March 2019

Financing Vietnam’s LNG projects

2

Agenda

Overview of South East Asia gas markets

Overview of Vietnam gas market

Financing Structure

Environmental and Social Due Diligence

Case Study

3

Overview of South East Asia gas markets

4

South East AsiaCountry snapshots

Countries classified by gas market maturity Vietnam Indonesia Malaysia Thailand Brunei Myanmar

2P reserves [Ranking] (1,2) 10,048 bcf[#3]

25,241 bcf[#2]

26,276 bcf[#1]

7,126 bcf[#4]

547 bcf[#6]

6,707 bcf[#5]

2C resources [Ranking] (1,2) 5,712 bcf[#4]

92,343 bcf[#1]

30,114 bcf[#2]

2,485 bcf[#5]

1,964 bcf[#6]

10,012 bcf[#3]

Current gas prod. [Ranking] (2)

0.7 bcf/d [#6]

6.4 bcf/d [#1]

6.5 bcf/d [#2]

3.0 bcf/d [#3]

1.0 bcf/d [#5]

1.7 bcf/d [#4]

Liquefaction / regas capacity NA / NA 21 mmtpa (3) / 9 mmtpa 31 mmtpa / 10 mmtpa NA / 15 mmtpa 7 mmtpa / NA NA / NA

2019 consumption [5-yr CAGR growth]

346 bcf [+12.0%]

1,296 bcf[+2.7%]

1,275 bcf[+2.1%]

1,829 bcf[+1.2%]

138 bcf[+1.3%]

155 bcf[+24.9%]

Net importer / exporter NeutralNet exporter (piped +

LNG)Net exporter (piped +

LNG)Net importer (piped +

LNG)Net exporter (LNG) Net exporter (piped)

Upstream gas price policy

Piped domestic: Case by case basis

Piped domestic: Fixed or w/ inflation factorLNG domestic: Netback on realised price (FOB Indo)LNG export: Netback with link to JCCPiped export: Linked to MFSO

Piped domestic: Indexed to MFSOLNG export: LNG netback

Piped domestic: Indexed to MFSO, inflation and FX indices

Piped domestic: Case by case basisLNG export: Typically 50% of export price

Piped domestic: Case by case basis with no linkage to any price indexPiped export: Indexed to 2% Sulphur Fuel Oil Price and inflation

Market concentration

NOC influence

Key:

Fragmented marketConcentrated market

Sources: BMI, Wood Mackenzie, GiignlNotes: * denotes operator(1) Includes only gas and gas/condensate fields(2) Ranking method: From largest to smallest with the largest value assigned a #1 ranking(3) Only includes active capacity

Weak to no influence Strong influence

1 1 1 1

5

335 71 (230)

470

455 960

(332)

300 335 71 (226)

452 11

1,186

(431)

332 (233) (21)

(800)

(400)

0

400

800

1,200bcf

2019 - Pipeline 2019 - LNG 2023 - Pipeline 2023 - LNG

South East AsiaOverview of gas markets, policies and regulations

Overview of South East Asia gas markets Gas consumption 2019 vs 2023 (1)

Current LNG capacity

South East Asia is a collection of fragmented gas markets at various stages of developments, featuring distinctly different supply-demand dynamics and properties

Snapshot of gas supply – demand dynamics

Market with

high growth

potential.

Mostly self

sufficient for

now

Mature export

oriented

market with

sufficient

domestic

supply

Large market

with high

growth

potential

facing near

term supply

deficit

Large mature

export

oriented

market with

sufficient

domestic

supply

Large mature

market with

supply deficit

and an

increasing

reliance on

LNG imports

Export

oriented

market with

high growth

potential

0

1

2

3

4

5

6

7

8

0123456789

Current gas production (bcf/d)

1,296 1,275

1,829

138 155346

1,444 1,388

1,921

145378 544

0

500

1,000

1,500

2,000

Indonesia Malaysia Thailand Brunei Myanmar Vietnam

bcf

2019 2023

Maturity of gas market (Most mature Least mature)

Net export/(import) of gas 2019 vs. 2023

VietnamMyanmarBruneiThailandMalaysiaIndonesia

2P reserves

2P + 2C resources

1,031

790

346

(561)(657)

219

1,257

21

31

NA

7

NA NA

9 10 15

NA NA NA0

20

40

Indonesia Malaysia Thailand Brunei Myanmar Vietnam

mmtpa

Liquefaction Regas

(2)

Source: BMI, Wood MackenzieNote:1. Total volumes of dry natural gas consumed in total per calendar year in the domestic market. The amount is expressed in terms of production during a 12-month period2. Only includes active capacity

6

Overview of Vietnam gas market

7

100%

Domestic production

VietnamKey operational metrics

Overview of key gas provinces

4,663

2,534

462 649 193 299

0 212 226 226 0 194 0 175 0

2,445

319

579 91 506 42 279 54 35 35 248 30 220 25 110

0

2,000

4,000

6,000

8,000

bcf

2P Gas 2C Gas

835 887 830 760 770 758 727 719 815 874 827

0

250

500

750

1,000

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

mmcfd

Actual Estimated

Net export/import neutral country

2P + 2C by water depth (1)

Top 15 gas reserves and resources holders (1)

Gas production (1)

Key gas upstream stats (1)

2P reserves 10,048 bcf

2C resources 5,712 bcf

Avg. gas 2P+2C per field 394 bcf/field

Avg. 2P opex / boe (2) US$7.6

Avg. 2P capex / boe (3) US$9.2

1%

95%

4%

Onshore

Shallow Water

Deepwater

Ultra-deepwater

Sources: BMI, Wood Mackenzie, GiignlNotes: * denotes operator1. Includes only gas and gas/condensate fields2. For the remaining life of the field, and condensate included as it affects the economics3. Over the entire life of field, and condensate included as it affects the economics

Cuu Long BasinHistorically, gas discovered in the Cuu Long Basin has been associated with oil

Nam Con Son BasinMostly gas prone region andIncludes the Lan Tay/Lan Do project, which suppliesaround 35% of Vietnam's gas

Song Hong BasinUpcoming gas producing region with major gas discoveries such as ExxonMobil’s Blue Whale, however the area requires more gas infrastructure to facilitate development

c.350bcf

15,760bcf

8

VietnamMarket overview

339 346353 424 463

544

696 710 724833

0

200

400

600

800

1,000

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

bcf

Consumption Production Import

Gas supply and demand

Production expected to increase due to additional output from new projects such as Idemitsu Kosan's Blocks 05-1B and 1C (Sao Vang, Dai Nguyet) and Rosneft’s Lan Do field, before the anticipated start-up of the giant Ca Voi Xanh in 2024

Despite the above, production is still insufficient to meet growing demand, with LNG imports expected to offset the remainder

No. of players per segment in gas value chain

Market concentration

Reserves and resources are concentrated with the top player, PetroVietnam, owning c.45% of 2P + 2C reserves(1), followed by ExxonMobil owning c.18%

PetroVietnam through its subsidiary PVGas controls all the onshore gas distribution infrastructure(2)

0% 25% 50% 75% 100%

Upstream

0% 25% 50% 75% 100%

Liquefaction

79%

21%

Top 5 players Others

Market share

0%0%

Top 5 players Others

0 1 - 2 3 - 5 6 - 10 >10

0 1 - 2 3 - 5 6 - 10 >10

Commentary

n/a n/a

Key trends Key considerations

Diver-sification of gas supply

sources

Declining proven

reserves

Considerable influence of NOC across

the O&G value chain

Foreign firms must enter into joint-ventures with PetroVietnam in producing assets, and the need to appease PetroVietnam in key contract negotiations creates a tricky operating environment for private and international investors

Governmental relations would aid in this regard e.g. Russia G2G relations has helped Gazprom build a decent position in Vietnam

Reserves are forecast to contract over the coming years, due to natural declines and insuffcient exploration

The Law on Petroleum (2008) is set to be revised over the course of 2019-2020, as Vietnam seeks to boost oil and gas exploration, attract foreign investment and promote the development of petroleum technology.

Details of the revision are not yet available, although focus is likely to be given to shortening key approval processes for oil and gas activities, simplifying procedures and boosting incentives for foreign and domestic investors to develop smaller, marginal fields, as well as deepwater projects

Due to historically low gas prices and a lack of infrastructure, a large portion of Vietnam’s gas reserves remain undeveloped

Gas makes up c.75% of the country’s remaining reserves of c.2.4 bnboe

The anticipated completion of PVN's Nam Con Son 2 pipeline system over 2019 will materially expand gas transportation capacity between natural gas fields in the offshore Nam Con Son basin to onshore processing stations and ease infrastructure bottlenecks that had hindered developments to date

Sizable volumes of gas remain

undeveloped

Vietnam’s gas demand has historically been capped by domestic gas production due to the lack of any import infrastructure

However, the start-up of the country's first LNG import terminal in 2021 would allow consumption to surpass production for the first time, enabling greater uptake by Vietnam's more gas-intensive industries (transportation, power, manufacturing and petrochemicals)

Growth beyond 2024 will be further boosted by additional gas from ExxonMobil's Ca Voi Xanh (Blue Whale) gas project (set to be Vietnam's largest gas project), where annual production could reach c.470mmcfd at peak levels according to Wood Mackenzie

Sources: BMI, Wood Mackenzie, Giignl(1) Includes only gas and gas/condensate fields and excludes direct holdings by the government(2) Offshore transportation includes JVs between IOCs and PetroVietnam

9

VietnamKey upstream projects

Project description:

Blocks 48/95 & B and 52/97, located in the Malay Basin, are

estimated to contain recoverable reserves of 3.8 tcf of gas and

16mmbbls of condensate within the Ac Quy, Ca Voi and Kim

Long structures

Gas from the two PSCs is planned to supply the O Mon, Kien

Giang and Ca Mau power complexes in the southwest region of

Vietnam

Over the last two years, the government approved the field

development plan, reserves assessment report, gas price and

key government guarantee undertakings and the upstream

project is getting closer to FID, anticipated to take place in late

H2 2019

In Sept 2017, heads of agreements (HoAs) for the transportation

tariff and wellhead gas price were signed, however the take-or-

pay clause of the GSA is still an issue being discussed

First sales gas is expected to be achieved in 2024 at the earliest.

Project description:

Blocks 48/95 & B and 52/97, located in the Malay Basin, are

estimated to contain recoverable reserves of 3.8 tcf of gas and

16mmbbls of condensate within the Ac Quy, Ca Voi and Kim

Long structures

Gas from the two PSCs is planned to supply the O Mon, Kien

Giang and Ca Mau power complexes in the southwest region of

Vietnam

Over the last two years, the government approved the field

development plan, reserves assessment report, gas price and

key government guarantee undertakings and the upstream

project is getting closer to FID, anticipated to take place in late

H2 2019

In Sept 2017, heads of agreements (HoAs) for the transportation

tariff and wellhead gas price were signed, however the take-or-

pay clause of the GSA is still an issue being discussed

First sales gas is expected to be achieved in 2024 at the earliest.

Upstream: Blocks 52/97, 48/95 and B

Project description:

Ca Voi Xanh was discovered in 2011 and is Vietnam's largest gas

discovery with a gross gas volumes estimated at c.7 tcf

(including CO2)

On Jan 2017, PetroVietnam and ExxonMobil cleared a crucial

commercial hurdle by signing a framework heads of agreement

on the development and, more importantly, the gas sales for Ca

Voi Xanh

Ca Voi Xanh will underpin Vietnam's biggest power generation

project. The gas will be transported onshore via an 88-km

pipeline and will initially fire-up four power plants with a

combined capacity of 3,000 MW. The power plants will have a

capacity of 750 MW each and are all expected to be

commissioned between 2023 and 2024. A fifth-750 MW power

plant may be added in 2026

Pre-FEED was completed in 2018 and FEED was awarded in

February 2019 to Saipem. FID is expected to be taken in 2020

and first gas by 2024/2025 with plateau production maintained

at c.470 mmcfd for over 20 years

The project must also compete commercially with ExxonMobil's

other pre-FID projects to stand a chance of achieving sanction.

Project description:

Ca Voi Xanh was discovered in 2011 and is Vietnam's largest gas

discovery with a gross gas volumes estimated at c.7 tcf

(including CO2)

On Jan 2017, PetroVietnam and ExxonMobil cleared a crucial

commercial hurdle by signing a framework heads of agreement

on the development and, more importantly, the gas sales for Ca

Voi Xanh

Ca Voi Xanh will underpin Vietnam's biggest power generation

project. The gas will be transported onshore via an 88-km

pipeline and will initially fire-up four power plants with a

combined capacity of 3,000 MW. The power plants will have a

capacity of 750 MW each and are all expected to be

commissioned between 2023 and 2024. A fifth-750 MW power

plant may be added in 2026

Pre-FEED was completed in 2018 and FEED was awarded in

February 2019 to Saipem. FID is expected to be taken in 2020

and first gas by 2024/2025 with plateau production maintained

at c.470 mmcfd for over 20 years

The project must also compete commercially with ExxonMobil's

other pre-FID projects to stand a chance of achieving sanction.

Upstream: Block 118 (Ca Voi Xanh / Blue Whale)

10

Ke Ga Wind Farm (Offshore Wind; 3,400 MW)

Vung Ang 3(Coal; 2,400 MW)

Quynh Lap 1 (Coal; 1,200 MW)

Son My 1 IPP(Gas; 2,000MW)

Song Hau 2(Coal; 2,000 MW)

Vinh Tan 3(Coal; 1,980 MW)

Long An 2 (Coal; 1,600 MW)

Long Phu 2(Coal; 1,320 MW)

Quang Trach 1 & 2(Coal; 2,400 MW)

Thai Binh 2(Coal; 1,200 MW)

Nhon Trach 3 & 4(Gas; 2x750MW)

Dung Quat 2 IPP(Gas; 750MW)

VietnamKey power plant projects

Ca Mau 1 &2 (Gas; 2x750MW)

Nhon Trach 1 &2 (Gas; 450 &750MW)

Kien Giang 1 &2 (Gas; 2x750MW; Block B)

Mien Trung 1 &2 (Gas; 2x750MW; CVX)

Phu My 1, 2, 4(Gas; 2,462MW)

Dung Quat 1, 3(Gas; 2x750MW)

Son My 2(Gas; 3x750MW)

11

Financing Structure

12

“Bankability Analysis”

Project Risk

Completion Risk

Operating Risk

Supply Risk

Off-take Risk

Currency Risk

Political Risk

E&S Risk

Participant Risk

13

Lender(s)

Offshore Commercial Loans: Key ParametersIntroduction to Offshore Loans

Supplier

Loan Agreement

Principal and Interest

Borrower

Commercial Contract

Goods and Services

Typical Offshore Commercial loan structureBorrower: Project, Project Sponsors

Tenor: Up to 5 years

Security: Guarantees, Negative Pledge, Debt Service Reserve Account

Financial covenants, conditions etc.

Benefits of Offshore Financing:

- Market Access: Access to broader pool of capital including international banks

- End Purpose: Broader usage of funds permitted

- Interest Rates: Attractive financing rates given differing pool of liquidity available offshore

- Market Participation: Enables lenders to support onshore borrowers by leveraging on international balance sheet / capital

- Potential to Raise Higher Quantum: Ability to provide larger commitments

- Natural Hedge: Can better facilitate natural hedging of FCY-equivalent revenues

14

Lender(s)

What does an ECA loan look like?

Export Credit Agency (ECA)

Supplier

Loan Agreement

Principal and Interest

Guarantee / Support Agreementnormally 90-100% cover

Borrower

Application Documentation

Commercial Contract

Goods and Services

Typical ECA financing structure

Borrower: Project, Project Sponsors

Tenor: 8-10 years on corporate basis and 14 years on project basis (weighted average life not exceeding 7.5 years)

Security: Guarantees, Negative Pledge, Debt Service Reserve Account

Financial covenants, conditions etc.

15

Advantages of ECA financingKey benefits

Long tenors

High leverage

Withholding tax exempt

Alternative source of liquidity

Attractive fixed-rate financing

Low all-in cost

Why ECA financing?

Typically up to 85% of the goods/services being imported

(including proportion of local costs, up to 100% of the ECA Premium and up to

100% of capitalised interest costs)

Up to 12 years post completion / commissioning

Loans drawn as contractual works are performed

Availability periods determined by the contractual arrangements between the borrower and the exporter

Longer tenors (14 years) available for Project Finance structures

All-in cost of financing is highly competitive versus traditional bank financing.Cost of ECA financing is less correlated to market volatility

Some ECAs can fund at a fixed CIRR rate for the duration of the loan, thereby negating requirements for

interest rate swaps

Preserves traditional bank lines and capital markets

capacity

A large number of ECA backed facilities can be structured in such a way as to render them exempt from withholding tax

16

Cost of ECA financing

All in pricing is typically a sum of:

ECA Premium (annualised)

Base / fixed rate + Bank

Margin

Fees (annualised)

ECA premium is set by the ECA and depends on… Bank margins depend on… Fees depend on…

Borrower country Credit quality Tenor % of ECA cover Can be financed & drawn pro-rata

Prevailing market conditions Borrower country / credit risk Tenor % of ECA cover Size of facility

Amount of funding Complexity Structure Timeline

Other costs

Agency fees Legal fees Other third-party fees, typically includes due diligence fees such as technical advisor / environmental consultant

17

Main terms & conditions

Tied and Multisource Arrangement Untied

Loan amount

Up to 85% of the export contract value + proportions of thirdcountry and local costs (maximum 30% of the export contractvalue) + up to 100% of the ECA premium and interest duringconstruction, subject to ECA approval

Not governed by the OECD Guidelines Subject to importance of ECA country interest in the project. No

specific guideline in terms of loan amount. Considered by theECAs on a case by case basis

Lender Commercial banks; ECAs as a direct lender (only applicable to certain ECAs)

Cover Typically 90-100% comprehensive risk cover in form of a guarantee (depending on ECA due diligence of project/corporate risk profile)

Tenor

Drawdown (construction) period in line with the commercialcontract + usually up to 8.5-10-year repayment period (equal semi-annual installments) on a corporate basis/up to 14-year repaymentperiod (unequal installments possible subject to ECA approval)on a project finance/limited recourse basis (provided that theweighted average life of the repayment period does not exceed7.25 years)

The Lender will disburse monies to the supplier under the terms ofthe loan agreement against appropriate documentation as may bedetermined in the loan agreement

The ECAs may approve the reimbursement of previously executeddeliveries (over the last 6 months to 1 year) paid by the Borrower

Subject to cash flow projection of the underlying project/offtakecontract

Not governed by the OECD Guidelines and all conditions arediscretionary to the ECAs

The Lender will disburse monies to the supplier under the terms ofthe loan agreement against appropriate documentation as may bedetermined in the loan agreement

Currency USD, EUR, JPY or other freely convertible currencies

Interest rate

Floating rate (applicable interest rate + margin) Fixed rate:

• Hedging of the currency and interest rate risk to be determined in accordance with the Borrower.• Commercial Interest Reference Rate (“CIRR”) (available with specific ECAs and subject to their approval).

Premium Typically payable up front but can also be financed and included into the Loan Amount.

Security On a corporate basis, expected to be similar to corporate borrowing including but not limited to ranking pari passu with the Borrower’s other

senior ranking financing(s).

Timeline Typically 3-6 months for an ECA corporate facility (from signature of the mandate to financial close).

18

Key Export Credit AgenciesECAs are present globally including Europe, Asia and the Americas

EDC Canada

US EXIM USA

BNDES Brazil

ECICSouth Africa

Sinosure China

KEXIM/K-SureSouth Korea

JBIC/NEXIJapan

EFICAustralia

CredendoBelgium

AtradiusHolland

UKEFUK

EKFDenmark

GIEKNorway

EKNSweden

FINNVERAFinland

HermesGermany

KUKEPoland

BpifranceFrance

CESCESpain

OeKBAustria

SACEItaly

SERVSwitzerland

EGAPCzech Rep

19

Environmental and Social Due DiligenceIn supports of International Financing / ECA Support

20

Debt Financing

International Financial Support

ECA Cover

BanksECAs

Typical structure

21

Screening

International Financial Support

Sensitive areas; human right impact; Category A project; ≥SDR 10million

How ECA Common Approaches is structured?

Classification

Disclosure of Projection information

Projection categorization: A, B, C

Benchmarking: IFC PS, WBG Safeguard PoliciesLocal regulation: EIA, ESIA

Mgmt Program: Prevent / mitigate advise impactsMonitoring procedures and reports

Evaluation, Decision and Monitoring

E & S Review

Exchange and Disclosure of Information

Exchange and Disclosure of Information

Periodic Reporting

22

Case Study

23

Maximize the quantum of ECA financing raised for the projects. Take advantage of maximum flexibility available from each ECA. Carefully manage ongoing administrative burden by harmonizing the key terms and conditions of all ECA facilities with

the company's overall debt platform. Enable the financing of direct procurement from a large number of SME suppliers from the facilities.

Key Objectives

Investing the time to negotiate the first ECA deal and secure very flexible terms and conditions – this was used as aprecedent to negotiate with other ECAs for subsequent transactions under the same program.

Innovative multi-ECA facility comprising one loan agreement with multiple ECA policies – this enabled RIL to tapsupport from certain ECAs where the overall procurement level was low.

Framework agreement to allow financing of relatively small individual contracts with SME suppliers.

Strategy

BPI France, Credendo, K-SURE, OeKB, SACE, SERV, UKEFECAs Involved

Completed India

Reliance Industries Limited

USD 5 billion

ECAs involved:

To maximize the level of ECA financing for the EPC contracts in respect of a single project originally awarded on a‘cash’ basis.

To obtain support for reimbursements to the borrower in respect of works already completed. To harmonise documentation terms across 7 ECAs involved in the financing.

Key Objectives

Obtained contractor support for the ECA process despite contracts being effective. Stream-lined the negotiations process with the ECAs through a common Term Sheet. USD 6.25bn of ECA facilities to be raised at the same time – this is the largest corporate-level ECA-supported

transaction.

Strategy

Atradius, JBIC, KEXIM, K-Sure, NEXI, SACE, UKEFECAs Involved

Completed Kuwait

Kuwait National Petroleum Company

USD 6.25 billion

ECAs involved:

Asia

24

Project Back-ground and Objectives

Project financing facilities totalled USD 5bn including USD 2.3bn of JBIC/KEXIM direct funding and USD 2.6bn ofECAs supported debt (including support from NEXI, KEXIM, COFACE, ECGD, Hermes and SACE).

30 bank participating in transaction

ECAs / Banks Involved

Vietnam

2013 Vietnam 2013 Vietnam

Nghi Son Refinery and Petrochemical LLC

US$5 billion Project Finance Facilities

Mandated Lead Arranger

USD 9.2bn 200 kbpa refinery and petrochemical complex in the Nghi Son Economic Zone of Vietnam andsponsored by Kuwait Petroleum Europe BV (35.1%), Idemitsu Kosan Company Limited (35.1%) Vietnam Oil andGas Group (“PVN”) (25.1%) and Mitsui Chemicals Inc (4.7%).

The Project is one of the more complex refineries in the East of Suez that will produce light products (LPG, naphtha,gasoline, kerosene, diesel, basic petrochemicals such as aromatics and propylene) and sulphur. 50% ofpolypropylene output by NSRP is expected to supply the Vietnam domestic market and other products to primarilyexported.

Strategic Project for the Government of Vietnam to ensure security of domestic supply of high-value refinedproducts for PVN substituting imports.

Critical Project for Kuwait Petroleum Corporation (the crude supplier) to secure stable long-term export market.

Facility Amount Tenor Borrower Nghi Son Refinery and Petrochemical LLC

1)NEXI Facility USD 1,300m 16yrs Sponsor

Kuwait Petroleum Europe BV, Idemitsu

Kosan Company Limited, Vietnam Oil and

Gas Group and Mitsui Chemicals Inc

2) KEXIM Facility USD 440m 16yrs Financial Close

June 2013

3) Other ECAs Facility USD 950m 16yrs Ranking Senior secured

FormatMultiple ECAs-supported limited-recourse financing

Repayment16 year facility; scuplted, 4yr construction +

1 year grace + 11yr amortising

Transaction details

25

26

Disclaimer

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