to the National Utility Company (STEG) v Fiscal Regime : - Rate of Income Tax : 35% - Exemptions from. certain duties and taxes such as VAT and import duties The Parties negotiate in good faith a sale Contract that define the rights and obligations of the Parties (term, Sale Price , quantity, technical and commercial conditions…. )

OIL AND GAS SERVICES Law of July 27 th, 2004 Ø Investments are made freely subject of a « Declaration » Ø Export of goods and services to oil &gas companies in foreign countries Ø Exemption of customs taxes and VAT on imports Ø Deduction of income originating from export from taxation basis for the first 10 years and 50% of those profits beyond that period

Access to Open Acreage Database The open acreage is divided into 12 blocks that correspond to the usual size of exploration permits. ETAP has a special data room for visiting companies that wish to explore in Tunisia. Data on available blocks including geophysical data (seismic lines, airmag and gravity surveys) and geological data (well reports, local and regional studies) may be accessed at free of charge. Visitors benefit from ETAP’s expertise in any area. We also take care of our visitors for any matter concerning travel and local arrangements.

ACREAGE Sq. Km BLOCKS NORTHERN BLOCKS CENTRAL BLOCKS EASTERN BLOCKS LA GALITE N 1 RAF N 4 KORBOUS N 5 MATEUR N 6 7910 2200 4000 6000 KASSERINE AYACHA C 1 C 3 5108 4400 KONDAR BOUHAJLA KSOUR ESSAF LA SKHIRA E 1 E 2 E 4 E 5 672 416 2108 3820 SOUTHERN BLOCKS TELEMZANE KSAR GHILANE S 1 S 2 6100 4468

For further information, please contact ETAP Direction Exploration 27 bis, Avenue Khereddine Pacha -1073 Montplaisir BP: 83 -Tunisia Phone (216 – 71) 782 288, Fax (216 – 71) 784 092, 786 141 Telex : 15503, 18877 E. Mail : dexprom @etap. com. tn ETAP web site www. etap. com. tn