1 Natural Ties - The GIIGNL Letter - July 2018 #3

#3Natural TiesT H E G I I G N L L E T T E R July 2018

Dear GIIGNL Members,The World Gas Conference held in Washington D.C in June gathered industry experts and stakeholders from over 100 countries. Public sentiment regarding the outlook for natural gas and its future contribution to the world’s energy needs seemed outstandingly positive.This was not a complete surprise in a producing country - the United States - which recently became a net exporter of gas for the first time in 60 years and which is expected to lead the global gas supply growth in the coming years.In a context of turbulence for global trade and rising protectionism, industry leaders at WGC discussed about the benefits of free trade for gas, warning about the negative consequences that a potential trade war would have on LNG. Varied and fascinating debates took place around the requirements for future investment decisions in LNG supply projects, around the potential benefits of decoupling LNG from oil prices or the role of gas in delivering energy access and promoting economic and social development.The issue of methane intensity was also largely talked about, to an extent never

observed in previous conferences. Reflecting on three days of intense exchanges at the triannual natural gas conference, one point clearly stood out: most if not all talks could be summarized in three letters: L-N-G. As if the old business of pipeline gas did not deserve as much focus. LNG may be cold, but it has never been such a hot topic! The industry is indeed entering a new era with three FLNGs now in operation, the first deliveries of Arctic LNG to China through the Northern Sea Route and numerous supply projects betting on Asia’s assumed thirst for LNG.After more than fifty years of successful development, it is time to review the conditions for LNG to remain “hot”. The main theme of our upcoming General Assembly in Fukuoka (November 11-13) will be “Strengthening LNG imports in the next-half century”. The role of GIIGNL in achieving this goal will also be discussed.I wish you a pleasant reading and look forward to seeing you in Fukuoka.

Yours sincerely,

Vincent Demoury GIIGNL General Delegate

2018 ANNUAL REPORT LAUNCH

Thanks to the valuable contribution of GIIGNL members, the 2018 Annual Report was launched in April. Hardcopies of the report have been distributed to the members in May. If you have not received them or if you would like to receive additional copies, kindly contact the Central-Office.

A video which summarizes in 3 minutes the key findings of our 2018 Annual Report is available here: https://giignl.org/media-center/video-gallery. Do not hesitate to forward this link within your organization or to your contacts who might be interested.

Message from the General Delegate . . . 1GIIGNL 2018 Annual Report launch . . . 12018 Executive Committee in Santiago 22018 General Assembly in Fukuoka . . . . 2Study Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3News from GIIGNL Members . . . . . . . . . . . . . . 3Close-up on… JERA . . . . . . . . . . . . . . . . . . . . . . . . . . . 4EU GDPR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Upcoming Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

SUMMARY

Message from the General Delegate

It’s all about LNG! " "

Australia USA Angola Nigeria Malaysia

Top 5 incremental supply sources : 2017 vs 2016 (MT)

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101112 10.7

9.6

2.8 2.6 1.8

China South Korea Spain Turkey France

Top 5 incremental demand sources : 2017 vs 2016 (MT)

0123456789

101112 11.6

3.61.9 1.9 1.8

+9.9% growth

289.8MT imported

40 importing countries

1 new LNG importer (Malta)

2018 ANNUAL REPORT KEY FIGURES

2 Natural Ties - The GIIGNL Letter - July 2018 #3

On April 15-17 2018, GNL Quintero and Gas Natural Fenosa hosted the 47th Executive Committee in Santiago (Chile). It was the 2nd time that GIIGNL had held its Executive Committee in Santiago. The first Executive Committee of GIIGNL was held in Santiago in 2012, three years after Chile started to import LNG for the first time.

On the evening of Sunday April 15, the participants were invited to a welcome cocktail and dinner at “Carneros”, a typical Patagonian restaurant, where they enjoyed Chilean specialties.

On Monday April 16, working sessions were held at the Noi Vitacura Hotel. By way of introduction, Mr. Jean-Marie Dauger, GIIGNL President, congratulated Mr. Michiaki Hirose, GIIGNL Vice-President for Asia who was appointed Chairman of the Board of Tokyo Gas on April 1st, 2018 and Chairperson of the Japan Gas Association in June 2018. President Dauger introduced Mr. Chong-su Yoo, Executive Vice-President and Head of the Marketing division of Kogas who was appointed an EC member, succeeding Mr. Lim. The General Delegate then provided the participants with a sneak peek of the findings from the GIIGNL 2018 Annual Report.

The participants were honored by the visit of the Minister of Energy of Chile, Mrs. Susana Jiménez, who traced the history of the Chilean gas industry. It all started in the mid-1990’s with the first imports from Argentina. 2004 was a tipping point as Argentina began to dramatically restrict exports, destabilizing Chile’s energy supplies. After this crisis, the Chilean private and public sectors cooperated to ensure a diversified and secure long-term gas supply, including the construction of LNG terminals. Regarding the future, Mrs. Susana Jiménez explained that the government is willing to move towards

a clean and sustainable energy mix in the next decades with a major contribution from the natural gas and renewables sectors. She emphasized that gas will become an

increasingly important factor in reducing energy emissions in the country.

M r. B a c i g a l u p o f ro m G N L Quintero and Mr. Tuñón from Gas Natural Fenosa (now Naturgy)

then provided a summary of the current situation of the natural gas market in Chile.

On behalf of the Asian region, Mr. Takashi Higo from Tokyo Gas presented lessons learned from recent examples of challenges in natural gas demand creation in Japan. For the Americas, Ms. Ann Collins from Shell gave an overview of the digital transformation in the LNG industry. For Europe, Mr. Alessandro Della Zoppa from ENI discussed the potential impact of Brexit on future European gas and LNG flows and on European gas trading hubs.

Ms. Ann Collins also presented a summary of the work of the “LNG in a decarbonizing world” task force which was founded in 2017. The discussion which followed highlighted the importance of advocating for LNG outside the already captive LNG audience. During the 2018 General Assembly in Fukuoka, an LNG Advocacy Playbook will be presented to the members and made available to all GIIGNL members.

In the afternoon, Mr. Bensaude from Cheniere provided an update on the Panama Canal tolling system, including some highlights to be discussed with EC members.

On Tuesday, April 18, the delegates had the opportunity to visit GNL Quintero LNG terminal, with its impressive 1.9 km long jetty and four LNG truck loading bays. The participants attended a captivating live demonstration of LNG characteristics and could approach the hawk and the owl which help preventing nuisance from seagulls.

All presentations and reports from the meeting can be found in the members area of the GIIGNL website www.giignl.org.

2018 Executive Committee in Santiago

At the kind invitation of Tokyo Gas, the 48th GIIGNL General Assembly will take place in Fukuoka, from November 11 to 13, 2018. Participants will be accommodated at the Hilton Fukuoka Sea Hawk hotel where the working sessions will be held all day on Monday, November 12 and on Tuesday, November 13 until 10.30 AM.

The 2018 General Assembly will explore the following theme: Strengthening the role of LNG imports in the next half-century. Mr. Masakazu Toyoda (IEEJ Chairman), Mr. Xizhou Zhou (Managing Director, Asia Pacific, IHS Markit) and Dr. Tim Boersma (Senior Research Scholar, Columbia University) will debate in a panel session moderated by Mr. Shigeru Muraki (Executive Advisor, Tokyo Gas).

The working sessions will be preceded by a welcome reception and dinner on the evening of Sunday, November 11. A gala

cocktail and dinner will take place on the evening of Monday, November 12.

Early on Tuesday afternoon, November 13, participants will have the opportunity to visit the Hibiki LNG terminal. They will then attend the renowned Kyushu Sumo Tournament. In the evening, the 2018 General Assembly will conclude with a Farewell dinner in a famous sake brewery.

For more information regarding the event, please contact the Central-Office.

2018 GENERAL ASSEMBLY IN FUKUOKA

Happy 10th Anniversary to EDF Trading, Gate Terminal, Repsol and Sonatrach Gas Marketing UK who joined the association in 2008 !

G I I G N L M E M B E R S H I P A N N I V E R S A R Y

3 Natural Ties - The GIIGNL Letter - July 2018 #3

31st CSG Meeting On March 1&2, 2018, the Commercial Study Group representatives gathered in Dubai (UAE) for a two-day meeting at the kind invi-tation of Excelerate Energy, represented by Mr. Edward Scott, Executive Vice President and Chief Operating Officer. On March 1, Mr. Siamak Adibi (Principal Con-sultant & Head of Middle East Gas Team, FGE London) presented an overview of the natu-ral gas market in the Middle East, including an outlook for gas and LNG imports.

On March 2, The CSG representatives visited the FSRU Explorer, located in Jebel Ali. The 6 MTPA DUSUP’s import terminal has been importing LNG via an FSRU since 2010 but needed to expand its capacity to meet Dubai’s increasing demand for natural gas. DUSUP partnered with Excelerate in 2015 to upgrade Explorer’s features. Mr. Kazumi Takahata attended the CSG meet-ing for the last time. On April 1st, he relocated to TG’s Tokyo offices and was replaced by Mr. Jun Ishikawa, his successor as General Manager of Tokyo Gas Paris Representative Office. We thank Mr. Takahata for his valuable and continuous contribution to GIIGNL and CSG works.

Study Groups

The following changes have been brought to our knowledge since the last GIIGNL Letter:

Statoil became Equinor in May. Gas Natural Fenosa became Naturgy in June.

Ms . Laurence BORIE-BANCEL was appointed CEO of Elengy , succeeding Mr. Martin JAHAN DE LESTANG as official GIIGNL representative. Mr. Jahan de Lestang became Managing Director of the Gas Chain Metier of ENGIE. Following the closing of the acquisition of

ENGIE’s portfolio of upstream LNG business, Mr. Philip OLIVIER (former ENGIE’s CEO Global LNG) became CEO Global LNG SAS for Total. Mr. Anders BJORDAL, Head of LNG Trading

was appointed GIIGNL official member for Equinor. Ms. Jodi NAVARETTA, Vice President, FP&A

and Investor Relations, succeeded Mr. Zdenek GERYCH as GIIGNL official representative for Freeport LNG Development, L.P.

Mr. Yoshihisa SUZUKI, Member of the Board, President & Chief Operating Officer

succeeded Mr. Eizo KOBAYASHI as GIIGNL official member for Itochu Corporation.

Mr. Katsuyuki OTA was appointed Representative Director and President of JXTG Nippon Oil & Energy Corporation as of June. He succeeded Mr. Tsutomu SUGIMORI. Mr. Chong-su YOO, EVP & Head of Marketing

Division succeeded Mr. Jong-Kook LIM as GIIGNL Executive Committee member and GIIGNL official representative for Kogas. Mr. Jong-Kook LIM was appointed Senior Executive Vice President and Member of the Board of Kogas on July 26th.

Mr. Francisco REYNES succeeded Mr. Rafael VILLASECA as Chairman and CEO of Naturgy. He became GIIGNL official representative along with Mr. José Maria EGEA who represents Naturgy within the GIIGNL Executive Committee.

Mr. Chigeru CHIKAMOTO moved to Osaka Gas’ Pipeline Business Unit. On April 1st, he became Senior Executive Officer, Head of Pipeline Business Unit. On July 1st, Mr. Hamad AL SAMRA succeeded

Mr. Robert Alan ELSE as General Manager of South Hook LNG Company. He became GIIGNL official representative for his company.

On Apri l 1 st, Mr. Masayuki HYODO succeeded Mr. Kuniharu NAKAMURA as President and Chief Executive Officer of Sumitomo Corporation. He became GIIGNL official representative.

Mr. Michiaki HIROSE, GIIGNL Vice-President for Asia, was appointed Chairman of the Board of Tokyo Gas on April 1st and Chairperson of the Japan Gas Association on June 14th. Mr. Jun ISHIKAWA succeeded Mr. Kazumi TAKAHATA as Chief Representative, General Manager, Tokyo Paris Representative Office. Mr. Kazumi TAKAHATA was appointed General Manager, Energy & Technology Group, Corporate Planning Department for Tokyo Gas.

NEWS FROM GIIGNL MEMBERS

Sailing to other horizons? Notify GIIGNL at

central-office@giignl.org

63rd TSG Meeting

On March 14 & 15, 2018, the 63rd Technical Study Group meeting was held in San Diego at the kind invitation of Sempra LNG and Mid-stream. Ms. Secil Torun chaired the group for the last time, as Mr. Paul-Emmanuel Decroës (Senior LNG Manager – Gas Chain, Engie) was appointed TSG Chairman at the last General Assembly in Brussels. Mr. Philippe Bouchy from Elengy reported that two webinars were organized to present the new functionalities of GIIGNL Incident Identification tool. Additional webinars could be organized if needed. On the second day of the meeting, working sessions were held at the Energia Costa Azul regasification terminal. The TSG represent-atives were honored by the visit of local authorities. Guided by Mr. Yovannis Mierez, TSG rep-resentative for Sempra LNG, TSG members then visited the ECA terminal. The building of a liquefaction project next to the terminal has been authorized and Sempra selected an EPC contractor for this project in June.

Custody Transfer Handbook workshopMr. Stijn Verhelle from Fluxys kindly hosted a Custody Transfer Handbook workshop on February 21st, 2018 in Brussels. The workshop served to evaluate the 5th edition and to discuss

the corrections, modifications and new topics which could be interesting for the 6th edition of the Handbook. A second workshop will be organized on September 13th, 2018.

WGC

Two TSG papers were presented at the 2018 World Gas Conference. The first one on LNG Cold Energy Utilization*, was presented by Mr. Toshiyuki Hibino, TSG representative for Tokyo Gas. The second paper entitled LNG In-cident Identification Analysis was presented by Mr. Gabin Delannay, TSG representative for Total.

Both the CSG and the TSG will meet next time in Klaipeda, Lithuania on 9-11 October, 2018 at the kind invitation of Höegh LNG. The groups will have the opportunity to visit the FSRU Independence which is a symbol of the country’s energy supply diversification.

All presentations and reports from the meetings can be found in the members area of the GIIGNL website www.giignl.org. If you wish to officially appoint new CSG or TSG member or if you wish to attend an upcoming workshop or webinar, kindly contact the Central-Office.

* LNG Cold Energy Recovery has long been studied by the TSG: the first study on this topic carried out by GIIGNL was launched in 1975 under the leadership of… Tokyo Gas !

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GIIGNL: JERA announced that it will integrate the optimization activity into the Joint Venture jointly owned with EDF Trading. What is the purpose of this transaction?

Mr. Nakamura: We would like to secure the flexibility of cargo deliveries and reduce the procurement cost by optimizing the LNG portfolio. Flexibility and price competi t iveness are becoming more important for JERA’s business, as the business environment is changing rapidly due to the liberalization of the Japanese energy market, uncertainty in nuclear start-up, and increase of renewables. We think optimization is

JERA - Interview with Mr. Sunao Nakamura, Senior Executive Vice President, Energy Transactions and Projects

key to realizing stable and economically reasonable deliveries of LNG cargoes.

GIIGNL: If you consider making the most of the optimization function, you need to have more flexible cargoes. What do you think is important in building your LNG portfolio?

Mr. Nakamura: Securing more LNG cargoes without destination restriction is required for us to meet the changing business environment. More short-term contracts and spot cargoes will be added to the portfolio due to the increasing volatility in LNG consumption. We believe it is beneficial for all LNG players to transact cargoes in a transparent and liquid marketplace, where a price index is well reflective of the supply and demand balance.

GIIGNL: JERA will assume LNG receiving terminals and power stations from TEPCO and Chubu in April 2019. What will be the impact on the operation of the facilities?

Mr. Nakamura: In order to enjoy the benefits of a liquid market, we must have a flexible receiving capability to accept cargoes from everywhere with a variety in terms of quality. Chubu has been making efforts to expand the acceptable range of specifications, and TEPCO is pursuing the same by adding new tanks as well as refurbishing gas-fired power generation units. We need both optimization skills and receiving capability to maximize the value of our contracts and assets.

32nd CSG meeting - Klaipeda (Lithuania) - October 9-11, 2018

64th TSG meeting - Klaipeda (Lithuania) - October 9-11, 2018

2018 General Assembly - Fukuoka (Japan) - November 11-13, 2018

2019 Executive Committee - Milan (Italy) - April 29, 2019

Gastech - Barcelona (Spain) - September 17-20, 2018

8th St. Petersburg International Gas Forum (Russia) – October 2-5, 2018

LNG Producer / Consumer Conference – Nagoya (Japan) - October 22, 2018

CWC LNG Summit - Lisbon (Portugal) - November 27-30, 2018

CONTACTGIIGNL – International Group of LNG Importers8 rue de l’Hôtel de Ville – 92200 Neuilly-sur-Seine – France +33 1 56 65 51 60 – central-office@giignl.org

The EU GDPR – General Data Protection Regulation - is a new European regulation enforced since 25 May 2018. It was designed to harmonize data privacy laws across Europe in order to protect EU citizens’ personal data and to reshape the way European organizations deal with data privacy. Organizations which do not comply with the EU GDPR face heavy fines.

In order to comply with the new regulation, GIIGNL has reviewed its procedures for collecting and storing personal data. GIIGNL has also updated its Privacy and Cookie Policy which can be consulted on the official GIIGNL website at https://giignl.org/privacy-and-cookie-policy.

GIIGNL is committed to protecting and respecting privacy .

Al l GIIGNL members and GIIGNL website users have the right to access their personal information in order to verify that it is up to date or to have it modified or deleted. Access requests can be directed through the website contact form or directly at central-office@giignl.org.

EU GDPR – WHAT DOES IT STAND FOR?

SPECIAL WELCOME TO…

UPCOMING GIIGNL EVENTS

UPCOMING INDUSTRY EVENTS

Close-up on…

511 LNG carriers, including 28 FSRUs

10.2MT loaded onto trucks in Chinese LNG terminals in 2017

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2013 – 2017 LNG spot/short* term volumes vs total LNG trade

*Short-term trade denotes trades under contracts of a duration of 4 years or less

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2018 ANNUAL REPORT KEY FIGURES

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Mr. Seung-ha HWANG from Kogas joined the GIIGNL Central-Office on a 2-year secondment as LNG Advisor.