Small Scale to Large Market Strategies & Technologies for the Mediterranean Area. LNG for off-grid areas

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1 Small Scale to Large Market Strategies & Technologies for the Mediterranean Area LNG for off-grid areas Ing. Massimiliano Naso Sales manager Italia Grandi Clienti

2 SUMMARY Introduction to Liquigas Focus on the Liquid Natural Gas distributed by Liquigas 1 case study: the experience of Mario Costa SpA 2 case study: LNG supply through a civil network

3 A tradition of energy Present in the Italian market since 1936, Liquigas supply LPG in tanks to over 350,000 clients, a large number of whom are domestic customers, plus LPG sold in cylinders via a network of 5,000 retailers. Liquigas also design, build and operate networks for the distribution of LPG to all the major urban centers and small towns not served by the natural gas system. Liquigas design and build industrial plants for LPG and LNG storage and distribution. All figures valid as of participating companies More than 50 official suppliers 100 commercial operators Around 350,000 customers Turnover of 489 Mio 253 k tonnes by volume 2 port-side terminals (joint venture) 1 railway terminal (joint venture) 27 deposits and facilities Over 200 tankers 5,000 GPL (cylinders) retailers.

4 A joint venture between two great companies Liquigas is a joint venture between the Italian firm Brixia and the Dutch company SHV. SHV Energy is one of the main operating groups involved in the commercialization of LPG and LNG, and is part of SHV Holdings, a Dutch company that operates in 27 countries across three continents. Independent at organizational and commercial levels, Liquigas has the backing of a major global energy supplier.

5 Who we are A combined centralised and local structure with strong local brands United Kingdom The Netherlands Belgium Turkey Plus 11 other brands throughout Europe

6 Our LNG value chain CNG Import vessel Import terminal or Inland supply Distribution Storage and / or satellite plant

7 Market Overwiew Automotive* I/C Civil Networks Overall LNG annual demand for heavy transport sector (MT LPG eq ) Overall CNG annual demand for transport sector (MT LPG eq ) 2.5 x x 10 6 Estimated heating - heavy oil demand (mt LPG eq ) Estimated large bulk LPG demand (MT LPG eq ) * * Off-grid methane annual demand (MT LPG eq ) Municipalities within No methane areas * Tons Refueling Stations with LNG dispensing systems Refueling Stations with CNG dispensing systems Mechanical (12%) and Agri-food (7%) sectors can be considered the main sectors for the LNG supply. People equivalent with NO access to methane 4 milions Avg drop per 1 LNG refueling station (MT LPG eq ) Avg drop per 1 CNG refueling station (MT LPG eq ) Estimated accessible market for LNG (mt LPG eq ) ** LNG fueled trucks CNG fueled vehicles 2.3 milions *Source: National Strategic Framework *Source: Ref-e research in 2016 La filiera degli usi finali del GNL in Italia (2016). **This study identifies mechanical and food&bev industries as the most accessible markets, weighting approx 20% of the whole market size. *Source: Elaborazioni ConferenzaGNL

8 Drivers SUSTANABILITY Ecologically friendly, LNG is an ethical choice. It respects the environment since it eliminates the emission of the principal greenhouse gases. Oil industrial emission LNG industrial emission CO PM PERFORMANCE It offers very high energetic performance. More energy, less space and less re-fuelling. TECNOLOGY Ideal for advanced energy technologies. Co-generation and cold recovery even in places not served by the standard gas network. *Fonte: elaborazioni EY su dati Innovhub-SSI 2016 e ENEA 2015.

9 LNG customers in Italy at a glance 1. Nestlé Levissima (beverage) 2. Nestlé Panna (beverage) 3. Fiat Chrysler Automobiles 4. Vis Jam (food) 5. Mario Costa (food) 6. Ferrero (animal feed) 7. Lederplast (textiles) 8. Rivoira (food) 9. Speziali (cereals) 10. Bonomi (food) 11. Norda (beverage) 12. Craver (inert materials) 13. Pucci Gomme (automotive) 14. Calizzano (beverage) 15. Pizzaferri (automotive) 16. Oilgest (automotive) 17. B-Petrol (automotive) T CO 2 Reduction estimated *SourceRefe - La filiera degli usi finali del GNL in Italia 2016

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11 A case study: LNG civil network Case study1 Case study2 Potential end-users 1,000 1,500 Capex ( m) 1,500 2,500 Expected redemption rate 60% 70% No. Heating Oil consumers Savings Public administration -20% -25% Domestic users -10% -10% Industrial & commercial -15% -25% Sustainability Reduction in CO 2-25% -25% Reduction in PM 10-90% -90%

12 A case study: LNG civil network Case study1 Case study2 PM 10 produced by 10,000 Km 477 drivers 545 drivers CO 2 absorbed by 38 trees 41 trees

13 Best practice: LNG pipeline Scouting Analysis Project Contract Construction Acquisition Operation Meetings with stakeholders (local authorities, network owners) Energy needs Environmental impact Private agreement Public tender Pipeline Satellite LNG storage Marketing & communication Sales LNG distribution Maintenance Customer service Invoicing Technical and economic aspects

14 Thanks for your attention See you on stand n.20 Entrance area (in front of EOLIE Room)

15 What does it mean in reality? CO 2 ABSORBED by The savings in CO 2 arising from a shift to LNG from traditional fuels for the areas involved equals the total that can be absorbed in one year by around 38,000 and 41,000 trees in one year, respectively 38,000 trees 41,000 trees IN ONE YEAR Area 1 Area 2 PM 10 PRODUCED BY 10,000 km TRAVELLED BY 477 DRIVERS Area DRIVERS Area 2 The savings in PM10 arising from a shift to LNG from traditional fuels for the areas involved equals the total emissions of 477 and 545 drivers who travel 10,000 km in one year. 15

16 From words to deeds To fully understand the real impact of using LNG in our country, we undertook a project to analyse and quantify the environmental benefits of this energy source compared to traditional fuels. We created simulations in two real councils in the province of Trento, hypothetising the impact of installing high-efficiency LNG plants if used by users currently using LPG or diesel. Area 1 Area 2 16

17 Some methodological notes LE METHODOLOGICAL FASI DI LAVORO STEPS POINTS TO NOTE Data-gathering and analysis of the actual 2014 consumption of traditional energy sources (diesel and LPG) for central heating Calculation of this consumption divided by user Estimation of predicted LNG consumption needed to produce the equivalent amounts of energy for central heating Calculation of the environmental impact of each energy source (both traditional and LNG) Calculation of the environmental benefits of using LNG compared to traditional energy sources. This methodology does not consider other possible impacts (positive or negative), such as: The end-of-life phase of diesel/lpg plants (recycling or decommissioning etc) Impact of LNG storage (i.e. notable energy consumption related to cryogenic tanks) Impact of conversion of existing energy distribution systems, and installation of new LNG distribution infrastructures 17

18 Assumptions of the study Area 1 Area 2 EXISTING CONSUMPTION OF DIESEL AND LPG Total: 10,324,132 KWh GPL 17% Total: 9,871,644 KWh GPL 1% Gasolio 83% NUMBER OF USERS PREDICTED TO SWITCH TO LNG Gasolio 99% around 200 including Località 1 1 spa Hospitality/ health-care Businesses Households 80% of town centre users* around 900 including Council Schools Hospitality/ health-care Households 80% of town centre users* 18 Source: Liquigas calculations based on Carbontrust data 2013 (*) excludes outlying areas

19 LNG industrial market overview Market size: estimated Heating / Heavy oil usage in I/C segment (mt of LPG equivalent) Market size: estimated large bulk / I/C LPG usage (MT) Market size: estimated accessible market potential for LNG (mt LPG equivalent) 834* 128* ** The mechanical (12%) and agri-food (7%) sectors, whose consumption of petroleum products is likely to be brought back to the energy needs of manufacturing enterprises not connected to the natural gas network, can be considered the main sectors concerning LNG supply. *Source: Ref-e research in 2016 La filiera degli usi finali del GNL in Italia (2016). **This study identifies mechanical and food & beverage sectors as the most accessible markets, comprising about 20% of the whole market