PECHORA LNG. Corporate Presentation

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Belinda Campbell
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1 PECHORA LNG Corporate Presentation

2 Market overview Russia in the context of global natural gas market Top 1 by Reserves of Natural Gas Top 1 Gas Producers Top 1 Gas Exporters Top 1 LNG Producers Source: BP Energy Review, 211 2

Market overview Nenets Autonomus District Regional market overview Nenets Autonomus District

a Current gas production is less than.2 bcm p.a. or nearly 1% from potential output Gas

existing pipeline network LNG technology is the most economically justified method to

(MTOE) 54 (MTOE) 99% 13,8 (MTOE) 1%,18 (MTOE) Gas reserves Oil reserves Gas production Oil

3 Market overview Nenets Autonomus District Regional market overview Nenets Autonomus District The cumulative proven reserves of natural gas 56 bcm Prospective annual production 15 bcm p.a Current gas production is less than.2 bcm p.a. or nearly 1% from potential output Gas reserves of the Netets autonomous district are underdeveloped due to remoteness from the existing pipeline network LNG technology is the most economically justified method to develop gas potential of the region Reserves: oil and gas Production: oil and gas 64% 36% 14 (MTOE) 54 (MTOE) 99% 13,8 (MTOE) 1%,18 (MTOE) Gas reserves Oil reserves Gas production Oil production Source: Nenets Autonomous District Administration Source: Nenets Autonomous District Administration 3

Project Project overview Project development history Pechora LNG Project is based on reserves of Kumzhinskoye and Korovinskoye gascondensate fields in Nenets Autonomous District, licensed to ALLTECH

4 Project Project overview Project development history Pechora LNG Project is based on reserves of Kumzhinskoye and Korovinskoye gascondensate fields in Nenets Autonomous District, licensed to ALLTECH Group in the course of open bids held in December 27 and June 29, respectively Kumzhinskoye field was licensed at a decision of NAO Administration, considering environmental issues related to consequences of gas leakage accident happened in 198 In line with license obligations, ALLTECH Group has performed profound work to liquidate consequences of the accident and has developed the program of environmental monitoring Project status Project Feasibility Studies (FS) have been completed, i.a.: field development plan, gas treatment and pipeline transport, several LNG plant options, shipping and LNG marketing Kumzhinskoye field reserves have increased by 2 Bcm of gas based on completed 3D seismic Appraisal well on Kumzhinskoye field was drilled: gas flow rate was proven at 1.1 mcm/day Public Consultations on the Project were held in NaryanMar with Declaration of Intentions presented to the public and local administration Additional preinvestment study was completed by Gazprom s subsidiary JSC «Giprospetsgas» Positive expert opinion on preinvestment study was issued by «Gasprom VNIIGAS» Pechora LNG Project in terms of Russian LNG market Project key advantages Shtockman LNG Integrated production chain: gas production gas treatment and transportation LNG production Pechora LNG Yamal LNG Sakhalin2 Relative simplicity of implementation : proven resource base production and transportation from onshore fields light ice conditions in the region Vladivostok LNG 4

Project Project concept Existing Project resource base: Kumzhinskoye and Korovinskoye fields, Nenets autonomous district Perspective resource base: Vasilkovskoye,

5 Project Project concept Existing Project resource base: Kumzhinskoye and Korovinskoye fields, Nenets autonomous district Perspective resource base: Vasilkovskoye, Vaneivisskoye, Layavozhskoye fields, Nenets autonomous district Gas treatment at GTP (village Krasnoye) and transportation to LNG plant, Barents sea shore LNG production: mtpa 5

Project Resource base Licensed resource base Kumzhinskoye field Field discovered in 1968 On state balance since 198 Wells drilled : 29 Total acreage : 225 km 2 2D seismic completed on 262 line

6 Project Resource base Licensed resource base Kumzhinskoye field Field discovered in 1968 On state balance since 198 Wells drilled : 29 Total acreage : 225 km 2 2D seismic completed on 262 line kilometers License holder : CH Invest License received in 27 Korovinskoye field Field discovered in 1975 On state balance since 1985 Wells drilled : 26 Total acreage :134 km 2 2D seismic completed on 626 line kilometers License holder : EvroSeverNeft License received in 29 Existing resource base Perspective resource base Field Kumzhinskoye Korovinskoye TOTAL reserves License status Alltech Group Alltech Group С1 С2 С1 С2 Gas, Bcm Pechoraneftegazprom Category Condensate, mln.t Oil, mln.t C1+C Field Vasilkovskoye Vaneivisskoye Layavozhskoye TOTAL reserves License status Open acreage Open acreage С1 С2 С1 С2 С1 C2 Gas, Bcm Category Condensate, mln.t Oil, mln.t C1+C

7 Project Gas and LNG production options (JSC «Giprospetsgas») Gas production 4.2 Bcm. LNG production 2.6 mtpa Gas production 7. Bcm. LNG production 4. mtpa Gas, mcm Gas: Kumzhinskoye Gas: Korovinskoye LNG LNG, Ttpa Gas, mcm Gas: Kumzhinskoye Gas: Korovinskoye LNG LNG, Ttpa Gas production 7. Bcm. LNG production 4. mtpa (incl. processing of gas Vasilkovskoye field) Gas production 13.4 Bcm. LNG production 8. mtpa Gas, Gas: Vasilkovskoye Gas: Korovinskoye mcm Gas: Kumzhinskoye LNG LNG, Ttpa Gas, mcm Gas: Vasilkovskoye Gas: Korovinskoye Gas: Vaneyvisskoye Gas: Kumzhinskoye Gas: Layavozhskoye LNG LNG, Ttpa

8 Project Developing Nenets region gas potential (JSC «Giprospetsgas») KOROVINSKOYE EuroNorthOil KUMZHINSKOYE CH Invest Ø 72, L 21 km VASILKOVSKOYE Pechoraneftegazprom GTP VANEIVISSKOYE Open acreage Naryan Mar LAYAVOZHSKOYE Open acreage Ø 12, L 3 km 8

Project LNG plant Onshore LNG plant (Technip/Air Products) Dimensions (hectares) 21 Capacity (mtpa) 2.

infrastructures Longer construction schedule Higher CAPEX combining port infrastructures Floating LNG FLSO (Technip/DSME) Dimensions (L x W x H) (m)

6 LNG storage (m 3 ) 235, Technology packet APCI DMR Advantages : shipyardbased construction Possibility of relocation Does not require jetty

sea conditions Floating LNG case GBS (Aker Solutions) Floating LNG case GBS (TGE Gas Engineering) Dimensions (L x W x H) (m) 33 x 75 x 4 Capacity

6 LNG storage (m 3 ) 25, Technology packet APCI DMR Advantages High ice loads Structural stability during offloading in the open sea Does not require

9 Project LNG plant Onshore LNG plant (Technip/Air Products) Dimensions (hectares) 21 Capacity (mtpa) 2.6 LNG storage (m 3 ) 18, Technology packet APCI C3MR Advantages Proven design Conventional technology packet Disadvantages Requires port infrastructures Longer construction schedule Higher CAPEX combining port infrastructures Floating LNG FLSO (Technip/DSME) Dimensions (L x W x H) (m) 32 x 65 x 32 Capacity (mtpa) 2.6 LNG storage (m 3 ) 235, Technology packet APCI DMR Advantages : shipyardbased construction Possibility of relocation Does not require jetty infrastructures Disadvantages High LNG storage vaporization at sea swells Substantial ice management requirements LNG offloading limitations in open sea conditions Floating LNG case GBS (Aker Solutions) Floating LNG case GBS (TGE Gas Engineering) Dimensions (L x W x H) (m) 33 x 75 x 4 Capacity (mtpa) 2.6 LNG storage (m 3 ) 235, Technology packet APCI DMR Dimensions(øx H) (m) 15 х 65 Capacity (mtpa) 2.6 LNG storage (m 3 ) 25, Technology packet APCI DMR Advantages High ice loads Structural stability during offloading in the open sea Does not require jetty infrastructures Disadvantages High weights characteristics and construction cost Sea bottom installation requires supplementary investigations Advantages High ice loads Structural stability during offloading in the open sea Low LNG storage construction cost Disadvantages Installation works at install point required Sea bottom installation requires supplementary investigations 9

10 Financial parameters CAPEX and Per Unit Costs (JSC «Giprospetsgas») Onshore LNG Plant: CAPEX Offshore LNG Plant: CAPEX MUSD Offshore infrastructure Liquefaction MUSD Offshore infrastructure Liquefaction 8 6 Transportation +treatment 8 6 Transportation +treatment 4 2 Production 4 2 Production 2.6 mtpa 4. mtpa (K+K) 4. mtpa (К+К+V) 8. mtpa 2.6 mtpa 4. mtpa (K+K) 4. mtpa (К+К+V) Onshore LNG Plant : Gas unit costs Offshore LNG Plant: Gas unit costs USD/mmbtu USD/mmbtu Liquefaction ** 4 3 Liquefaction ** 2 1 Production, * transportation, treatment 2 1 Production, * transportation, treatment 2.6 mtpa 4. mtpa (K+K) 4. mtpa (К+К+V) 8. mtpa 2.6 mtpa 4. mtpa (K+K) 4. mtpa (К+К+V) * Gas cost level at which NPV of upstream & midstream stages equals zero, taking discount rate equal to 1% ** LNG cost level at which NPV of gas liquefaction stage equals zero, taking discount rate equal to 1% 1

11 Financial parameters IRR results (JSC «Giprospetsgas») IRR comparison of Project options 4% 35% Project options Onshore: 2.6 FLSO: 2.6 GBS: 2.6 3% Onshore (К+К): 4. FLSO (К+К): 4. 25% 2% GBS (К+К): 4. Onshore (К+К+В): 4. FLSO (К+К+V): 4. GBS (К+К+V): 4. Onshore 8. 15% Ряд11 IRR=15% 1% Poten&Partners forecast RF EDM forecast (negative) RF EDM forecast (basic) RF EDM forecast (optimistic) Poten&Partners forecast (+risks) 11

12 Project development Feasibility study results and next steps Pechora LNG is a technically feasible project Financial and economic results are attractive Risk analysis is performed. Risk factors are within the acceptable limits Market niche for the 2182 period was identified Next steps: Freezing Project s resource base Negotiating the terms of cooperation with Russian gas players Formation of partnership with foreign partners 12

Russian Exports to Asia and LNG

OXFORD INSTITUTE FOR ENERGY STUDIES Natural Gas Research Programme Russian Exports to Asia and LNG James Henderson Natural Gas Programme, OIES SEPTEMBER 2014 Russia has clear motivation to turn to Asia