Meeting the Growing Need for Natural Gas Imports in the EU >

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1 Nord Stream A Successful Major Infrastructure Project and the Way Forward > Paul Corcoran, Financial Director, Nord Stream AG The European Gas Conference 2013, Vienna CEO PERSPECTIVES major supply routes from Russia to Europe in uncertain industry times and what they will mean for the European energy mix 30 January 2013

2 Meeting the Growing Need for Natural Gas Imports in the EU > The EU will need 222 bcm of additional gas imports by bcm 479 bcm Import gap Σ 222 bcm 302 Current EU gas imports Decreasing European production Domestic production Existing imports Additional import requirements Nord Stream Source: IEA World Energy Outlook, 2012 bcm = billion cubic metres 2

3 The Growing Importance of Natural Gas > > Natural gas is very efficient and produces much lower CO 2 emissions than other fossil fuels when combusted > Natural gas will be the most important fossil fuel in the EU energy mix by 2025, surpassing oil > Natural gas acts as a bridge to greater use of renewable energy sources as it is flexible in use in combination with renewables (mainly for electricity production) EU energy mix (2010) 14% 10% 25% 16% 35% coal renewables oil nuclear natural gas Sources: IEA World Energy Outlook, 2012 Eurostat,

4 Europe in the centre of gas supply EU gas consumption by origin > Norway Russia 19% 21% Domestic production 33% 12% 7% Northern Africa Caspian region and Middle East Source: Eurostat 2012 * remaining percentage: other sources (i.e. Nigeria, Trinidad and Tobago, others) 4

5 Stable Gas Supply from Russia > EU energy mix > Gas consumption in the EU-27 rose from 18 to 25 percent in the last two decades 4% renewables 12% nuclear % renewables 14% nuclear > Russian gas deliveries remained stable at 5 percent 27% coal 38% oil 16% coal 35% oil 18% natural gas 25% natural gas Source: Eurostat, % Russian gas in the total EU energy consumption 5

6 Additional Pipeline Transport Capacities Needed > Pipelines put in operation since 2008 Proposed pipelines European gas transmission system Nord Stream (55 bcm/a) Line 1 and 2 in operation Nord Stream Extension Medgaz (8 bcm/a) Transmed (+ 7 bcm/a) Source: European Commission, Priority Interconnection Plan 2007; Nord Stream Galsi (8 bcm/a) Trans Adriatic Pipeline (TAP)* (10 bcm/a) ITGI / IGI Poseidon (8-10 bcm/a) Nabucco West* (10-23 bcm/a) Turkey-Greece- Interconnector (11-12 bcm/a) South Stream (63 bcm/a) Trans-Anatolian Pipeline (TANAP) (16 bcm/a) * Both Nabucco West and TAP are competing to transport natural gas delivered through TANAP. Most likely, only one of the projects will be realized. 6

7 Nord Stream: Project on Time, within Budget > > Nord Stream transports natural gas from Russia to the European Union > Operations of Line 1 started on 8 November 2011 > Line 2 came on stream on 8 October 2012 > Load tests for Line 1 have been completed in July 2012 and have proven the reliability and safety of the pipeline > After completion of the twinpipeline system, capacity has doubled to 55 bcm > Project completed within budget 7

8 Feasibility Study of Additional Pipelines > A step further towards greater long-term energy security for the EU 30% 40 1 or 2 Q4 expected share of natural gas in EU energy mix in 2035 years of reliable gas export relations between Russia and EU additional pipelines are assessed 2012 feasibility study completed 8

9 Rationale for the New Study > > EU s gas import requirement grows continuously Natural gas offers economic and environmental advantages. EU s fuel of choice over long term Production in the North Sea in steady decline Substantial import gap in the EU and in Northwest Europe in particular > Additional gas transport infrastructure is necessary: To provide capacities for new supplies To ensure diversification and operational flexibility of supply routes EU energy mix the growing demand for natural gas* 10% 23% 25% 14% 13% % 16% 35% 25% coal oil natural gas renewables nuclear 30% *Sources: IEA World Energy Outlook, 2012 Eurostat,

10 Feasibility Study of the Nord Stream Extension > > Nord Stream received a mandate from its Shareholders to study options to further increase gas transport capacities through the Baltic Sea > Nord Stream assessed feasibility of 1 or 2 additional offshore pipelines, including key variables which are interlinked: Technical solutions Route alternatives Environment Financing > The study started in May 2012 and was completed in Q > The study underlines the Shareholders Commitment to explore ways to enhance the EU s long-term energy security by providing reliable and competitive natural gas supplies and diversified transportation capacities 10

11 Results of the Study Next Steps > > Feasibility study confirmed that extension with one or two additional lines is possible from the technical, environmental, permitting and financing perspectives > Study acknowledged additional import needs in long-term development of European gas market > Further project development is to be executed within the framework of a new company to be incorporated in Q Shareholders will decide participation by that time > Further detailed work will follow: More concrete technical design Actual pipeline routing Environmental Impact Assessment The permitting process > The pipeline extension can deliver gas in 2017 Pipelines enhance the EU s long-term energy security 11

12 Contact > Nord Stream AG Grafenauweg Zug / Switzerland Phone: info@nord-stream.com Paul Corcoran Finance Director paul.corcoran@nord-stream.com 12