LNG in 2015 and MT perspectives

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1 CEDIGAZ, the International Association for Natural Gas LNG in 2015 and MT perspectives Geoffroy Hureau Secretary General - CEDIGAZ

2 THE LNG MARKET IN 2015 (Preliminary estimates)

3 LNG Demand grew 2% in 2015 in a soft market Around 241 Mt Fastest growth in 4 years Supply growth mainly in the Pacific basin Demand declined in Asia Prices collapsed and converged further LNG returned to Europe Demand growth from new importers Growth of intra-regional trade

4 Regional demand evolution ( ) Annual change in LNG demand (mmt)

5 Decline in major Asian importing countries Growth mainly in MENA countries, new importers (Egypt, Jordan, Pakistan) and Europe + Brazil, Thailand and Taiwan

6 Change in growth dynamics? Annual change in LNG demand (mmtpa) Asian growth had been weakening since 2011

7 Europe : Net imports up 14.1% (+4.6 mmtpa) Re-exports down 43% (-2.7 mmtpa)

8 Disruptions and declining outputs limited supply growth New liquefaction plants in 2015 Project Country Startup Capacity (mmtpa) QCLNG Train 1 Australia January 4.3 QCLNG Train 2 Australia July 4.3 Donggi-Senoro Indonesia August 2 Gladstone LNG Train 1 Australia October 3.9 Total 14.5 Other important facts Ramp-up of PNG LGN Yemen LNG iddle since April Continued production declines of exports from Algeria, Indonesia, T&T

9 Change in trade patterns Mt +0,77 Mt +1,8 Mt Mt MENA:+2 Mt Qatar -0,44 Mt -3.6 Mt Mt T&T Nigeria Source: Cedigaz Mt Mt +0,6 Mt Growth of intra-regional trade: Asia +10% Europe +50% Latam + 13% MENA +70%

10 FID s limited to US projects (50% = expansions of already FIDed projects) + small FLNG (Cameroon) Limited contractual activity (down 38%) FIDs in 2015 Corpus Christi LNG 9 mmtpa USA Freeport LNG 4 mmtpa USA Expansion Sabine Pass 4.5 mmtpa USA Expansion Cameroon FLNG 1.2 mmtpa Cameroon FLNG

11 MT OUTLOOK

12 Liquefaction capacity to grow by 40% to 2020 (125 mmtpa of projects under-construction)

13 Demand : downgraded perspectives with a few bright spots ASIA China Official targets for gas demand 2020 revised down from 400 bcm/y to 360 Bcm/y (2014) CNPC scenarios: bcm/y in 2020 Competition from coal, renewables + pipeline gas from Turkmenistan & Myanmar «New normal», pricing issues Japan South Korea Taiwan Others Weather + structural factors EUROPE ROW Peak in Japan, South Korea Slowdown in China Nuclear restart (Japan) + new plants (SK), renewables with FIT, energy efficiency, coal (SK, Taiwan, Japan?) LNG demand has probably peaked Growth in «emerging markets» Indonesia, Malaysia, Thailand, Singapore, Pakistan, the Philippines (2016) & low prices could boost demand (India) Decline of domestic production + limited growth perspectives from traditional suppliers except Russia + low prices some growth potential Growth potential in MENA (Egypt, Jordan, UAE, Kuwait, Dubai), but Zohr discovery changes perspectives in Egypt Latam: Chile, Uruguay, Colombia (2016) Other: Ghana (2016)

14 Conclusions ( ) Always in motion is the future... Yoda Supply/demand: market looks well/over-supplied to 2020 and beyond but low-prices could boost demand, especially in emerging and new importers in the MENA, Asia and LATAM Prices: Spot prices to remain under pressure LT (oil based) prices should remain low until at least 2017 Profitability of US contracts will be challenged Projects: Challenging times for large projects but some small FLNG development still possible (ex. Cameroun FLNG)

15 Thank you for your attention

16 CEDIGAZ, the International Association for Natural Gas CEDIGAZ 1 & 4 Avenue de Bois-Préau Rueil-Malmaison Cedex France About CEDIGAZ CEDIGAZ is an international association dedicated to natural gas information and has more than 90 members in 40 countries. CEDIGAZ data has been the industry's reference since its foundation in 1961.