GAS MARKET INTEGRATION: FOR A SUSTAINABLE GLOBAL GROWTH By: Chairman of the Management Committee, Gazprom Alexey Miller

GAS MARKET INTEGRATION: FOR A SUSTAINABLE GLOBAL GROWTH By: Chairman of the Management Committee, Gazprom Alexey Miller

Growth dynamics and structure of energy consumption Dynamics of world energy consumption, million TOE. Structure of world energy consumption, % 2 4 18 16 14 12 1 8 6 4 2 3 2 1 29,2 28,8 25,5 16,7 6,7 1985 199 1995 2 25 21 215 22 225 23 235 1985 199 1995 2 25 21 215 22 225 23 235 Natural gas Coal Oil RES (wind, solar, tidal power, geothermal energy, biomass, hydro) Atom 2 Gas market integration: for a sustainable global growth

The potential of hydrocarbon energy Forecasts of global gas demand, Forecast of gas production by 235, 5 48 46 44 42 4 38 36 34 32 3 211 22 23 The International Energy Agency (New Policies Scenario 211) The International Energy Agency (Сurrent Policies Scenario 211) Russia USA China Iran Qatar Cabada Algeria Australia Saudi Arabia Turkmenistan 1 2 3 4 5 6 7 8 9 1 Conventional gas Unconventional gas The International Energy Agency (Gas Scenario 211) U.S. Department of Energy (Reference Case 211) CERA (Global Redesign Scenario 211) Energy Research Institute of Russian Academy of Sciences 212 3 Gas market integration: for a sustainable global growth

The development of global trade in natural gas OECD North America 2 1-1 -2 199 26 21 3 2 1-1 -2-3 -4-5 OECD Europe 199 26 21 2 1-1 Africa 199 26 21 Countries outside the OECD Europe/Eurasia 4 3 2 1-1 -2-3 2 1-1 199 26 21 Middle East 199 26 21 OECD Pacific Region 1-1 -2 199 26 21 2 1 Export, -1-2 Import, Volume of international trade in gas by pipelines Volume of international trade in LNG IEA data, Petroleum Economist

Alternative sources of natural gas Global structure of unconventional gas resources, trillion cubic meters Global gas production by types, 2-225 Shale gas 38-55 Gas of low-permeable reservoirs 5 4 2% 16% 3 12% 2 8% 38-42 1 4% Coal-bed gas 28 215 22 225 23 235 % Conventional gas Low-permeability gas reservoirs Coal-bed gas Shale gas Share of unconventional (right axis) Expert assessment by Gazprom VNIIGAZ 5 Gas market integration: for a sustainable global growth

International gas trade from 21 to 211 Dynamics of international gas trade, World exports by regions of the world, 12 +4,2% 35 +1% 1 3 8 25-4,3% 6 2 15 +4,2% 4 1-23,2% 2 5 199 1995 2 25 21 211 Африка Европа Ближний Восток Азия Океания СНГ Северная Латинская Америка Америка International gas trade By pipeline LNG 21 211 6 Gas market integration: for a sustainable global growth

Regional gas pricing 6 Europe USA 6 4 2 25 215 225 235 4 2 25 215 225 235 Japan 6 4 2 25 215 225 235 7 Average import gas price in Europe, USD/thousand cubic meters Spot gas price in the U.S. (Henry Hub), USD/thousand cubic meters Import gas price in Japan, USD/thousand cubic meters Perspective projects

Price formation in the gas market Dynamics of LNG prices in Japan, USD/million Btu Dynamics of oil and gas prices in Europe, USD/million Btu Dynamics of oil and gas prices in the U.S., USD/million Btu 25 2 15 1 5 3.21 9.21 3.211 9.211 25 2 15 1 5 3.21 9.21 3.211 9.211 3.212 2 18 16 14 12 1 8 6 4 2 3.21 9.21 3.211 9.211 3.212 Japanese Crude Cocktail LNG (Japan) Russian gas at the border of Germany Russian gas at the border of France Russian gas at the border of Hungary Russian gas at the border of Italy Brent Henry Hub WTI 8 Gas market integration: for a sustainable global growth

Price formation in the gas market Hotelling rent Price (USD/barrels, USD/thousand cubic meters) 12 Dynamics of price integration of the world gas market Price, based on replacement cost (the cost of consumption of alternative energy resources) Limitation of production capacities Supply curve (cost of delivery) 1 8 6 Hotelling rent Ricardo rent Demand curve Price, based on the costs (Cost +) of production and delivery Production volume (million barrels/day, million cubic meters/year) 4 2 1861 1871 1881 1891 191 1911 1921 1931 1941 1951 1961 1971 1981 1991 21 211 9 Gas market integration: for a sustainable global growth

Development of Gazprom's resource base 8 7 6 4 3 323, 5 4 3 2 1 69,4 133,2 157,2 47,2 94,9 9,3 32,2 2 1 22 23 22 23 22 23 22 23 21 22 23 Existing projects New fields Nadym Pur Taz District Yamal Stockman Commissioning of the Yamal Peninsula fields and the shelf Expected production, /year 215 23 116 31-36 (land+shelf) Eastern Siberia and the Far East 1 Gas market integration: for a sustainable global growth

Gazprom's transportation projects Nord Stream gas pipeline South Stream and Blue Stream gas pipelines Capacity: 55 /year 8 7 6 5 4 3 2 1 Gas balance in Europe, 21 215 22 225 23 235 11 Imports from the Middle East Imports from Africa Imports from the CIS Imports from Latin America Imports from North America Capacity: 63 /year (South Stream) Gas production in other EU countries Gas production in Norway Europe's inter-regional gas trade, 11 Gas market integration: for a sustainable global growth 6 5 4 3 2 1 21 235 LNG import Gas import through pipelines

Gazprom in the LNG sector Volumes of Gazprom Group's transactions with LNG, thousand tons 2 15 1 5 26 27 28 29 21 12 Gas market integration: for a sustainable global growth

The strategy of relying on conventional natural gas resources Distribution of conventional and unconventional gas by regions in the world, trillion cubic meters North America 12 CIS 12 8 Europe 4 4 South America 12 Middle East and Africa 2 Low-permeability gas reservoirs APR 16 8 12 4 4 8 4 8 11 5-2 Shale gas 8 4 The structure of Russia's unconventional gas resources, trillion cubic meters 5 Coal-bed gas Conventional gas Coal-bed gas Shale gas Low-permeability gas reservoirs Coal-bed gas Shale gas Expert assessment by Gazprom VNIIGAZ 13 Gas market integration: for a sustainable global growth

Gazprom's global supplies of pipeline gas and LNG Ratio of supply volumes of pipeline gas and LNG, Global gas supplies, 8 Russia 6 4 2 Europe 148,1 America and APR 1,93 262,1 CIS and Baltic states 7,2 1973 199 24 25 26 27 228 29 21 Gas through pipelines LNG Perspective routes 14

Natural gas an environmentally and technologically optimal solution Cost of building 1 kw of electric power of various types of power plants, thousand dollars. Relative content of toxic components in exhaust gases of motor vehicles Fuel energy Nuclear energy 14 Gas generation Coal-fired TPP 13 Lignite-fired TPP 12 Thermal reactors 11 Fast neutron reactors 1 Onshore wind turbines 9 1 9 8 7 6 5 4 Offshore wind turbines 8 3 Renewable energy Solar photovoltaic (PV) 7 Concentrated thermal solar power (CSP) 6 Biomass-fired CPP 5 Biomass-fired TPP 4 2 1 Gasoline Diesel fuel Propane Natural gas Large hydropower 3 Small hydropower 2 CO NOx СН Benzopyrene Soot Geothermal 1 2 4 6 8 15 Gas market integration: for a sustainable global growth

Thank you for your attention! 16