INVESTOR DAY
Lisbon, 22 October 2007
2 Investor Day
Matters discussed in this presentation may constitute forward-looking statements. Forward-looking statements are statements other than in respect of historical facts. The words “believe,” “expect,” “anticipate,” “intends,” “estimate,” “will,” “may,” "continue," “should” and similar expressions identify forward-looking statements. Forward-looking statements may include statements regarding: objectives, goals, strategies, outlook and growth prospects; future plans, events or performance and potential for future growth; liquidity, capital resources and capital expenditures; economic outlook and industry trends; developments of Galp Energia’s markets; the impact of regulatory initiatives; and the strength of Galp Energia’s competitors. The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in Galp Energia’s records and other data available from third parties. Although Galp Energia believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors could cause the actual results of Galp Energia or the industry to differ materially from those results expressed or implied in this presentation by such forward-looking statements.
The information, opinions and forward-looking statements contained in this presentation speak only as at the date of this presentation, and are subject to change without notice. Galp Energia does not intend to, and expressly disclaim any duty, undertaking or obligation to, make or disseminate any supplement, amendment, update or revision to any of the information, opinions or forward-looking statements contained in this presentation to reflect any change in events, conditions or circumstances.
DISCLAIMER
STRATEGY OVERVIEW
Lisbon, 22 October 2007
Manuel Ferreira De Oliveira, CEO
4 Investor Day
A FOCUSED MANAGEMENT TEAM
CFO
Francesco Antonietti
Head of Refining, Supply and Logistics
José
António
Marques Gonçalves
Head of Power
André
Freire
de Almeida Palmeiro
Ribeiro
Head of E&P and International Oil
Fernando Manuel dos Santos Gomes
Head of Oil Marketing
João
Pedro Leitão
Pinheiro
de Figuereido
Brito
Head of Natural Gas
Massimo Guiseppe
Rivara
Chief Executive Officer
Manuel Ferreira De Oliveira
5 Investor Day
23-Oct 23-Nov 23-Dec 23-Jan 23-Feb 23-Mar 23-Apr 23-May 23-Jun 23-Jul 23-Aug 23-Sep
Galp Energia PSI20 Index DJ Euro Stoxx Oil & Gas
A TOTAL RETURN OF 102% IN ONE YEAR
Source: Bloomberg
+97%
+21%
+10%
6 Investor Day
Growth in E&P Production
Growth in Natural Gas
Sales
2007
Improvement in R&M
Profitability
SinesCogeneration
Facility
2008
Growth in Natural Gas
Sales
Growth in E&P Production
Improvement in R&M
Profitability
CCGT 1
2009
SinesCogeneration
Facility
Growth in Natural Gas
Sales
Growth in E&P Production
Improvement in R&M
Profitability
CCGT 2
Wind Farms
2010
Oporto Cogeneration
Facility
CCGT 1
SinesCogeneration
Facility
Growth in Natural Gas
Sales
Growth in E&P Production
Improvement in R&M
Profitability
Conversion Project
2011
CCGT 2
Wind Farms
Oporto Cogeneration
Facility
CCGT 1
SinesCogeneration
Facility
Growth in Natural Gas
Sales
Growth in E&P Production
Improvement in R&M
Profitability
Growth in E&P Production
Growth in Natural Gas
Sales
2007
Improvement in R&M
Profitability
SinesCogeneration
Facility
2008
Growth in Natural Gas
Sales
Growth in E&P Production
Improvement in R&M
Profitability
CCGT 1
2009
SinesCogeneration
Facility
Growth in Natural Gas
Sales
Growth in E&P Production
Improvement in R&M
Profitability
CCGT 2
Wind Farms
2010
Oporto Cogeneration
Facility
CCGT 1
SinesCogeneration
Facility
Growth in Natural Gas
Sales
Growth in E&P Production
Improvement in R&M
Profitability
Conversion Project
2011
CCGT 2
Wind Farms
Oporto Cogeneration
Facility
CCGT 1
SinesCogeneration
Facility
Growth in Natural Gas
Sales
Growth in E&P Production
Improvement in R&M
Profitability
PROVEN TRACK RECORD ON IMPLEMENTATION
Strategic plan
under
execution
E E E E
7 Investor Day
E&P5%
R&M63%
G&P32%
GROWING WITH A MORE BALANCED PORTFOLIO
E&P17%
R&M57%
G&P26%
E&P25%
R&M50% G&P
25%Target
1H2007
2006
2005 EBITDA adjusted
Breakdown
E&P8%
R&M59%
G&P33%
481 M€
958 M€
877 M€
8 Investor Day
TOWARDS A MORE INTEGRATED OIL BUSINESS
To be achieved
Building an E&P Portfolio
Improving refining competitiveness
Distributing refining throughput
Marketing
Refining
E&P 150 Kbbl/d
300 Kbbl/d
300 Kbbl/d
9 Investor Day
Supply Portugal
Sourcing contracts
Trading
Sourcing contracts
Supply Portugal
Supply Spain
Trading
Gas to Power
Midstream
New sourcing contracts
TOWARDS A MORE INTEGRATED GAS & POWER PORTFOLIO
New sourcesNew businesses
Current Target
10 Investor Day
CAREFULLY MANAGING THE ENVIRONMENTAL RISK
3.4
3.3
0.2
• Licenses for 2008-2012 period on PNALE’s1 EU approval
• Expected reduction in CO2 emissions in line with estimated PNALE reduction
• New projects consider CO2 cost
• Actively developing clean energy projects
2007 Licences 2007E CO2 emissions
Galp CO2 emissions balance (Mton)
Surplus 2007E
1 PNALE – Portuguese Emissions’ Licence Allocation Plan
Biofuel, wind, hydro and other
11 Investor Day
Vegetable oil production
BIOFUELS IS A NATURAL CORE BUSINESS TO GALP
Mineral oil production Logistics DistributionRefining Logistics
Vegetable oil production Logistics DistributionBiorefining Logistics
Oil value chain
Biofuels
value chain
No additional investment
needed
Strong position in distribution
Focus on Biodiesel II much more technology advanced
and competitive than current biodiesel (FAME1)
Negotiation of agreements sharing production and
commercial risks
1 FAME – Fatty Acid Methyl Ester
Residual investment
required
12 Investor Day
STRATEGIC PRESENCE IN AFRICAN DOWNSTREAM
An option to grow
• GDP growth of 15% in Angola in 2006 (35%-2007E)
• Positive EBITDA contribution (10M€)
• Leverage on Galp’s access to oil & gas upstream and biodiesel feedstock
Cape Verde
Guinea-Bissau
Angola
Mozambique
Galp presence in Africa
13 Investor Day
TO BECOME AN INTEGRATED ENERGY COMPANY
Integrated expansion
focusing on return
Sustained value
creation
The right assets
The right strengths
The right opportunities
EXPLORATION & PRODUCTION
Lisbon, 22 October 2007
Fernando Gomes
15 Investor Day
LONG TERM PEAK OIL PRODUCTION ON CURRENT PORTFOLIO EXPECTED AT 80 KBBL/D
• 5 blocks offshore
• 1 block offshore
• 4 blocks offshore
• 7 blocks offshore
• 10 blocks offshore
• 3 areas onshore1
Working production evolution
Strong growth still to be extracted from current portfolio
Angola
Brazil
Portugal
East-Timor
Mozambique
1 Corresponds to 44 onshore blocks
1.9 1.83.5
12.4
6.25.1 5.0
9.5
17.0
34.0
2004 2005 2006 2007E 2012ETotal Production (Mbbl)Daily Production (Kbbl/d)
2X
16 Investor Day
Working Production target (Kbbl/d)
• Building an E&P portfolio
• Attractive 14% IRR assuming 35 Usd/bbl
• Balancing political and geopolitical risk
• Global market to expand activity
GAINING SCALE IN E&P WITH LIMITED RISK PROFILE
1834
150
2008E 2012E Long termtarget
Refining coverage 7%
Strengths
• Flag carrier, with strong ties with Portuguese speaking countries
• Ability to exploit geopolitical opportunities
• Partnership with NOC’s (Petrobras, Sonangol) and IOC’s (ENI, Chevron, Total)
Rationale
11% 50%
17 Investor Day
EVALUATING NEW OPPORTUNITIES TO SUPPORT FURTHER GROWTH
• 9th round: 312 blocks being auctioned, onshore and offshore
• Galp already present in some of the basins
• Partnership with Petrobras
• MoU signed with PDVSA to study the development of several projects (short, medium and long term)
• ST: to enter into producing fields
• MT: Stake in a NG upstream project and a liquefaction plant
• LT: Certification of reserves at Orinoco Belt
• A new bidding round is being launched:
• 3 onshore blocks (Cabinda Centro1, Block 11 and Block 12)
• 7 offshore Blocks including shallow, deep and ultra deep water
Brazil
Venezuela
Angola
1 Due to force majeure, Sonangol has put the block for auction. Galp didn’t have to pay the bonus fee of this project.
18 Investor Day
CONTINGENT RESOURCES’ EVOLUTION CONFIRMS QUALITY OF EXPLORATION ASSETS IN ANGOLA (BLOCKS 14, 14K AND 32)
Source: Gaffney, Cline & Associates1 Net entitlement interest reserves are Galp’s share of contractor entitlement to field reserves under the PSA.2 Block 14: Kuito, BBLT and TL only3 Include other fields and discoveries of Blocks 14 (Negage, Gabela e Lucapa), Block 14K and Block 32
+0%
+22%
+58%
Million bbl
June 30, 2006 Dec 31, 2006
Reference crude price (Usd/bbl) 62.5 65.0
Net entitlement1
Proved (P1)2 35.6 35.7
Proved + Probable (P2)2 41.4 50.4
Working reserves Contingent Resources3 43.2 68.1
19 Investor Day
Key highlights
• 11 commercial discoveries
• 2 recent discoveries: Lucapa-1 and Malange-1
• More than 50 prospects identified
• 16 exploration and 16 appraisal wells drilled
• Exploration period expired on February 2007
Next steps
• Appraisal wells planned for 2008
• Definition of development areas already requested
Location
Area: 3,600 km2
Water depths: 200 – 2,000 m
Galp Energia share: 9%
Operator: Chevron
PSA*: Yes*PSA – Production Sharing Agreement
BLOCK 14 – SIGNIFICANT DISCOVERIES IN 2007
20 Investor Day
BLOCK 32 – FAVOURABLE PROSPECTS
Key highlights
Next steps
• Full screening of potential development plans
• Appraisal wells expected in 2008
• Definition of Development Areas
• 3D long offset seismic processing
Location
• 12 commercial discoveries
• Two 3D seismic acquisitions covering whole block
• More than 20 prospects identified
• 16 exploration wells drilled
• 2 appraisal wells drilled
Area: 5,090 km2
Water depths: 1,400 – 2,000 m
Galp Energia share: 5%
Operator: Total
PSA*: Yes
*PSA – Production Sharing Agreement
21 Investor Day
BM-S-11 – KEY ASSET
Key highlights
Next steps
• Continue evaluation of Tupi Area
• Evaluate further prospects
• Exploration wells planned for 2008
Location
• Tupi discovery
• Opening of a new hydrocarbon play
• Hydrocarbons in place: 1.7 to 10 billion boe
• Tupi Sul appraisal well proved the southern extension of Tupi discovery, located 9.5 km away
• Iara Area in 3rd Exploration Phase
*PSA – Production Sharing Agreement
Area: 2,600 km2
Water depths: 2,000 – 2,400 m
Galp Energia share: 10%
Operator: Petrobras
PSA*: No
APPENDIX
23 Investor Day
Total Production
Cost Oil Profit Oil
Contractor Concessionaire
Net Profit Oil Oil Tax
Working Production
UNDERSTANDING A PRODUCTION SHARING AGREEMENT
Equity Production
Fraction of production
that is allocated to recovering
the contractor's
costs, between
50%-65%.
Shared between the contractor and the Concessionaire at the terms agreed in the contract. Varies from 10% to 70%, depending on current IRR.
24 Investor Day
WORKING PRODUCTION TO DOUBLE ON BLOCK 14
Working Production
1.9 1.83.5
12.4
6.25.1 5.0
9.5
17.0
34.0
2004 2005 2006 2007E 2012ETotal Production (Mbbl)Daily Production (Kbbl/d)
• Tômbua - Lândana production from CPT to start in 2010
• Increase weight of light oil in working production
• Natural production decline of Kuito field
• Increase of BBLT contribution in production portfolio
2X
25 Investor Day
BLOCK 14 – STRONG GROWTH IN PRODUCTION EXPECTED
LocationKey
highlights
• Producing fields: Kuito, BBLT, TL
• Kuito works for development definition after FPSO contract finished
• Optimization works to lift BBLT production above nominal capacity
Next
steps
• Pursue TL EPCI1
• Pursue Negage pre-development studies
• Pursue Gabela viability studies
Area: 4,091 km2
Water depths: 200 – 2,000 m
Galp Energia share: 9%
Operator: Chevron
PSA*: Yes
*PSA – Production Sharing Agreement1 Engineering, Procurement, Construction and Installation
26 Investor Day
BLOCK 14K – PRE-DEVELOPMENT STUDIES UNDER WAY
Key highlights
Next steps
• Pursue Pre-Development Studies
• Pursue Uncertainty Management Plan execution (fiscal, commercial)
Location
• 2 commercial discoveries
• 3 prospects identified
• 3 exploration wells drilled
• 1 appraisal well drilled in 2007
• Date of Lianzi Commercial Discovery effective since May 2006
Area: 700 km2
Water depths: 500 – 1,000 m
Galp Energia share: 4.5%
Operator: Chevron
PSA*: Yes
*PSA – Production Sharing Agreement
27 Investor Day
BLOCK 33 – NEW OPERATOR TO BE APPOINTED
Key highlights
• 3D seismic survey covering whole block
• 1 discovery
• 5 exploration wells drilled
• Calulú Provisional Development Area approved by concessionaire
• Initial Exploration Phase expired on May 2005
Next steps
• Waiting for concessionaire to appoint new operator
Location
Area: 4,925 km2
Water depths: 1,800-2,500m
Galp Energia share: 5%
Operator: To be known
PSA*: Yes
*PSA – Production Sharing Agreement
28 Investor Day
SANTOS BASIN (BLOCKS 8, 21, 24) – DRILLING CAMPAIGN JUST STARTING
Key highlights
Next steps
• Geologic & Geochemical studies under way
• Exploration wells planned for 2008
• Evaluate further prospects
Location
• 3 blocks: BM-S-8, BM-S-21 and BM-S-24
• 3D seismic survey completed
• More than 10 prospects identified
• 2 exploration wells being drilled
Area: 4,800 km2
Water depths: 1,600 – 2,500 m
Galp Energia share: BM-S-8 - 14% BM-S-21 / 24 - 20%
Operator: Petrobras
PSA*: No
*PSA – Production Sharing Agreement
29 Investor Day
ESPÍRITO SANTO – POSITIVE SIGNS FROM SEISMIC SURVEY
Key highlights
Next steps
Location
• Galp operator in 5 blocks
• 3D seismic surveys covering all blocks completed
• More than 20 leads identified
• 8 mature prospects ready to be drilled
• Finish seismic and geological evaluation
• 5 operated exploration wells planned for 2007/2008
• Identify more leads and prospects
Area: 378 km2
Galp Energia share: 50%
Operator: Galp / Petrobras
PSA*: No
*PSA – Production Sharing Agreement
30 Investor Day
PORTIGUAR BASIN – OIL DISCOVERIES UNDER EVALUATION
Key highlights
Next steps
Location
• Galp operator in 20 blocks
• 2D and 3D seismic surveys completed
• More than 30 Leads identified
• More than 12 Prospects identified
• 10 operated exploration wells drilled in 2007
• 3 oil discoveries
• Finish seismic and geological evaluation
• Prepare evaluation plans and appraisal wells
• More than 4 operated exploration wells planned for 2008
• Identify more leads and prospects
Area: ≈
890 km2
Galp Energia share: 50%
Operator: Galp / Petrobras
PSA*: No
*PSA – Production Sharing Agreement
31 Investor Day
SERGIPE/ ALAGOAS – EXPLORATION WORKS IN AN EARLY PHASE
Key highlights
Next steps
Location
• 2D and 3D seismic surveys completed
• 5 leads identified
• 2 prospects identified
• 1 exploration well planned
• Finish seismic and geological evaluation
• Drill 3 exploration wells
• Identify more leads and prospects Area: 123 km2
Galp Energia share: 50%
Operator: Galp
PSA*: No
*PSA – Production Sharing Agreement
32 Investor Day
ESPÍRITO SANTO OFFSHORE – EXPLORATION WORK JUST BEGINNING
Key highlights
• 3D seismic survey
• 3 leads identified
• 3D Seismic reprocessing on-going
Next steps
• Finish seismic and geological studies
• Identify more leads and prospects
• 1 exploration well to be drilled up to 2010
Location
Area: 722 km2
Water depths: 2,000 – 2,200 m
Galp Energia share: 20%
Operator: Petrobras
PSA*: No *PSA – Production Sharing Agreement
33 Investor Day
POTIGUAR OFFSHORE – FIRST EXPLORATION WELL IN 2012
Key highlights
Next steps
• Finish seismic and geological studies
• Identify more leads and prospects
• BM-POT-16/BM-POT-17: 1 exploration well each, to be drilled up to 2012
Location
Area: 3,837 km2
Water depths: 50 – 2,000 m
Galp Energia share: 20%
Operator: Petrobras
PSA*: No
• 3D seismic survey
• More than 10 leads identified
• 3D seismic reprocessing on-going
*PSA – Production Sharing Agreement
34 Investor Day
PENICHE – NEW FRONTIER AREA
Key highlights
• Concession contract signed on May 2007
• Exploration Period: 8 years
• Whole area being new frontier
• More than 10 leads identified
Next steps
Location
• Geological studies and seismic reprocessing under way
• 2D and 3D seismic acquisition planned for 2009
• Commitment exploration wells planned for 2010
*PSA – Production Sharing Agreement
Area: 12,159 km2
Water depths: 200 – 3,000 m
Galp Energia share: 30%
Operator: Petrobras
PSA*: No
35 Investor Day
Area: 9,099 km2
Water depths: 200 – 3,000 m
Galp Energia share: 10%
Operator: Tullow Oil
PSA*: No
ALENTEJO – NEW FRONTIER AREA
Key highlights
• Concession contract signed on February 2007
• Exploration Period: 8 years
• Whole area is new frontier
• Seismic and geological studies under way
Next steps
• 3,000 km 2D seismic acquisition and processing during 2008
• Commitment exploration wells planned for 2010, 1 in each concession
Location
*PSA – Production Sharing Agreement
36 Investor Day
MORE THAN 12 LEADS ALREADY IDENTIFIED
Key highlights
• Farm-in Agreement signed in 2007
• Exploration period: 3+2+2 years
• More than 12 leads identified
• Intensive 2007/2008 seismic acquisition program on-going (more than 8,400 km2 3D seismic plus 3,100 km 2D seismic)
Next steps
• Seismic processing and geological studies under way
• Identify more leads and prospects
• 2 exploration wells to be drilled up to 2009
Location
*PSA – Production Sharing Agreement
Area: 12,183 km2
Water depths: 0 – 2,000 m
Galp Energia share: 10%
Operator: ENI
PSA*: Yes
37 Investor Day
AN UNEXPLOITED AREA
Key highlights
• New frontier area
• Exploration period: 4+2+2 years
• Production period: 30 years
• 1 main lead identified
• Geological studies under way
Next steps
• Acquisition of 2,000 km 2D seismic + 1,000 km2 3D seismic planned for 2008
• 2 exploration wells for the second period + 2 for the third
Location
*PSA – Production Sharing Agreement
Area: 17,000 km2
Water depths: up to 2,600 m
Galp Energia share: 10%
Operator: ENI
PSA*: Yes
REFINING, SUPPLY AND LOGISTICSLisbon, 22 October 2007
Marques Gonçalves
39 Investor Day
Portugal SpainGalp CLH Others
STRONG POSITION IN IBERIA
Refining and Logistics Infrastructure
Source: Oil and Gas Journal, 2005 Worldwide Refining Survey
Key Highlights
• 100% of Portuguese or 20% of Iberian refining capacity
• 69% of production corresponds to gasoline (25%) and middle distillates (44%)
• Ownership interest in key logistics assets in Portugal and in Spain
Refinery
Galp Main Depots
Somorrostro(220 kbpd)Coruña
(120 kbpd)
Porto(90 kbpd)
Sines(220 kbpd)
Huelva(100 kbpd)
Cadiz(240 kbpd)
Tenerife(87 kbpd)
Cartagena(100 kbpd)
Castellón(105 kbpd)
Tarragona(160 kbpd)
Puertollano(140 kpbd)
PtrovalIberian storage capacity (M m3)
CLH
79%
1 Includes 5% of CLH
CLC
2%1
Galp Share
3.8
18.9
40 Investor Day
SINES IS ONE OF THE MOST RECENT REFINERIES IN EUROPE
• Sines (1979), includes the following units:
• Topping
• 2 vacuum distillation
• Fluid catalytic cracking
• Visbreaker
• 2 diesel hydrodesulphurization
• Sines refinery is producing reformulated gasoline for the US markets since early 1990s
• Programmed turnaround in Sept/ Oct 2008
Asset Description Sines
refinery diagram
Capacity: 220 kbbl/dNelson complexity index: 5.3
41 Investor Day
A SPECIALITIES REFINERY IN PORTO
• The Porto refinery complex, built in 1969, includes:
• Hydroskimming fuel plant
• Aromatics plant
• Base oil plant
• Lubricants blending plant
• Producer of paraxylene, ortoxylene, toluene and benzene for Portuguese and export markets
• Turnaround in progress
Asset Description Porto refinery diagram
Capacity: 90 kbbl/dNelson complexity index: 6.9
42 Investor Day
Refining margin target (Usd/bbl)
• Market conditions favour diesel vs fuel
• Dieselization of Iberian market
• Improvement potential of assets
• Focusing on return
Rationale
• Integrated refining and marketing operations
• Financial capabilities to support investment
• Strategic located assets
Strengths
ENHANCING VALUE OPPORTUNITY FROM EXISTING PORTFOLIO
5.4 5.4
+3.5
2006 2011EYE
8.9 +65%
2006 Galp refining margin Incremental margin
43 Investor Day
POTENTIAL EFFICIENCY GAINS IN REFINERY OPERATIONS
Refining margin improvement
Energy intensity
Energy intensity Process
utilization, %
Process utilization, % Process
efficiency
Personnel, work hr/1000
EDC
Process efficiency
Maintenance, Usd/EDC
Maintenance cost
efficiency
Personnel efficiency
Personnel efficiency
Maintenance cost
efficiency
Personnel, work hr/1000
EDC
Maintenance, Usd/EDC
Sines
Refinery Porto Refinery
44 Investor Day
Hydrocracker
Vacuum distillation
Vacuum Flash
Starting operations: 2011
Pre-Flash
Vacuum distillation
Visbreaker
Vacuum Flash
Starting operations: 2010
Sines
Porto
VGO
6.8
Nelson complexity index:
7.9
5.3
6.9
Naphtha and fuel
oil
Current After conversion
OPTIMIZING REFINING SYSTEM
Fully integrated refining system
45 Investor Day
TOWARDS ONE REFINING SYSTEM
RV
Gasoline
LPG
LCO+SLURRY
CRUDE
Vac. Dist.
LPG
Naphtha
KERO
Diesel
TOPPING
AR
VGO
RVB
FCC
HGO
VB
Gasoline focus
HDCSines
Naphtha
Diesel
LPG
Res. oils
VBPorto
Flux.
F. Oil
HGOVac. Dist.Porto
RV
RVB
VGO
Diesel focus
46 Investor Day
IMPROVING REFINING PORTFOLIO COMPETITIVENESS
Product Yield (M ton; %)
Fuel
Middle Distillates
Gasoline
Others
Crude Processed (M bbl; %)
Light
Heavy/Medium
98.5 109.713.6 14.8
Adjust production mix to market needs
Higher conversion allows usage of heavier crudes
25%41%
75%59%
Current AfterConversion
20% 13%
44% 57%
11% 11%
19%25%
Current AfterConversion
47 Investor Day
Conversion Economics
Estimated Capex 1,000 M€
Starting operations
Porto 2010
Sines 2011
Impacts
Refining margin + 3 Usd/bbl
EBITDA impact + 200 M€1
1 Assuming incremental opex per bbl of 0.9 Usd2 Accounted in Power3 Assumptions: Eur/ Usd 1.25
Perfomance
Improvement Economics
Estimated Capex
Cogeneration plants 1502 M€
Energy efficiency program 100 M€
Environmental compliance 174 M€
Impacts
Consumptions & Losses -15%
Refining margin + 0.5 Usd/bbl
EBITDA impact + 44 M€3
REFINING’S EBITDA FUELLED BY CONVERSION AND OTHER UPGRADING INVESTMENTS
48 Investor Day
EXTRACTING FURTHER VALUE FROM EXISTING ASSETS
1 Assuming refining margin increment of 3.5 Usd/bbl times 98.5 M bbl.
2 Assuming refining margin of 8.9 Usd/bbl times incremental crude processed of 11.2 M bbl.
100
345
Current Refining margineffect
Volume effect Total
Impact on Gross Margin (M Usd)
1
2
OIL MARKETING
Lisbon, 22 October 2007
João
Pedro Brito
50 Investor Day
Retail Wholesale LPG Special Clients Total
2006 Sales to final clients (M ton)
Portugal
Spain
2.5
4.40.4
9.0
GALP FOCUSING IN IBERIA
Space to grow in the Spanish market
1.7
Market Share
46%
3.6%
51 Investor Day
2.1 2.0 2.0
0.6 0.6 0.6
2004 2005 2006Portugal Spain
INCREASE RETAIL ACTIVITY EFFICIENCY AND EFFECTIVENESS
Galp Market Share 2005
MURCIA
MADRID
VALENCIA
CASTILLA-LEÓN
GALICIA
ARAGÓN
CASTILLA-LA MANCHAEXTREMADURA
ANDALUCÍA
CATALUÑA
5.5%
6.5%
4,2%
1.5%
1.8%
2.0%1.2%
3.8%
2.9%0.8%
Azores
Madeira
37.6%
39.5%
36.9%
• 1,041 service stations: 818 in Portugal and 223 in Spain
• In the past 3 years there was a significant expansion growth in C-stores business, over 100 stores
• Represents over 19% of refining throughput
Business Overview
Retail volumes (M ton)
Key areas
Type of service stations
COCO21%
CODO48%
DODO31%
COCO33%
CODO45%
DODO22%
By number By volumes
52 Investor Day
Lubricants1.002
Construction226
Marine342
Aviation168
Resellers772
Manufacturing741
Transports615
WHOLESALE AS A RELEVANT DISTRIBUTOR OF REFINING THROUGHPUT
• 52% market share in Portugal
• Represents over 32%
of refining throughput
• Aviation and marine segments boosted
by increase in tourism activity
Business Overview
Wholesale volumes (M ton)
Main business segments’
clients 2006
Allocation by segment
3.0 3.3 3.1
1.11.3 1.3
2004 2005 2006Portugal Spain
Resellers6%
Aviation15%
Marine19%
Others16%
Manufactoring13%
Transport21%
Construction9%
Lubricants1%
53 Investor Day
AN INNOVATIVE APPROACH TO A MATURE LPG MARKET
• Stable market share in Portugal of 44%
• Deliveries consistently high levels of profitability
• Over 20 thousand points of sale
• Market to stabilize at current levels
• Launch of new products to capitalize on Galp Energia brand (cookspot and hotspot)
Business Overview
LPG volumes (M ton)
0.39 0.37 0.34
0.030.04
0.04
2004 2005 2006Portugal Spain
Allocation by segment
Bottled63%
Wholesale32%
Piped5%
54 Investor Day
-2
2
4
6
2000 2001 2002 2003 2004 2005 2006-2
2
4
6
2000 2001 2002 2003 2004 2005 2006
VOLUME GROWTH IMPACTED BY GDP EVOLUTION
Diesel
Total
Gasoline
60%
80%
100%
120%
140%
2000 2001 2002 2003 2004 2005 2006
Sales Volume (%) Sales Volume (%)
Gasoline
Diesel
Total
60%
80%
100%
120%
140%
2000 2001 2002 2003 2004 2005 2006
GDP Growth (%) GDP Growth (%)
Po
rtu
gal
Sp
ain
55 Investor Day
Galp Iberian Market (M ton)
• Sustain market leadership in Portugal
• Extract further value from existing assets
• Develop non-fuel business
• Spain is a higher growth market
• Geographical diversification into Spain
• Increase integration between R&M activities
Rationale
• Long position in refining
• Strong brand awareness
• Logistic assets in place to support further growth
• Market knowledge in Portugal and in Spain
• Very small scale in Spain
Strengths
EXTRACTING AND EXPANDING VALUE IN IBERIA
2006 Soon... LT Target
Portugal Spain To be achieved
9.0
11.6
13.6
56 Investor Day
A MORE EFFICIENT AND EFFECTIVE RETAIL ACTIVITY IN PORTUGAL
2.02.02.1
2004 2005 2006
Galp Sales Volume (M ton)
37% 37% 37%
Galp retail market share
860 837 823
2.52.3 2.3
3.13.0
3.1
2004 2005 2006Throughput / site k m3 - GalpThroughput / site k m3 - Market
Number of Service Stations
• Strong market share of 37%
• Increase penetration of premium products, from 7% to 15%
• More than 120 million transactions per year
101121
139
58 64 69
2004 2005 2006
Non fuel sales (M€)
Number of C-Stores
CAGR
06/049%
57 Investor Day
2004 2005 2006 After Agipacquisition
DELIVERING ON SPANISH STRATEGY
Sales Volume (M ton)
4%
Galp market share
Number of Service Stations
• Boosting Galp presence in Spain
• Market share in Spain increased to 7%
• No geographic overlapping
• Increasing refining and marketing integration
• More than doubling volumes
Number of C-Stores
7%
3.00 3.20 3.18 3.25
3.4 3.5 3.5 3.5
2004 2005 2006 After AGIPacquisition
Throughput / site k m3 - MarketThroughput / site k m3 - Galp
30
36
26
2004 2005 2006 After AGIPacquisition
Non fuel sales (M€)
5.3
2.72.51.7
312
3%2%
543
222223234
5748 62
58 Investor Day
HIGHLY COMPLEMENTARY RETAIL NETWORK
MURCIA
MADRID
VALENCIA
CASTILLA-LEÓN
GALICIA
ARAGÓN
CASTILLA-LA MANCHAEXTREMADURA
CATALUÑA
5.5%
6.5%
4,2%
1.5%
1.8%
1.2%
3.8%
2.9%0.8%
Galp Current Galp + AGIP
2.0%
ANDALUCÍAMURCIA
MADRID
VALENCIA
CASTILLA-
LEÓN
GALICIA
ARAGÓN
CASTILLA-LA MANCHAEXTREMADURA
CATALUÑA
7.3%
6.5%
5.5%
4.9%
5.6%
5.3%
9.1%
9.7%4.4%
3.0%
ANDALUCÍA
ASTÚRIAS
10.5%
CANTABRIA
3.5%
PAIS BASCO
3.0% NAVARRA
5.5%LA RIOJA
1.0%
Below 3%
3 - 6%
Above 6%
Ptroval
GIJON
BARCELONA
Ptroval
AGIP Logistic assets
Market Share
Source: Cores 2005
59 Investor Day
Retail Wholesale LPG Special Clients Total
Sales Galp + AGIP
(M ton)
Portugal
Spain
3.6
5.90.4
11.6
GEOGRAPHICAL DIVERSIFICATION ACHIEVED
12% Iberian market share
1.7
Breakdown by Country
55%
45%
60 Investor Day
FURTHER INTEGRATION TO REDUCE RISK ENHANCES VALUE
Sales volumes (M ton)
Refiningthroughput
Currentvolumes
After AGIP
LT targetvolumes
Portugal Spain
13.6
66%
100% To hedge 100% of
refining throughput Galp
Energia needs to get
additional 2 M ton in
Spain while diversifies
geographical exposure
9.0
13.6
+2.011.6
+2.6
85%
Refining coverage by marketing volumes
NATURAL GAS
Lisbon, 22 October 2007
Massimo Rivara
62 Investor Day
Nigeria55%
Algeria45%
STRONG COMPETITIVENESS OF EXISTING CONTRACTS
• 5.7 bcm secured
• High flexibility
• Maturity 2020/2026
• Option to deliver in any point in Iberia
Sourcing Contracts
NG supply sources 2006
Sales volumes (bcm)
2004 2005 2006
Portuguese market Trading
4.04.2 4.6
Leverage on gas contracts to explore trading opportunities
63 Investor Day
2006 2012E
Contracted volumes Additional quantities
SEEKING FOR NEW SOURCES
Iberian market (bcm)
15%
15%
+40%
• Strong growth prospects
• Geographical expansion into Spain
• Defend current market share in Iberia
• Access to sourcing as a critical success factor
Rationale
• Competitive gas sourcing
• Strong costumer base
• Developing power projects
• Access to critical infrastructure
Strengths
Galp contracted volumes over market volumes
5.7 bcm 8 bcm
37.5
52.4
64 Investor Day
Regasification
Terminal Barcelona
Regasification
Terminal Sagunto
Regasification
Terminal (Cartagena)
GUARANTEED ACCESS TO CRITICAL INFRASTRUCTURE
• Regasification capacity available for Iberian needs
• Galp Energia has an important stake in the unique pipeline access to the Portuguese market
• International pipelines:
• Capacity of 3.7 bcm/year to enter in Portugal
• Stable dividend contribution
• Tariff definition based on 11% return
58%
98%
62%
46%
52%80%100%
51%
Pipeline Galp Share
Capacity bcm/ year KM Final
Year
Al Andaluz 33% 7.8 315 2020
Extremadura 49% 6.1 250 2020
EMPL 27% 12.0 1,105 2017
Al Andaluz
Pipeline
Regasification
Terminal Bilbao
Regasification
Terminal Mugardos
(In construction)
Irún
–
Larrau
Pipeline
Regasification
Terminal (Sines)
AlgeriaMOROCCO
Used capacity
Extremadura Pipeline
EMPL
Almeria Pipeline (in
construction)
Regasification
Terminal (Huelva)
65 Investor Day
GALP STORAGE ASSETS KEY FOR OPPORTUNISTIC TRADING
• Location : Carriço
• Underground storage capacity:
• 1st cavern already in operation (40 Mm3)
• 2nd cavern to start operations in 4Q2010 (45 Mm3)
• Additional two caverns to be built (110 Mm3)
• Stable return
• Equivalent to a LNG vessel
• Ability to exploit trading opportunities
• One of the few commercial companies with own storage capacity in Iberia
Galp Storage Rationale
• Regulated asset base of 17 M€
• Return on regulated asset base of 8%
• Second cavern capex of 24 M€
• Concession period of 40 year
Regulation
Cost of capital
Tariff deviations
Net opex
Allowed revenues
Regulated asset baseXRate of Return+ Depreciations
66 Investor Day
STABLE RETURN WITH GROWTH POTENTIAL
• Above 9,000 Km of network and additional 1,400 km planned for next four years
• 5 local distribution companies under concession agreements until 2035
• 4 Autonomous distribution units (not linked to high pressure pipeline)
Infrastructure Liberalization
• Unbundling of commercialization activities for companies with more than 100 thousand clients
• Others will have to present separate accounts
Regulation
• Actual regulated asset base of 853 M€
• Expected revaluation in 2008 above 20%
• Return on regulated assets to be announced in 1st Half 2008
Smoothed cost of capital
Net opex
Allowed revenues
• Over 800 thousand clients
Autonomous Distribution Units
Tariff deviations
Regulated asset baseXRate of Return+ Depreciations
67 Investor Day
1.8
4.01.5
2.7
0.7
0.9
2006 2012E
8.614.3
14.3
18.1
10.5
12.4
2006 2012E
STRONG GROWTH PROSPECTS IN IBERIAN NATURAL GAS MARKET
Source: Wood Mackenzie and AT Kearney
CAGR 11%
NG Market –
Portugal (bcm)
CAGR 5%
NG Market –
Spain (bcm)
Residential and othersIndustrialElectric
4.0
7.6 44.8
33.5
NG in
Primary
Energy
22%15% 22% 25%
68 Investor Day
HIGHER MARGIN VOLUMES KEPT AT GALP
2007 2008E 2009E 2010E
Electric
> 1 Mm3/y
> 10 k m3/y Remaining
Liberalization calendar
To be regulated from 1st July 2008
Not regulated
Regulated and electric volumes to be maintained at Galp
69 Investor Day
GROWTH COMING FROM OWN CONSUMPTION AND GEOGRAPHICAL EXPANSION
4.6
6.2
Galp Energia
NG Sales (bcm)
Includes Trading and other liberalized sales from LDC’s
LDC’s regulated sales
Includes incremental consumption from two new cogens and Spanish market
Maximum level of Take–or-Pay for power generators and Galp CCGT’s
+1.6
1.82.5
1.5
2.80.7
0.6
0.6
0.3
2006 2012E
Electric Industrial LDC's Others
POWER
Lisbon, 22 October 2007
André
Ribeiro
71 Investor Day
Cogens
New Cogens Cogen
Wind
CCGT
CCGT
Wind
A GAS TO POWER PORTFOLIO
Special Regime Producers Market
CO2 mitigation
Gas to Power
Developing a portfolio
80
160
160
800 1,200 MW
72 Investor Day
Source: REN, REE and OMIP
Projected Installed Capacity (MW)
CCGT PROJECTS WITH SOUND FUNDAMENTALS
400
400
800
3Q 2010E 4Q 2010EGas consumption
600 Mm3
CCGT
load factor and Spanish pool price
• Load factor above 50%
• Estimated capex of 420 M€
50%
63% 61%52%
39% 40%46% 47%
2003 2004 2005 20060
1
2
3
4
5
6
7
Portuguese CCGT load factorSpanish CCGT load factorSpanish average pool price (cent€/KWh)
• Pool price reflects a CCGTs’ higher usage
cent€/ KWh
73 Investor Day
8082
-
82
244
2007 2008E 2009E 2010E Total
Projected installed capacity (MW)
• Annual sales to the grid of 1,200 GWh in 2010
• Estimated capex of 150 M€ in Sines and Porto refineries project
• Positive impact on refineries‘ energy efficiency
• EBITDA margin above 20%
COGENERATION BUSINESS WITH POSITIVE IMPACT ON GALP’S VALUE CHAIN
• Granted tariff for a period of 15 years
• Tariff covers avoided costs in
• Investment in alternative baseload technology
• O&M and fuel costs
• CO2 subject to level of electrical efficiency
• Priority access to the grid
• Tariff of 65.69 €/MWh with brent at 50 Usd/bbl
• After 10 years of operation the tariff is reduced by half of environment charge (PA of 4.5 €/MWh)
Regulation
Natural Gas consumption 160 660 Mm3
74 Investor Day
+108 400
80
+64+76
+144 +8
2009E 2010E 2011E 2012E 2013E Total
Projected installed capacity (MW)
• Premium load factor of 2,800h, 22% above average
• Turbine supply already guaranteed
• Galp’s estimated capex of 194 M/€
• Project to be equity consolidated with an expected unlevered return of 7.5%
GALP ENERGIA DELIVERING ON WIND PROJECT
• Average regulated tariff of 73.6 €/MWh, to be adjusted with CPI from start of operations
• Granted tariff for a minimum of 15 years or 33 GWh/MW and option to pass to market price plus green certificates
• After 15 years or 33 GWh/MW, tariff will sum market price and green certificates
• Priority access to the grid
1 80 MW of additional capacity to be requested to DGEG
1
Regulation
75 Investor Day
MOVING INTO POWER BUSINESS
Target installed capacity (MW)
• Value accretive Gas & Power integrated approach
• Attractive electricity market growth
• Opportunity in green field generation projects in gas and hydro
Rationale
• Efficient gas sourcing contracts
• Opportunity to develop competitive generation mix
• Strong customer base
• Track record in competitive environment
Strengths
80
1,200Hydro
2007 2012E Target
76 Investor Day
160
800
160
Galp Energia
Own consumption increases supply management capability
Galp Energia
planned generation mix
Natural GasDemand (bcm)
GAS & POWER APPROACH REDUCES OVERALL BUSINESS RISK
Cogens
CCGT
Wind
Galp Energia own consumption
Portuguese market 2006
Additional Galp Energia incremental demand
4.0
1.10.4
2.1
Market 2012E
77 Investor Day
CALL OPTION PROFILE OF INTEGRATED GAS AND ELECTRICITY APPROACH
CCGT project will allow to arbitrage between gas trading and power margins
Spark spread
Gas cost
Gas margin
Additional flexibility gain from CCGT project
78 Investor Day
Indicative cost structure by generation type (MWh)
PORTFOLIO’S COMPETITIVENESS TO BE COMPLEMENTED BY HYDRO
Fuel
Coal
Gas
Hydro
Nuclear
Capital O&M Fuel CO2
CCGT and Hydro usage
Available technologies
CO2 free
Source: BCG
79 Investor DaySource: INAG
New hydro capacity to be licensed
Project Installed capacity (MW) Production (GWh)
Ribeiradio 70 110
Foz Tua 234 340
Fridão 163 299
Padroselos 113 102
Gouvães 112 153
Daivões 109 148
Vidago 90 114
Almourol 78 209
Pinhosão 77 106
Girabolhos 72 99
Alvito 48 62
Total 1,166 1,742
HYDRO INCREMENTAL CAPACITY IS AN OPPORTUNITY TO DIVERSIFY
80 Investor Day
TO BECOME THE ALTERNATIVE PLAYER IN PORTUGAL
HydroHydro
Nuclear
CCGT
CCGT
Coal
Fuel oil
SRPSRP
Iberia 2010E Galp target portfolio
1 SRP – Special Regime Production
1
1
More efficient generation mix than average
81 Investor Day
LOCK IN VALUE IN ELECTRICITY
Galp electricityproduction
Final clients Pool
Pending on supply margin’s
evolution
Leverage on oil and gas customer base
Galp electricityproduction
Final clients Pool
Sales Mix Base Case Sales Mix Target
FINANCIAL OVERVIEW
Lisbon, 22 October 2007
Francesco Antonietti, CFO
83 Investor Day
79
587 581
1,241
80
425
118
627
E&P R&M G&P Consolidated
2006 1H2007
79
560
320
958
80
272
125
481
E&P R&M G&P Consolidated
2006 1H2007
GALP’S BUSINESSES IN DIFFERENT MOMENTUMS
EBITDA Adjusted (M€)EBITDA IFRS (M€)
1.0x
0.5x
0.4x
0.5x
1H07/06
• E&P confirming growth in production
• R&M stable even with lower refining margins
• G&P affected by transportation activities spin-off
84 Investor Day
IFRS Adjusted
H106 H107 % Ch. € Million H106 H107 % Ch.
6,130 5,894 (3.9%) Sales 6,054 5,890 (3.0%)
615 627 2.0% EBITDA 404 481 19.2%
475 498 4.8% EBIT 264 360 36.4%
19 31 59.4% Income from Associates 19 31 59.4%
354 401 13.4% Net Income 167 285 71.0%
0.43 0.48 13.4% EPS (Eur/share) 0.20 0.34 71.0%
ADJUSTED EPS INCREASED BY 71% TO €0.34
85 Investor Day
17
270
208
79
13
347
221
E&P R&M G&P Consolidated
5,8696,166
(38)(194)
12(77)
Total2005
E&P R&M G&P Others Total2006
CONTROLLED OPERATING COSTS
Fixed costs 2006
Variable costs 2006
19
Operating costs1
2006 (M€)
693 130 858
Employees (#)
2
1 Adjusted results. Gas & Power and consolidated 2005 figures adjusted to reflect unbundling effect.2 Includes 188 employees transferred to REN during the unbundling process.Note: Segmental figures don’t add up to total due to consolidation adjustments and others
24% 0% 3% 4%
∆
06/05
External Supplies & Services 2006 (M€)
13%31% 29% 34%
87%69% 71% 66%
E&P R&M G&P Consolidated
Personnel costs External Supplies & Services
86 Investor Day
CAPITAL EXPENDITURES SUPPORTING GROWTH
Breakdown by segment:
(1) Includes other of €3M and €1M in 2005 and 2006 respectively
M€
R&M1)
G&P
E&P
Total
145 131
2005 2006
7050
2005 2006
3050
2005 2006
88 112
2005 2006
9090
2005 2006
1010
2005 2006
100100
2005 2006
82 106
2005 2006
0 0
2005 2006
315 349
2005 2006
8674
2005 2006
1426
2005 2006
Maintenance (%) Expansion (%) Total Capex Comments
Maintenance and environmental investments in both refineries, construction of new service stations in Portugal and in Spain, construction of strategic storage facilities and development of piped LPG
Capitalization of cushion gas, investments in other underground storage surface facilities. Expansion of the natural gas network, clients conversion to natural gas and investments in Sines refinery cogeneration plant
Investments in production activity in Block 14 in Angola, exploration activities in Block 32 in Angola and in Brazil
87 Investor Day
Fixed rate 25%
Variable rate 75%
LOW DEBT LEVEL AT 0.4x DEBT TO EQUITY
Debt exposure to interest rates
Debt reimbursement plan (M€)
30 June 2007 M€ Short Term Long Term
Bonds - 226
Bank debt 325 273
Commercial Paper
275 -
Cash (182) -
Net Debt 918
Average life - 3.98 years36
245
38 37 26 20
68
2007 2008 2009 2010 2011 2012 >2012
88 Investor Day
STRONG CASH FLOW GENERATION FROM OPERATING ACTIVITIES ALLOWED DEBT REDUCTION
Net debt 2005 Operating cash flow
Investment cash flow net of subsidies
Dividends paid Net interests and taxes
Others Net debt 1H2007
1,192
1,606
305
1,280
319 38 918
M€
89 Investor Day
OFF BALANCE SHEET RESPONSABILITIES
Type of benefits Total responsibilities 2006
Pensions 397 M€
Pre and early retirements 81 M€
Health and life insurance 211 M€
689 M€
Coverage
• Pension Fund: 370 M€ (95% funded)
• Provisions: 213 M€
• Accumulated deviation1: 106 M€
• 64 M€ within the corridor
• 42 M€ outside the corridor
(1 ) IAS 19 allows companies to defer the recognition of actuarial gains or losses. These actuarial gains or losses are unrecognised, if they fall within a “corridor” (10% of total responsabilities). The excess portion of the corridor, must be recognised over the expected average remaining working lives of the participating employees.
90 Investor Day
• Subject to approval of all related parties
• 1H results needs to be sufficient to allow dividend payment
• Interim dividend is deducted to the annual dividend approved by the General Meeting
Net income IFRS
@ replacement
cost
Annual Dividend of year n
Annual Dividend
Interim Dividend of year n+1
50% xAnnual
dividend of year n
Interim dividend
50% payout ratiox
2007 interim dividend of 0.152 €/share to be paid in November 7, 2007
2006 dividend of 0.304 €/share (paid in June 19, 2007)
STABLE AND CLEAR DIVIDEND POLICY