[LNG MARKET ANALYSIS ] 1. LNG Market Analysis

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1 [LNG MARKET ANALYSIS ] 1 LNG Market Analysis LNG Market Analysis Volume: 13 th April 2018

2 LNG and Natural Gas Price Assessment 3 rd 13 th April 2018 [LNG MARKET ANALYSIS ] 2 LNG Analysis Global LNG prices remained stable to bullish through out the week as market is expecting customers to come back for summer procurement and demand seems stable in Europe due to re-stocking activities. Supply side remain adequate with PNG LNG and Cove Point adding more cargoes, market is well supplied with bullish crude prices will also create more demand for spot cargoes. Asian price closures on Friday; NE Asia for May closed at $7.22/MMBTU, whereas June prices closed at $7.43/MMBTU, while long-term contract prices are in the range of $8.13/MMBTU-$9.75/MMBTU. Product receipt as per last week, except for China, which has increased during the week, Japan received 1.60MMT (27 vessels), South Korea 0.74MMT (10 vessels), China 0.92MMT (14 vessels) and Taiwan 0.32MMT (5 vessels) during the week, NEA region represent 60.2% of a global trade this week. MTD April receipt: Japan 3.20MMT (52 vessels), South Korea 1.62MMT (22 vessels), China at 1.43MMT (21 vessels) & Taiwan 0.72MMT (11 vessels). Demand seems to be generated from India and Taiwan as both demand centres are already in summer season and like to procure more on spot basis. DES South Asia is calculated around $7.02/MMBTU for May & $7.22/MMBTU for June, whereas FOB ME estimated at $6.60/MMBTU & $6.81/MMBTU for May & June 2018 respectively. Brent based contract price is around $8.62/MMBTU on average for Pakistan and Henry Hub based prices for India at $6.88/MMBTU. India imported 0.34MMT (5 vessels), MTD 0.59MMT (9 vessels), while Pakistan received 0.25MMT (3 vessels) during the week, with MTD 0.43MMT (5 vessels). This is depicting Indian wait and see mode for

3 [LNG MARKET ANALYSIS ] 3 price reduction. North West Europe LNG prices had a bullish run as reduction due to maintenance at Norwegian gas supply along with bullish crude prices; lower inventory level and restocking activities have been supporting spot and forward gas hub prices. NW Europe LNG price closure estimates on Thursday is $6.61/MMBTU for May and $6.49/MMBTU level for June. 4 vessels left from Sakhalin project for Japan, China, Taiwan & South Korea. Four cargoes left from Sabine Pass export terminal during the week, for South Korea and South American destination, while one partially loaded cargo left from Dominion Energy Cove point terminal. South West Europe prices also had a bullish run despite bullish as demand is picking up for cooling season along with lower inventory and reduced supplies to France from Norway. SW Europe LNG price closure for the week is estimated at $7.15/MMBTU for May and $7.04/MMBTU level for June. Spain & UK received 3 vessels, while France 2, Portugal, Poland, Belgium, Italy & Netherlands 1 each. Turkey receiving one cargo during the week. Kuwait received two cargoes, while Jordan received one cargo during the week. US received one cargo along with one cargo each for Dominican Republic, Chile, Colombia and Mexico. Arbitrage window for European reloads for Asian destination remained closed this week as FOB prices for reload terminal are coming around $6.02/MMBTU France, $6.24/MMBTU Spain and $5.97/MMBTU UK. US Henry Hub based price is $5.65/MMBTU for US based liquefaction companies, which translate into margin of $0.21/MMBTU for NE Asia & $0.15/MMBTU for South Asia, and $1.57/MMBTU & $1.42/MMBTU for June price basis, whereas $0.39/MMBTU for NW Europe and $0.96/MMBTU for SW Europe. NEA May price around $7.20/MMBTU level is estimated to be 10.75% of Brent basis. Author s Conclusion Despite the bearish fundamentals, geopolitical issues took over and resulted in bullish run, with Friday US & allies strike on Syria will bring more bullish tinge, current Brent level impact on LNG prices are bearish, as long term contract prices are higher than spot prices. European gas prices are supporting regional LNG prices as due to lower inventory level, restocking activity has gained momentum. Henry Hub prices still stable and HH based LNG prices still bringing positive margin for NE Asian, South Asian and European destinations. LNG prices seems stable as we expect customers to be back in the market for summer procurement, fundamentals are supporting a stable prices as supply is adequate and market is awaiting for the customers. US producers will be focusing on NE and Asian markets also as margin are expected to improve substantially for June prices, we expect prices to remain stable in the coming week. Market Analysis Supply Outlook (14 th 21 st April 2018) As per forecast model, supply seems adequate with 81 vessels expected to load cargoes. Project Name Cargoes Project Name Cargoes Project Name Cargoes Project Name Cargoes Shakhalin LNG 2 Cheniere LNG 2 DS LNG 3 Atlantic LNG 3 Yamal LNG 1 Cove Point LNG 3 G LNG, AP LNG, QC LNG 11 Angola LNG 1 ADNOC LNG 2 Pluto LNG 2 NWS LNG & WS LNG 8 EG LNG 1 Oman LNG 3 Brunei LNG 3 Petronas LNG 6 Nigeria LNG 6 Qatar Gas 20 PNG LNG 1 Bontang & Tangguh LNG 3 Total 81 Weather North West Europe: Weather remained mild, couple of degrees above seasonal norm and expected to remain mild to warm next week. South West Europe: Weather mild to warm, with the exception of central Spain, which remained cold, weather is expected to be mild to warm in the coming week. South America: Warm weather with Colombia still enjoying mild and outlook is for same profile Middle East: Summers in Middle East. South Asia: Summer in full swing.

4 [LNG MARKET ANALYSIS ] 4 North East Asia: Mild to warm weather prevailed during the week, except for summer started in Taiwan, outlook for mild to warm weather. South East Asia: Summer season. North America: Summer in Mexico. US weather; Cold weather outlook in Northwest, Rockies & Upper Midwest, while cold-to-mild weather in Central & Northeast. Warm weather outlook for West & Southern regions. Crude Oil Bearish factors like US production increase and US-China trade dispute are overwhelmed by Syria pre-strike sentiments along with news from OPEC on reduction of surplus inventory and production cut extension may continue in 2019, which resulted in a weeklong bullish run. EIA reported 3.30 million barrels buildup against expectation of 0.60 million barrels drawdown, while gasoline inventory reported an increase of 0.45 million against market expectation of 1.43 million barrels buildup. Million Barrels (MBbl) 06-Apr Mar Mar Mar-2018 Production (MBbl/D) Exports (MBbl/D) Crude Inventory Gasoline Inventory US production stands at million barrels/day, increased by 1.34 million barrels from last year and 65,000 barrels from last week. With inventory build up at Cushing by 1.1 million barrels from last week and stands at 36.0 million barrels. US weekly export number stands at million barrels, while imports increased by 0.75 million barrels to 8.65 million barrels per day. Brent prices jumped by 8.5% from last Friday & closed at $72.62/BBL, while WTI closed at $67.39/BBL, increased by 8.78%, with Brent-WTI spread at $5.23/BBL on Friday. Future market closure on Friday for Brent front month at $72.53/BBL, with $71.91/BBL & $71.23/BBL for July & August, whereas WTI front month at $67.39/BBL with $67.30/BBL for June & $66.94/BBL for July. Oversupply situation due to increased US production is dictating the long-term backwardation. Baker Hughes oil-rig count increased by 7 and now stands at 815. Natural Gas US Natural gas remained stable due to demand for heating and cooling as weather is expected to remained cold in Northern regions and hot weather outlook for West and Southern regions. EIA reported working gas in storage is 1,335 BCF as of Friday, 6 th April 2018, net decrease of 19 BCF; against expectations of 11 BCF draw down. Overall supply remained flat at 86.4 BCF/Day, where demand increased substantially to 90.1 BCF/Day, Industrial and residential sector demand increased by 3.5 BCF/Day. Baker Hughes reported decrease in gas rigs by 2 and total number stands at 192. Henry Hub closure on Thursday at $2.74/MMBTU, with future market closed at $2.73/MMBTU for May, $2.76/MMBTU for June & $2.80/MMBTU for July, depicting cooling season demand. North West European gas hub prices remained bullish for Day Ahead & stable for forward month prices. Day Ahead prices got support from weather outlook, lower renewable based power generation and reduced Norwegian gas flows for Germany & UK. Forward month prices remained stable to bullish due to lower inventory level along with expected summer season plus bullish crude prices. Gas flow from Norway reduced due to planned and unplanned outages at Karsto, Gullfaks & Sieipner fields along with Segal, Dornum and Emdem terminals. Russian gas flows remained regular through out the week. Gas inventory level improving but still low in NW Europe with Belgium at 9%, Germany 16% and

5 [LNG MARKET ANALYSIS ] 5 Netherlands at 10% & UK at 18%. UK Spot gas price closed at 52.24P/Thm ($7.44/MMBTU) on Friday, with front month April at 48.65/P/Thm ($7.00/MMBTU). Dutch Spot price closed at 20.22/MWH ($7.31/MMBTU), whereas front month price closed at 19.64/MWH ($6.94/MMBTU. SW Europe gas hub prices Day Ahead prices remained bullish due to lower inventory level, France 5% & Spain 49%, along with cold weather in Spain plus reduced gas supply from Norway to France. The forward month prices remained stable due to support from bullish crude prices and lower inventory level despite adequate power generation from nuclear and hydro. Spain hydro-based electricity generation increased to TWH from 9.67 TWH last week, last year the number was at 8.21 TWH. French Day Ahead prices: Northern France gas prices closed at 20.41/MWH ($7.38/MMBTU) whereas Southern France gas prices closed at 22.41/MWH ($8.10/MMBTU). Italian gas prices closed at 22.52/MWH ($7.98/MMBTU) and Iberian Gas Day Ahead price at 23.26/8MWH ($8.41/MMBTU). Front month Northern France gas prices remained bearish with closure at 19.48/MWH ($7.04/MMBTU), while Southern France had a bullish run and closed at 20.27/MWH ($7.33/MMBTU), Italian gas curve prices closed at 20.22/MWH ($7.71/MMBTU), whereas Iberian gas forward price at 20.69/MWH ($7.48/MMBTU). Weekly European Gas and LNG quantities at Storage and LNG terminals (BCF) One standard size Vessel of 150,000 m 3 equals to 3.42 BCF. Quantity in BCF 06- Apr Mar Mar Mar- 18 Belgium France Germany Greece Italy Lithuania Netherlands Poland Portugal Spain UK Gas LNG Total Capacity Utilization 9% 5% 7% 9% Gas LNG Total Capacity Utilization 5% 4% 4% 5% Gas LNG Total Capacity Utilization 16% 15% 15% 16% Gas LNG Total Capacity Utilization 81% 82% 82% 84% Gas LNG Total Capacity Utilization 36% 35% 34% 34% Gas LNG Total Capacity Utilization 8% 26% 46% 54% Gas LNG Total Capacity Utilization 10% 7% 7% 8% Gas LNG Total Capacity Utilization 39% 37% 38% 37% Gas LNG Total Capacity Utilization 46% 45% 52% 45% Gas LNG Total Capacity Utilization 49% 47% 44% 45% Gas LNG Total Capacity Utilization 18% 18% 18% 13%

6 LNG Trade Flows 7 th 13 th April 2018 LNG merchant data is developed in collaboration with Clipper Data LLC Supply Trade Flows 79 vessels carrying 5.08 million tons (244.2 BCF) left supply terminal centres. [LNG MARKET ANALYSIS ] 6 Demand Trade Flows 93 vessels carrying 5.99 million tons (288.0 BCF) reached demand centres. W-Country- within same country delivery & TBC To Be Communicated Disclaimer: This is a personal analysis based upon public information and should not be used for buying and selling of commodities. Source: EIA, REE & GIE.