Powering Asia: The Role of Gas Address to the Melbourne Mining Club David Knox, Chief Executive, Santos. 4 February 2010

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2 Powering Asia: The Role of Gas Address to the Melbourne Mining Club David Knox, Chief Executive, Santos 2 4 February 21

3 Asia is the Engine of Energy Growth Billions of People World Population Asia Rest of World US$ bn ($25) World GDP Asia Rest of World Quadrillions BTU World Primary Energy Consumption Asia 3 2 Rest of World Asia 47% of population growth % of GDP growth 62% of energy growth 3 Source: EIA International Energy Outlook 29

4 Gas Demand Growth Part of Asian Energy Mix 25 Non-OECD Asia Total Energy Consumption by Fuel Quadrillion Btu Other Energy Nuclear Coal Gas Liquids Non-OECD Asia gas share of fuel mix increases from 8% to 1% 4 Source: EIA International Energy Outlook 29

5 The Lucky Country Fuelling Asian Growth Australia s Share of Global Resources Australia s ranking in world holding on EDR Uranium Brown Coal Nickel Lead Bauxite Copper Gold Manganese Ore Iron Ore Black Coal Gas Oil % 5% 1% 15% 2% 25% 3% 35% 4% Australia's % of World Economic Demonstrated Resources 5 Source: ABS 28 Year Book; BP 29 Statistical Review

6 Top 2 World Oil Reserves Norway 8 12 Algeria 36 Nigeria Saudi Russia Iraq Kazakhstan Azerbaijan Libya 14 Angola UAE Years of Production Iran Kuwait 27 Qatar World Reserves to Production Ratio (Years) China Australia 4 Oil Production Oil Production (mbbl/d) Proven Oil Reserves (bn bbl) Proven Oil Sands (bn bbl) US Mexico 12 Canada 99 Venezuela 13 Brazil 6 Top 2 account for 94% world s proved oil reserves, Australia ranked 27th Source: BP Statistical Review 29

7 Top 2 World Gas Reserves Norway 13 Algeria Nigeria Russia 1529 Years of Production World Reserves to Production Ratio (Years) Turkmenistan Kazakhstan Iraq 159 Egypt Iran 87 China Kuwait Saudi 9 Malaysia 184 Qatar Indonesia UAE Australia Gas Production Canada USA Gas Production (Bcf/day) Proven gas reserves (Tcf) Unconventional Gas (Tcf), resource estimate 171 Venezuela 7 Top 2 account for 9% world s proved gas reserves Source: BP Statistical Review 29

8 The Changed World of IOCs NOC Reserves (Limited Equity Access) SOVIET Reserves Full IOC Access NOC Reserves (Equity Access) 1% 14% Reserves Held by Russian Companies 15% 8% 12% 85% 65% Full IOC Access NOC Reserves (Limited Equity Access) 8 Source: PFC Energy

9 Top 2 Gas World Reserves Gas Reserves With Full IOC Access Norway 13 Russia 1529 Algeria Nigeria Turkmenistan Kazakhstan Iraq 159 Egypt Saudi UAE Qatar Iran India Kuwait 38 Malaysia China Indonesia 25+ Australia Canada USA Proven gas reserves (Tcf) Unconventional Gas (Tcf), resource estimate 171 Venezuela 9 Source: BP Statistical Review 29, Oil & Gas Journal, PFC Energy Full IOC Access countries

10 What is Coal Seam Gas? Definition Methane that exists within coal Typically 98% methane, <2% inert gas, no liquids, 1 btu/scf heating value Key Facts Known coal exists from Townsville to Sydney (2km) Existence proven by coal industry drilling and seismic Target CSG zones are 5-1m sub surface Production process is simply dehydration and compression Denison Trough Surat Basin Fairview Roma Sydney Basin Scotia Gladstone Bowen Basin Gunnedah Basin Sydney Brisbane 2km 1

11 Key Success factors for CSG-to-LNG World class assets & reserves Manufacturing approach Gas storage management Sustainable resource management 11

12 World-class CSG Gas Reserves US v Australia CBM/CSG Reserves & Production CSG/CBM Reserves (Tcf) CBM/CSG Productiion (mmscf/day) US CBM 1P Reserves (Tcf) US CBM Production (mmscf/day) Australian CSG 2P Reserves (Tcf) Australian CSG Production (mmscf/day) 12 Source: EIA, ACIL Tasman, Energy Quest

13 Australia s Abundant Gas Resources 2.9 Tcf LNG Export.9 Tcf 2P 68Tcf 2C 79Tcf CSG Resource Potential +25Tcf WA/NT Domestic.4 Tcf 2P 28Tcf 2C 35Tcf Reserve, Resource Size.6 Tcf Eastern Australia Domestic 28 Gas Consumption 218 LNG Exports 13 Sources: Wood Mackenzie, Energy Quest, CSIRO

14 Strong Asia Pacific LNG Demand Outlook LNG Contracted Supply (mtpa) Others Brunei PNG Oman Indonesia Malaysia Qatar Russia East LNG Demand Uncontracted Demand LNG Demand (mtpa) Australia Source: Wood Mackenzie Others includes: Alaska, Trinidad, Egypt, Yemen, UAE, Iran

15 Domestic Channel Room to Grow Gas Penetration as % of Power Generated 1% 9% 8% 78% 1% 9% 8% 7% 68% 64% 7% 6% 5% 54% 6% 5% 5% 4% 35% 4% 37% 3% 3% 23% 2% 18% 2% 1% % 12% 9% 8%.5% 2% 1% % 9% 5% 3% 9% 11% SA WA QLD TAS VIC NSW/ACT Australia China India Australia Germany Korea US Japan UK California Malaysia Thailand Singapore 15 Source: EIA, AER, Santos

16 More Gas Means Lower Emissions 1.4 Emission Intensity of Electricity Generated by State tco2e/mwh CCGT Emissions Intensity <.4tCO2/MWh.2. NSW and ACT Victoria Queensland South Australia 16 Source: National Greenhouse and Energy Reporting

17 Santos Growth Strategy Santos is Australia's Leading Domestic Gas Producer 18% 16% (% of Domestic Gas Production) Performance from the Base 11% 11% Deliver LNG Growth 8% 7% 4% 4% 3% 3% Focused growth in Asia Santos BHP Billiton Woodside ExxonMobil Origin Apache BP Chevron Shell Conoco Phillips 17 Source: Energy Quest

18 Santos Growth Strategy Performance from the Base Deliver LNG Growth Focused growth in Asia Bonaparte LNG 2mtpa FLNG Santos 4% Darwin LNG Production since mtpa single train Santos 11.4% PNG LNG Sanctioned Dec mtpa two trains Santos 13.5% GLNG On track for FID mid-1 3.6mtpa first train 2 train FEED Santos 6% 18

19 The Project Milestones Achieved GLNG is meeting key milestones Two trains, 5 train site Downstream FEED 9% complete Upstream FEED 75% complete Binding off-take agreement Supplementary EIS lodged - Public submission period closed Cultural heritage management Water solution - 9, trees planted FID Mid 21 First cargo

20 Australia Must Stay Competitive Australia must stay competitive to ensure our continued economic prosperity and to supply Asia s economic growth To stay competitive, our world class resources sector requires: - Skilled labour - Stable fiscal regimes - Regulatory certainty Natural gas has a major role to play in: - Generating significant export and domestic revenue - Reducing carbon emissions both here and overseas - Maintaining our competitive advantage in energy 2

21 We have the energy. We have the energy. 21 Santos Tour Down Under winner Andre Greipel /Photo by John Veage 21

22 Disclaimer & Important Notice This presentation contains forward looking statements that are subject to risk factors associated with the oil and gas industry. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a range of variables which could cause actual results or trends to differ materially, including but not limited to: price fluctuations, actual demand, currency fluctuations, geotechnical factors, drilling and production results, gas commercialisation, development progress, operating results, engineering estimates, reserve estimates, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial markets conditions in various countries, approvals and cost estimates. All references to dollars, cents or $ in this document are to Australian currency, unless otherwise stated. 22

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