Small Scale LNG in the Netherlands

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1 Small Scale LNG in the Netherlands Opportunities for the North Eemshaven July 4, 2013 Piet Kager NV Nederlandse Gasunie

2 Presentation Outline Gasunie Introduction Gate Terminal in Rotterdam Breaking Bulk of LNG LNG as a transportation Fuel Shipping Heavy Road Transport New Infrastructure in Rotterdam Issues with new utilization of LNG Green Deal Rhine and Wadden Opportunities for the Northern Netherlands

3 Gasunie: An independent infrastructure provider Before 1 July 2005 One company After 1 July 2005 Two companies Infrastructure and transport N.V. Nederlandse Gasunie 100% Trade 25% 25% 50% 25% 25% 50%

4 Gasunie: From Moscow to London Crossborder network In the Netherlands and Germany Transported volume Total length 135 BCM 15,500 km

5 The gas roundabout NAM pijpleidingen

6 LNG in the Netherlands Gate GU PS

7 June 2011 First LNG Cargo Arrives in Rotterdam

8 Gate Rotterdam

9 Gate Terminal Maasvlakte, Rotterdam Partners: Gasunie 45%, VOPAK 45%, Dong 5% and OMV 5% Three 180,000m3 tanks Two Jetties Open rack vaporization with E.ON power plant water Initial capacity: 12 BCM/a

10 Who has LNG in Gate + 1 BCM/a available

11 Gate: 1,5 years of operations Little activity by the Gate capacity holders Caused by world LNG situation Strong pull of LNG to the far East, high price: 16$/mmbtu Relatively low gas prices in NW Europa: 12$/mmbtu Sufficient supply of Norwegian, Russian and Dutch P/L gas No long term supply arrangements for Gate customers Less than one ship per month instead of the 2/3 per week. Breaking Bulk and Small Scale LNG could be part of the solution

Breaking Bulk versus Small Scale LNG Break

classic chain where LNG will be used as a

12 Breaking Bulk versus Small Scale LNG Break Bulk means extension of the classic LNG chain with an extra step Breaking Bulk Small Scale LNG means a step in the classic chain where LNG will be used as a commodity in the end users market LNG as transport fuel

Growing interest in LNG as a fuel for transportation, because of emission targets/requirements Emission limits for transport by truck and ship are tightened and converging.

13 Growing interest in LNG as a fuel for transportation, because of emission targets/requirements Emission limits for transport by truck and ship are tightened and converging. LNG as transport fuel can meet these requirements Tightening emission norms for trucks ships (Source: KEMA) Emission comparison (Source Magalog) Residual Oil 3,5%S Marine Diesel Oil, 0,5%S Gasoil, 0.1%S LNG Truck: Euro V has been implemented in 2009, Euro VI will come into force in Ships: CCNR v3 will have similar emission levels in Sox g/kwh Nox g/kwh PM g/kwh CO2 cg/kwh

14 Support from EU and Governments EU support through TEN-T subsidies TEN-T supported multi country North European LNG Infrastructure Project 2011/2012 Several initiatives have applied for subsidy of TEN-T Necessary because poor project economics due to slow volume build up, while all investments are upfront. 10% of relevant investment for a project in one country 20% of relevant investment when two or more EU countries join forces in setting up Small Scale chain Netherlands: Green Deal Rhine and Wadden Private Public cooperation to support the use of LNG as a fuel and to take away bureaucratic hurdles

15 Potential market near term Geographical Area s 1 Baltic area (Breaking Bulk) 2 North Sea 3 Rhine route, inland shipping 4 Dutch, German and Danish Wadden area 5 Blue Corridor Import terminal LNG production Initial Market area, Rhine Valley Russia NW Europe road connection

16 Current Status of Small Scale LNG Spain: Trucking of LNG to industrial sites, already for many years Norway: Kolsness (Gasnor) and Risavika (Skangass) small scale liquefaction for shipping and industrial use Various Fjord Ferries Offshore Supply Vessels Coast Guard Export to Sweden for industry and Ferry (Viking Grace) between Stockholm (Sw) and Turku (F) Fjord Line between Bergen (N) and Hirsthals (Dk) will run on LNG shortly Belgium, Fluxys LNG terminal: Investment decision on 2nd jetty Truck loading Netherlands: 85+ trucks are currently using LNG as fuel 2 Inland ships are LNG fuelled Argonon and Green Stream

17 LNG Break Bulk Rotterdam The project: LNG supply through Gate terminal Loading of LNG in smaller carriers and barges Truck loading with LNG Loading of LNG in rail cars containers under consideration Project partners: 7/9/

18 New Small Scale Capacity at gate Jetty capable of handling ~250 ships per year up to 180 meter LOA Truck loading bays capable of handling ~5000 trucks of 50 m3 in loading slots of 1 hour

19 Business Concept Open Access Principle Non Discriminatory Take or Pay arrangement Commitment for a number of Jetty or Truck Loading Slots for mid to long term LNG storage optional No Gasunie/VOPAK involvement in underlying commodity deal

20 Current Status LNG Rotterdam Permits received for 3rd Jetty and truck loading Deal on Land with Harbour finalized Terminal User Agreement being finalized with launching customers Gate Lender Approval proces has been started EPC tender expected end of this month TEN-T subsidy applied for

21 Timeline First FID = CID July/August FID Q4 2013, depending on Gate Lender Approvals Early start back loading/small vessel loading at Gate jetties as of July 2013 First truck loading at Gate premises early 2014 RFO Jetty 3 and extra truck loading stations Q4 2015

22 NW Europe Market Potential LNG as a fuel Very much dependent on Overall economic situation, specially in shipping Availability of LNG and more important its price Availability of alternatives and its prices Further development of SECA areas Tonnes/yr Low LNG price Mid LNG Price High LNG Price Source DMA report tonnes = appr 10BCM

Issues with Small Scale LNG LNG Availability and composition LNG pricing Currently NBP +20/30% + transportation + intermediate storage (bunker station) Infrastructure Some existing terminals to be

23 Issues with Small Scale LNG LNG Availability and composition LNG pricing Currently NBP +20/30% + transportation + intermediate storage (bunker station) Infrastructure Some existing terminals to be adjusted More vessels/barges needed Bunker locations to be established Overall cost of Cryogenic equipment Taxation For use as a tranportation fuel the right tax incentives to be in place Tax Ware House discussions for Gate ongoing with authorities Permits Current use of LNG as inland ship fuel is by exemption rather than by permit Standarization At the moment there are too many different ways of handling LNG as a truck fuel Also the marine sector needs to come to certain standards

24 Green Deal LNG Rhine and Wadden Regional National International Parties: Min. I&M, EL&I and Fin. LNG Market Parties via Nat LNG Platform Wadden Rotterdam and Rhine

25 Goal of Green Deal By 2015:50/50/500 This means by 2015 there will be operational in the Netherlands and surrounding countries 50 sea going vessels using LNG as a fuel 50 inland ships which are LNG fuelled 500 heavy duty trucks with LNG as fuel

26 International Link: Central Commission for Navigation on the Rhine A Rotterdam Arnhem Z Duisburg Köln/Bonn Koblenz Wiesbaden Karlsruhe Strasburg Basel

27 Possibilities in the Northern Netherlands Bunker facilities in Eemshaven, Den Helder and Harlingen. - Ferries, Fishing Ships and Offshore Supply vessels - Additional fuelling of heavy road trucks - Potentially LNG for existing diesel trains We need to build up a critical mass to justify investment in infrastructure. A phased approach with mobile stations is possible. Gasunie is prepared to invest with the right partners

Small scale LNG developments from the perspective of an infrastructure player

Small scale LNG developments from the perspective of an infrastructure player The Hague, 22 April 2016 Jan van Esch Scherm_2 Gasunie, introduction Independent gas infrastructure company High pressure gas