Rudy Van Beurden | Fluxys | Ghent - 27 April 2016

OUTLOOK

FOR THE

LNG

MARKET

PRODUCTION OF NATURAL GAS:

ABUNDANT & GEOGRAPHICALLY WELL-SPREAD RESOURCE BASE

Source: Cedigaz Natural Gas In The World 2014 Edition - EIA – World Shale Resource Assessment (September 2015) Figures: billion cubic metres (bcm)

North America

11,545

Latin America

7,618

Asia - Oceania

16,966

Europe

4,666

Africa

14,386

Iran

34,020

Qatar

24,681 Saudi Arabia + UAE

14,407

Russia

49,541

Other CIS

countries

15,767 Shale

17,627

Shale

16,223

2016 05 27 2

DEMAND OUTLOOK FOR NATURAL GAS

ACROSS THE REGIONS: EUROPE GOES FLAT

3

300

500

700

900

1100

1300

1500

Asia

Forecast 2011 Forecast 2015

300

350

400

450

500

550

600

650

700

Europe

Forecast 2011 Forecast 2015

300

500

700

900

1100

1300

1500

North America

Forecast 2011 Forecast 2015

Source: IEA World Energy Outlook 2011 - 2015

2016 05 27

DESPITE FLAT DEMAND OUTLOOK: SUPPLY GAP WIDENS

AS INDIGENOUS PRODUCTION DECLINES

4

0

50

100

150

200

250

300

350

400

450

500

Import requirements European production incl. Norway Demand

bcm

/y

Source: Entsog TYNDP 2015

Fluxys: partner in c. 45-55 bcm/y

additional supply capacity into Europe

2016 05 27

NATURAL GAS IMPORTS IN EUROPE

5

Source: BP Statistical Review of World Energy June 2015,

Cedigaz Natural Gas In The World 2014 Edition

EU : imports (Norway incl.) cover

76% of consumption (2014)

Russia 39,4%

Norway 33,8%

Algeria 9,8%

Qatar 7,3%

Nigeria 1,4%

Others 8,3%

Natural Gas by pipelines 90%

LNG 10%

2016 05 27

Africa

Russia

Middle East

Norway

WHERE WILL TOMORROW’S GAS COME FROM?

LNG worldwide

Russia

Africa

Norway

Southern Corridor:

Caspian,

Middle East,

East Med

6 2016 05 27

Liquefaction

Transmission

Gas fields

Storage Transmission

Storage

• Cool down to -162°C • Volume 1/600

Regasification

FROM SOURCE TO END USER MARKET:

PIPELINES AND LNG CHAIN (LIQUEFIED NATURAL GAS)

2016 05 27 7

• Warm up to +3°C • Volume x 600

• Liquefied by cooling the natural gas to a temperature of -162° C at atmospheric pressure.

• 600 less volume than natural gas

compact fuel, competitive with diesel

extremely clean, low-carbon fuel

8

LNG = Liquefied Natural Gas

2016 05 27

MAJOR LNG FLOWS IN THE WORLD

2016 05 27 9

LNG IS AVAILABLE: 240 360 MILLION TON/Y IN 2020

10

0

50

100

150

200

250

300

350

400

450

500

2000 2005 2010 2015 2020 2025 2030

United States

Australia

Qatar

Malaysia

Nigeria

Indonesia

Trinidad

Algeria

Russia

Oman

Yemen

Brunei

United Arab Emirates

Peru

Equatorial Guinea

Norway

Papua New Guinea

Angola

Libya

Egypt

MTPA

+50% increase in LNG supply by 2020

[IHS – exports operational terminals & terminals under construction]

Qatar

Australia

USA

2016 05 27

0

5

10

15

20

25

5/01/2009 5/01/2010 5/01/2011 5/01/2012 5/01/2013 5/01/2014 5/01/2015 5/01/2016

Brent Oil Japan Belgium US Natural Gas price

CRUDE OIL VS. NATURAL GAS PRICE

2009

2013

20

11

2012

2010

20

14

Crude oil at $100/barrel

= 17.3 $/MMBTU = --------------------------------------------------------------------------------------------

2016 05 27 11

Fukushima - Japan

Shale gas - USA

$ /MMBTU (*)

(*) 5 $/MMBTU ≈ 15 EUR/MWh

20

15

Sagunto Izmir

Fos-sur-mer

Bilbao

Montoir

Sines

Huelva

Barcelona

Cartagena

Panigaglia

Revithoussa

Ereglisi

Isle of Grain

Mugardos

Porto Levante

Świnoujście

2015

Northern Adriatic

Krk

Shannon LNG

OLT LNG Toscana

Taranto

Vasiliko

El Musel 2017-2021

Porto Empedocle

Gioia Tauro

Falconara

Zeebrugge

Rotterdam

Nynäshamn

Wilhelmshaven (outstanding)

Klaipéda

Riga

Paldiski

Dunkirk 2015

2016 05 27 12

Existing LNG terminals

Under construction

Planned or announced

LNG REGAS CAPACITY IN EUROPE

BUT UTILISATION RATE AS LOW AS 20%

South Hook

Dragon LNG

Hamburg

Göteborg

Lysekil

Sillamäe

Muuga

Fos Tonkin

Fos Cavaou

Kavala

Alexandroupolis

Source: GIE 2014 – GIIGNL 2014

150

160

170

180

190

200

210

220

230

20

10

20

11

2012

20

13

20

14

20

15

20

16

20

17

20

18

2019

20

20

20

21

Operational

Under construction

bcm/y

LNG IMPORTS IN EUROPE EXPECTED TO DOUBLE BY 2020

13

0

50

100

150

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Net LNG imports LNG regas capacity [GLE – GIIGNL – Cedigaz – market expectation IEA]

MTPA

2016 05 27

2016 05 27

• 1,500+ LNG carriers received

• 80 million tonnes LNG unloaded = 108 bcm of natural gas

ZEEBRUGGE LNG TERMINAL SINCE 1987

14

• Unloading and loading of LNG vessels (7 500 m³ to 266 000 m³ LNG)

• Storage capacity : 380 000 m³ LNG in 4 tanks

• Regas and send-out in the transport grid 1 700 000 m³(n)/h

DEVELOPING THE ZEEBRUGGE TERMINAL

AS A KEY LNG HUB

• Optimum take away capacity: security of supply instrument for NW Europe

• Developing the terminal as a versatile tool for our clients

2016 05 27

2008

Optimum destination

flexibility

15

Optimum

LNG reception

flexibility

Reload LNG:

ships and tanker

trucks

Pipe gas

throughout

NW Europe

16

• Port of Sabetta, Yamal Peninsula:

Yamal LNG to produce 16.5 mt/y of LNG

• Yamal Trade - Fluxys LNG:

20y capacity agreement for up to 8 mt/y LNG

transshipment services at LNG terminal in

Zeebrugge. ZEEBRUGGE

Winter route

Summer route

South

America

SABETTA

LNG Market

NEW LT-CONTRACT:

TRANSSHIPMENTS FOR YAMAL LNG

2016 05 27

TRANSSHIPMENT CONTRACT:

INVESTMENT IN 5TH STORAGE TANK AND PROCESS INSTALLATIONS

17

5th storage tank

Additional process installations

2016 05 27

Attack the invisible killer: premature

deaths from air pollution estimated at

420,000 for the year 2010 (EC)

Envisat, ESA

18

HEAVY FUEL OIL

3.5% Sulphur

MARINE GAS OIL

0.1% Sulphur

LNG

• 0% Sulphur

• Particulate matter: negligible

• Up to 90% less NOx

• Up to 25% less CO2 [European Commission SWD 2013 4]

SMALL-SCALE LNG = LNG AS A FUEL FOR INDUSTRY,

SHIPS AND TRUCKS: BETTER FOR CLIMATE & HEALTH

2016 05 27

19

Alternative Fuels Directive

adopted by the EU Parliament (2014)

CNG refuelling infrastructure

every 150 km by 2020

LNG refuelling infrastructure for

trucks every 400 km

and for ships in 106 TEN-T ports

by 2025

Sulphur Emission Control Area

Existing SECA area

Potential future SECA area

WORLD-WIDE REGULATION FAVOURS LNG

-

1,0

2,0

3,0

4,0

5,0

2008 2010 2012 2014 2016 2018 2020 2022 2024

Max % sulphur in ship fuel Global norm

SECA norm

2016 05 27

LNG AS A FUEL FOR SHIPS IN 2015: 0.2 MTPA

20

[DNV-GL 1/2016]

75 LNG fuelled ships in operation

(87% in Europe) + 84 on order

Sea-going ships propelled by LNG (excluding LNG carriers)

Num

be

r o

f sh

ips

2016 05 27

LNG AS A FUEL FOR TRUCKS

IN 2015: 0.02 MTPA (EST.)

21

1509 LNG fuelled trucks + 46 buses in operation

Russia

Finland

Sweden

Turkey

Poland

Italy

Netherlands

Switzerland

Portugal

UK

Spain

France

Belgium

1 truck

1 truck

69 trucks

46 buses

11 trucks

2 trucks

56 trucks

1 truck

33 trucks

10 trucks

306 trucks 11 trucks

621 trucks

387 trucks

[NGVA Europe Jan 2015]

2016 05 27

Heavy Fuel Oil 53 mtpa

LPG 27 mtpa

Gasoline 80 mtpa

Chem feed -naphta 49 mtpa

other 50 mtpa

Refinery losses 29 mtpa

Jet-kerosene 54 mtpa

Diesel ≈ gasoil 270 mtpa

Trucks, vans,

cars 200 mtpa

Ships 7 mtpa

Heating oil

63 mtpa

Cars

Industry

Ships

Petrochemical

Air-

planes

A NICHE MARKET TODAY, BUT WE ARE FISHING

IN A SEA WITH LARGE POTENTIAL

22

[Fuels Europe.eu]

430 mtpa market

Small-scale LNG: 1.7 mtpa

• Industry: 1.5 mtpa

• Ships: 0.2 mtpa

• Trucks: 0.02 mtpa

2016 05 27

LNG trailer

45 m³ LNG

Feeder ship

15 000 m³ LNG

Bunker vessel

up to 7 000 m³ LNG

Bunker vessel

up to 7 000 m³ LNG

Intermediate storage

Fluxys

LNG terminal

360 000 m³ LNG

Loading of LNG trailers

Loading of bunker barges

and feeder ships

Cutting through the chicken-and-egg

situation: Fluxys to invest with

partners in downstream LNG chain

DOWNSTREAM SMALL SCALE LNG SUPPLY FROM

ZEEBRUGGE: A CLOSER LOOK

End user

1 to 100 000 m³ LNG/y

23

30 m³ LNG/y

Fuel for industry

1 to 15 000 m³ LNG/y

2016 05 27

LNG trailer

45 m³ LNG

Feeder ship

15 000 m³ LNG

Bunker vessel

up to 7 000 m³ LNG

Bunker vessel

up to 7 000 m³ LNG

Intermediate storage

Fluxys

LNG terminal

360 000 m³ LNG

Loading of LNG trailers

Loading of bunker barges

and feeder ships

End user

1 to 100 000 m³ LNG/y

24

30 m³ LNG/y

Fuel for industry

1 to 15 000 m³ LNG/y

2016 05 27

Fluxys

LNG terminal

LNG trailer

Truck refuelling station

- e.g. Fluxys in Veurne

LNG AS A FUEL FOR INDUSTRY, SHIPS AND TRUCKS

Small ships propelled on LNG

Fuel for

industry

Loading of

LNG trailers

50%

10%

40%

25

2016 05 27

LNG TRUCK LOADING 2010 2011 2012 2013 2014 2015 …

0

1000

2000

3000

4000

2010 2011 2012 2013 2014 2015

LNG Trucks Loaded in Zeebrugge + FR + NL

19 active truck loading companies

Capacity of 4 000 loadings/year

24/7, online day-ahead scheduling

> Industrial sites without pipe gas >50%

> LNG refuelling stations <40%

> LNG as fuel for shipping <10%

Destinations: Belgium, UK, France, Germany, the Netherlands, Poland, Switzerland, Sweden, Norway, Italy

26 2016 05 27

FIRST LNG REFUELLING

STATION OWNED AND BUILT BY

FLUXYS IN BELGIUM

PARTNERSHIP WITH HAULAGE

COMPANY MATTHEEUWS

27 2016 05 27

LNG trailer

45 m³ LNG

Feeder ship

15 000 m³ LNG

Bunker vessel

up to 7 000 m³ LNG

Bunker vessel

up to 7 000 m³ LNG

Intermediate storage

Fluxys

LNG terminal

360 000 m³ LNG

Loading of LNG trailers

Loading of bunker barges

and feeder ships

End user

1 to 100 000 m³ LNG/y

28

30 m³ LNG/y

Fuel for industry

1 to 15 000 m³ LNG/y

2016 05 27

2ND JETTY ABLE TO LOAD SMALL LNG BUNKER

BARGES IN ZEEBRUGGE

29

Second jetty under construction

• Reception of LNG carriers with capacity as small as 2 000 m³ LNG

• Unloading and loading two ships simultaneously

• Ship-jetty-ship transfers

2016 05 27

Engie, NYK, Mitsubishi and Fluxys are

building a new LNG bunkering vessel:

• 5 100 m³ LNG

• Commissioning 2016

• Bunkers for UECC United European

Car Carriers

2 dual-fuelled ships in SECA

30

LNG BUNKERING VESSEL WITH HOME PORT ZEEBRUGGE

2016 05 27

LNG trailer

45 m³ LNG

Feeder ship

15 000 m³ LNG

Bunker vessel

up to 7 000 m³ LNG

Bunker vessel

up to 7 000 m³ LNG

Intermediate storage

Fluxys

LNG terminal

560 000 m³ LNG

Loading of LNG trailers

Loading of bunker barges

and feeder ships

End user

1 to 100 000 m³ LNG/y

31

30 m³ LNG/y

Fuel for industry

1 to 15 000 m³ LNG/y

2016 05 27

32

11/2014: agreement signed between Eni and Skangas

to load 2 small scale LNG ships per month in 2015 and 2016

LOADING OF FEEDER SHIPS: 15 600 M³ LNG

2016 05 27

LNG trailer

45 m³ LNG

Feeder ship

15 000 m³ LNG

Bunker vessel

up to 7 000 m³ LNG

Bunker vessel

up to 7 000 m³ LNG

Intermediate storage

Fluxys

LNG terminal

560 000 m³ LNG

Loading of LNG trailers

Loading of bunker barges

and feeder ships

End user

1 to 100 000 m³ LNG/y

33

30 m³ LNG/y

Fuel for industry

1 to 15 000 m³ LNG/y

2016 05 27

34

STRONG POTENTIAL FOR

ENLARGING REGIONAL SCOPE

• Germany: Fluxys member of

Maritime LNG platform

• Widening of scope already

started towards Sweden

SWEDEGAS

Shippers Meeting 3&4 March 2016 - for information purposes only 34

2016 05 27

SMALL SCALE LNG TERMINALS UNDER DEVELOPMENT

BY SWEDEGAS IN SWEDEN

• Significant LNG bunkering market in the Gothenburg port

• Main industrial end users via truck and/or rail

• Small regional grids by truck and/or rail

• Truck fuelling for heavy road transport

• Part of the Swedish pipe gas market

35 2016 05 27

WRAP UP

36

• Large-scale LNG: supply to entire markets

− Compared to pipe gas: advantage of flexibility and source diversification

− Huge amounts of additional liquefaction capacity coming on stream

− Europe expected to double LNG imports by 2020

• Small-scale LNG: LNG as a fuel for industry, ships and trucks

− Strong demand to reduce emissions as well as costs

− Challenge: developing downstream LNG infrastructure

• Fluxys: first mover in both large & small-scale LNG

2016 05 27

2016 05 27 37