Business environment supply and demand PESA 2012 Year in Review APPEA Conference May 2013 AGL External

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1 Business environment supply and demand PESA 2012 Year in Review APPEA Conference May 2013 AGL External

2 Disclaimer 2 The information in this presentation: Is not an offer or recommendation to purchase or subscribe for securities in AGL Energy Limited or to retain any securities currently held. Does not take into account the potential and current individual investment objectives or the financial situation of investors. Was prepared with due care and attention and is current at the date of the presentation. Actual results may materially vary from any forecasts (where applicable) in this presentation. Before making or varying any investment in securities in AGL Energy Limited, all investors should consider the appropriateness of that investment in light of their individual investment objectives and financial situation and should seek their own independent professional advice.

3 Agenda 3 Demand Domestic and LNG Global markets and potential new export demand Supply by participant Existing contracts for domestic demand rolling off Domestic users of natural gas calling for reservation Replicating US circumstances a better way forward An emerging issue swing gas A policy prescription for gas producers AND users Removing impediments to the discovery and production of more gas

4 4 Demand» Presentation Title» February 2008» AGL Internal

5 Current demand Demand is largely industrial with some power generation - Residential is relatively small 5 Source: BREE

6 Domestic demand Demand from industry, households and gas-fired generation is forecast to grow to Source: AEMO

7 LNG... Demand from LNG is set to create a step change in east coast demand 7 Source: AEMO

8 8 Power Generation latest forecasts indicate growth in gas-fired generation is unlikely» Presentation Title» February 2008» AGL Internal

9 Power generation Latest electricity demand forecasts indicate new gas-fired power generation unlikely to be required in medium term 9 Source: Simshauser and Nelson

10 10 Will new LNG export capacity (beyond that already committed to) be forthcoming?» Presentation Title» February 2008» AGL Internal

11 Significant LNG developments There are significant investments in new LNG export capabilities in various regions 11 Country Project Operator Capacity Under construction/in development Algeria Arzew GL3-Z Sonatrach 4.7 Under construction Angola Angola LNG Chevron 5.2 Under construction Australia APLNG ConocoPhillips/Origin 9 Under construction Australia GLNG Santos 7.8 Under construction Australia Gorgon Chevron 15 Under construction Australia Ichthys Inpex 8.4 Under construction Australia Prelude FLNG Shell 3.6 Under construction Australia QCLNG BG 8.5 Under construction Australia Wheatstone LNG Chevron 8.9 Under construction Canada Kitimat LNG Spectra/Apache 5 In development Canada Shell CNPC LNG CNPC/Shell 12 In development Eq Guinea EG LNG 2 Noble/Marathon 4.4 In development Indonesia DS LNG Pertamina/Mitsubishi 2 Under construction Indonesia Abadi FLNG INPEX Masela 2.5 In development Indonesia Sengkang EWC 2 In development Indonesia Tangguh Expansion BP 4 In development Malaysia Petronas FLNG Petronas 1 Under construction Malaysia MLNG Train 9 MLNG 3.6 In development Mozambique Mozambique Area 1 LNG Anadarko 10 In development Nigeria Brass LNG NNPC 10 In development Nigeria NLNG Seven Plus NNPC 8.4 In development PNG PNG LNG ExxonMobil 6.6 Under construction PNG PNG LNG Expansion ExxonMobil 3.5 In development Russia Sakhalin Expansion Gazprom 4.8 In development Russia Shtokman Phase 1 Gazprom 7.5 In development USA Cameron LNG Sempra Energy 12 In development USA Cove Point Dominion Resources 4.5 In development USA Freeport Freeport/Macquarie 10.9 In development USA Lake Charles BG 4.5 In development USA Sabine Pass Phase 2 Cheniere 9 In development Total Source: CLSA

12 The shale story...estimated global reserves If new Australian reserves are proven, will new (unannounced) LNG trains be developed? 12 Current global consumption Source: Energy Informer

13 13 Supply» Presentation Title» February 2008» AGL Internal

14 Reserves... Reserves held mainly by participants with LNG interests only 4,000 PJ of reserves currently uncontracted 14 Source: AEMO

15 15 Supply and Demand» Presentation Title» February 2008» AGL Internal

16 Supply and demand Possible that current reserves are insufficient to meet demand to 2030 critical that new supply is added 16 Source: AEMO

17 17 Contracted position of retailers...» Presentation Title» February 2008» AGL Internal

18 Contracted position of retailers AGL and other retailers contracts for gas supply fall off significantly from Source: ACIL Tasman

19 19 Domestic users are calling for a reservation policy. But evidence of what keeps prices down is best obtained from the US» Presentation Title» February 2008» AGL Internal

20 Evidence of policies which keep prices down The US shale experience developing lots of reserves and production has implications for prices 20 Source: BP

21 21 Swing gas an issue largely unconsidered (until now)» Presentation Title» February 2008» AGL Internal

22 Gas demand variability Swing gas is important for meeting demand variability LNG market is changing economic incentives to supply swing gas 22 Source: AGL

23 23 Domestic reservation unlikely to reduce prices better solution is to find and produce more gas but current public policy is doing the opposite» Presentation Title» February 2008» AGL Internal

24 Recent joint statement Recent joint statement by AI Group, ESAA, APPEA and CEC highlights the problems industry is facing 24

25 Recent joint statement Recent joint statement by AI Group, ESAA, APPEA and CEC highlights the problems industry is facing 25