North America OECD Europe Asia Pacific

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1 Australian LNG: Asia s natural supplier of LNG Peter Cleary, Vice President LNG Markets and Eastern Australia Commercial AJBCC: 52nd Australia-Japan Joint Business Conference Plenary Session Four: Energy Security Strategies across the resource spectrum 13 October 214 GLNG, 214

2 Gas and LNG demand growth Asia s appetite for gas grows with LNG meeting over half of gas demand by 23 tcf x% Gas CAGR 25-3 North America OECD Europe Asia Pacific LNG Indigenous/Pipeline 1.3% %.5% 2 Local production + pipeline imports 2 2 Contracted LNG Source: EIA; Wood Mackenzie, contracted LNG represents supply volumes from operating, under construction and planned projects 2

3 Asia Pacific LNG demand revisions Multiple upward revisions, driven by higher gas use in developing economies and traditional exporters turning to LNG imports Pacific basin LNG demand estimates Nov 213 Nov 212 Nov 211 Nov 21 Nov Source: Wood Mackenzie 3

4 Strong Asian demand for LNG Large opportunity exists for new projects to supply into the Asian market Asian LNG demand grows at CAGR of 5.7% from 2 to 23 4 By 23, over 7% of global LNG demand comes from Asia 35 Large opportunity for new LNG supply Over 15 of uncontracted demand by 225 (~ 25 new LNG trains) Over 195 of uncontracted demand by 23 (~ 2.5 x Australia s total LNG output in 218) Contracted Asian LNG Supply Source: Wood Mackenzie, contracted LNG supply and expected rollovers from operational and under construction projects, from SPAs, HOAs and MOUs. 4

5 Australian LNG Australian LNG projects offer buyers diversity of project ownership, upstream gas feedstock and geographic diversity Prelude FLNG Ichthys LNG Darwin LNG LNG plant operating LNG plant under construction Conventional gas Coal seam gas Shale gas Pluto LNG North West Shelf Gorgon LNG Wheatstone LNG *Operators of LNG projects named 5

6 Australian gas resources Australia s abundant gas resources could underpin future LNG exports, but we must create the right conditions for investment Australia s Gas Resources (tcf) 1 Darwin Conventional Unconventional Coal bed methane Brisbane 82 tcf Perth Adelaide Sydney Canberra Australian domestic gas demand ~1 tcf/year Source: BREE 212 Gas Resource Assessment 1. Total demonstrated resources Santos assets Operational LNG Plant Under Construction LNG Plant Hobart Melbourne 6

7 Australian LNG costs As LNG projects reach completion, cost pressures should abate from 215 onwards LNG plant CAPEX for already sanctioned Australian LNG projects (US$b) 24 US$17b Source: Wood Mackenzie, May 214 7

8 LNG supply Market flexibility and liquidity offers energy security, but timely support for new LNG supply is key Norway 1 Russia 3 1 Canada 3 North Africa 4 1 Qatar 9 West Africa 5 3 East Africa 3 Other Middle 4 East Malaysia Indonesia 3 PNG Australia Number of Operating Liquefaction Projects Number of Under Construction / Probable / Possible Liquefaction Projects United States South America Source: Wood Mackenzie, non-exhaustive and indicative. 8

9 LNG demand LNG demand is met by both long-term supply contracts and short/spot market volumes contracted LNG by source Other UAE Russia Qatar Oman Malaysia Indonesia Brunei Australia Spot Total Contract Volume Other Yemen Qatar Oman Malaysia Indonesia Spot Total Contract Volume Contracted LNG Demand Contracted LNG Demand Japan South Korea LNG delivers energy security Buyers rely on the spot market or short term market to meet their LNG needs Traditional buyers will continue to rely on LNG to deliver energy security; diversity of supply will remain a priority 4 Global LNG Trade Long-term Spot & Short-term 27% 27% Source: Poten & Partners. Source: Wood Mackenzie, contracted LNG volume versus demand 9

10 LNG pricing Henry Hub-linkage vs oil-linkage US$/mmBtu 2 Oil-linked LNG at US$12/bbl 15 $3 1 7 $3 $1 Oil-linked LNG at US$8/bbl 5 $6 Henry Hub Liquefication Other Shipping Source: Henry Hub 22 forecast from PIRA, other includes pipeline and fuel Traditional priced LNG 1

11 Disclaimer and 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. All references to project completion percentages are on a value of work done basis, unless otherwise stated. 11