#1Natural TiesT H E G I I G N L L E T T E R July 2017

Dear GIIGNL Members,I am pleased to introduce the first edition of the GIIGNL letter, in which you will find the latest information on our group. A privileged platform where LNG pros have been speaking to LNG pros since 1971, GIIGNL draws its strength from the mutual trust and the longstanding ties established between the most experienced representatives of companies involved in LNG imports. I hope this newsletter will contribute to further reinforce these ties.

2016 has been a busy year for GIIGNL, with the Executive Committee held in Athens in March at the invitation of DEPA, followed by the General Assembly hosted by Cheniere in October in New Orleans, which resulted in the appointment of a new Executive Committee and of a new President, Jean-Marie Dauger.

Our Technical and Commercial Study Groups gathered respectively in Quintero and Rotterdam in the Fall, before holding a joint meeting in Singapore in the Spring.

2016 has been a hectic year for LNG markets as well. As we are approaching mid-2017, it is already possible to draw the first conclusions and to prepare for the next few years, the key challenges and opportunities of which have been widely discussed during the recent Executive Committee in Tokyo, hosted by Tokyo Gas.

All eyes are now already turning to Europe and Brussels, where Fluxys will host our next General Assembly (October 8-11) and where discussions promise to be most insightful.

GIIGNL will then return to Chile in the Fall of 2018, thanks to Gas Natural Fenosa and GNL Quintero’s kind proposal to host the next Executive Committee in Santiago.

In March 2017, GIIGNL released the 2017 edition of its annual report, a reference publication on the state of the LNG industry now widely used by anyone interested in LNG markets, with the active contribution of the members. Over the years, the report has become a must-read for journalists, analysts and researchers and a flagship publication of our association.

In April, GIIGNL also published the latest (5th) edition of its Custody Transfer Handbook, a work initiated exactly thirty years ago by a Study Group of companies under the leadership of Distrigas S.A. At that time, the Executive Committee came to the conclusion that it would be useful to write a handbook, as simple and as practical as possible, aimed at organizations involved in the measurement of the energy transferred in the form of LNG in the context of an LNG purchase and sales agreement.

As for the annual report, GIIGNL thanks all the experts and companies who made this publication possible and sustainable by dedicating time and resources to advance our industry’s knowledge.

Based in France, the GIIGNL Central-Office has recently been transformed to meet the present needs and it is now composed of two full-time employees, working for the 78 members located in 25 countries.

Sibylle De Veyrac joined the Central-Office in July 2016, as LNG Analyst and

Communications Officer. She previously held positions in market analysis and sales with GTT. The team might be further expanded, since the workload remains significant as the membership expands.

In rapidly changing market conditions, GIIGNL continues to work in order to improve the efficiency and safety of LNG imports worldwide. When necessary, we will increase our presence vis a vis national and international bodies in order to remove potential barriers and to help promoting the development of LNG markets, either existing or emerging. I was honored to be promoted General Delegate in March last year and I look forward to serving our family in the challenging and exciting period ahead of us.

Vincent Demoury GIIGNL General Delegate

Message from the General Delegate . . 1Tokyo 2017 Executive Committee . . . . . . . . . . . . . . . . . . . . . . . 2Study Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3News from GIIGNL Members: Moves . . 3Close-up on… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Brussels 2017 General Assembly . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Upcoming GIIGNL Events . . . . . . . . . . . . . . . . . 4

SUMMARY

Vincent Demoury (GIIGNL), Steve Hill (Shell), Michiaki Hirose (Tokyo Gas), Yoshifumi Matsumura (METI), Hiroshi Ozaki (Osaka Gas), Jean-Marie Dauger (GIIGNL) and Erwin van Bruysel (ENI). 

Message from the General Delegate

In rapidly changing market conditions, a privileged platform where LNG pros speak to LNG pros

" "

2 Natural Ties - The GIIGNL Letter - July 2017 #1

On April 23-25, 2017, Tokyo Gas Co., Ltd. hosted the 46th GIIGNL Executive Committee.

It was the 3rd time that GIIGNL had held its Executive Committee in Tokyo. The first Executive Committee of GIIGNL was held in Tokyo in 1972, shortly after the foundation of our Group. The second GIIGNL Executive Committee meeting in Tokyo took place in 2005, at a time when the LNG industry included only 15 importing countries compared with 39 in 2016.

On the evening of Sunday April 23, official representatives from the 12 Executive Committee member companies boarded at the Cruise Club Tokyo located on Tenozzu Isle for a cruise dinner on “Lady Crystal” - also called “The Grande Dame of Tokyo Bay”, a prestigious three-floor cruise ship kindly lent by shipping company NYK.

On April 24, GIIGNL Executive Committee members gathered at the Palace Hotel Tokyo for a full day of working sessions. The day started with a special welcome to new participants or participants with

new responsibilities within the Executive Committee:• Mr.MichiakiHIROSE, President of Tokyo Gas, who succeeded Mr. Tsuyoshi OKAMOTO as Vice President for Asia and consequently as Bureau Member.• Mr.ErwinVANBRUYSEL,Executive Vice President, ENI, who became Vice President for Europe and consequently joined the Bureau.• Mr.TakashiHIGO,who succeeded Mr. Kentaro KIMOTO as official Executive Committee member for Tokyo Gas.• Mr.AntonioBACIGALUPO following the appointment of GNL Quintero as Executive Committee member.• Mr. Alessandro DELLA ZOPPA w h o succeeded last November Mr. Erwin VAN BRUYSEL as official Executive Committee representative for ENI.• Mr. Eric BENSAUDE,who succeeded Mrs. Meg GENTLE as Executive Committee member for Cheniere Energy.

By way of introduction, Mr. Dauger reminded the participants of the latest LNG market

trends based on the findings from the GIIGNL 2017 Annual Report.

Mr. Chikamoto from Osaka Gas then provided a summary of situation on the natural gas market in Japan in the context of the full liberalization of the gas retail market starting from April 2017.

On behalf of the Asian region, Mr. Takashi Higo from Tokyo Gas presented the NewdevelopmentsinthenaturalgasandLNGmarkets inSouthEastAsia,andtheroleof JapaneseLNGbuyers. For Europe, Mr. Alessandro Della Zoppa from ENI gave an overview of the historical and future roleofLNGintheMediterraneanbasin. Mr. Philip Olivier from Engie gave an overview of the competitionbetweenpipelinegasandLNGsupplies in themediumterm inEurope. For the Americas, Ms. Ann Collins from Shell presented the benefits of an integratedapproachforsmall-scaleLNGimports,withlearningsfromShell’sGibraltarproject.

Ms. Collins, Mr. Higo, Mr. Olivier and Mr. Tunon (Gas Natural Fenosa) also updated the Executive Committee on the roleofLNGinadecarbonizingworld in the various parts of the world, a joint presentation coordinated by Shell with the support of Tokyo Gas, Engie and Gas Natural Fenosa.

In the afternoon, the Executive Committee was honored by the visit of Mr. Yoshifumi Matsumura, State Minister of Economy, Trade and Industry of Japan. Mr. Matsumura expressed his belief that LNG is going to become a truly global commodity. He acknowledged the decisive role played by GIIGNL in developing the LNG market and in solving the challenges of LNG importers. In this regard, he encouraged our association to help establish price indexes which reflect supply and demand.

On April 25, a delegation of Executive Committee members visited the Ohgishima LNG terminal, followed by a fascinating live demonstration of the LNG characteristics.

(For more information, the detailed minutes of the Executive Committee can be found on the members area of the GIIGNL website  : www.giignl.org)

Tokyo 2017 Executive Committee

263.6 MT imported in 2016

LNG IMPORTS KEY FIGURES

Evolution of the regional splitof importing countries since 1997

19975 3 1 9

20078 5 4 17

201715 10 10 5 40

Europe Asia Americas Middle East

9

Floating as preferred solution to open new LNG markets

Initial solution chosen bynew importing countries since 2007

14 OffshoreOnshore

3 Natural Ties - The GIIGNL Letter - July 2017 #1

On March 30 and 31, 2017, 40 represent-atives from the Commercial and Technical Study Groups (CSG & TSG) met in Singapore at the kind invitation of Shell.

The participants had the opportunity to min-gle at the welcome reception held at Oasis Grand Hyatt and during a joint dinner held at Monti, a restaurant offering spectacular views on the Marina.   

Thanks to the arrangements made by Shell and SLNG, all participants had the opportuni-ty to visit the YTL Power Seraya Power plant, followed by a technical tour of the Singapore LNG regasification plant, a member of GIIGNL. The group also had the opportunity to see the 4th tank (260 000m3, among the largest tanks in the world) under construction. 

Chaired by the event’s host Arnaud Dubois-Denis (General Manager, Singapore Gas Marketing, Shell Eastern Trading), the Commercial Study Group representatives reviewed the progress of the group’s ongoing studies, including the RetailLNGStudy and the academic study of the Keyrequirementsfor theemergenceof an LNGHub . The Energy Studies Institute (ESI) of the National University of Singapore was selected in 2016 to partner with the CSG. The group will review the main success and failure factors for the development of an LNG trading hub based on the history of several key commodities: Crude Oil (Brent, WTI, Dubai), Coal, Iron Ore, Natural Gas (TTF, NBP, NCG, Henry Hub, Chinese Hub, LPG), Rice (Dojima Rice Exchange) and Copper.

The CSG representatives received the visit of guest speaker Jefferson Edwards (Head of Global Gas Advocacy, Shell) who presented a compelling set of messages regarding the case for gas and the various challenges facing the natural gas industry.

Among technical studies, the Technical Study Group chaired by Secil Torun (Key Program manager, small-scale LNG, Engie) reviewed the progress of its studies on CustodyTrans-fer (with the publication of the 5th edition of the Handbook in April 2017), ColdEnergyRecovery or LNGIncidentIdentification. A new web-based tool allowing anonymous reporting of incidents will be developed and presented at the next General Assembly.

The TSG also received the visit of Mr. Pablo Perez (Senior process engineer, Shell) who was invited to present a safety-linked feed-back on modifications related to reloading operations.

Finally, Stacey Eller (Global Gas Market Analysis Manager, Shell Trading & Supply) updated all CSG and TSG participants on the new ShellLNGOutlook, a fascinating summary of the driving forces for LNG demand at the 2030 horizon.  

The following changes have been brought to our knowledge since the New Orleans 2016 General Assembly:

Mr. Michiaki Hirose , President of Tokyo Gas Co., Ltd, replaced Mr. Tsuyoshi Okamoto as GIIGNL Vice President for Asia. Mr. Hirose joins the Bureau and the Executive Committee of GIIGNL.

Mr.KentaroKimoto, GIIGNL Executive Committee representative for Tokyo Gas Co., Ltd., was promoted Senior Executive Officer on April 1st, 2017.

Mr. Kimoto was replaced by Mr.TakashiHigo, General Manager Gas Resources, who joins the Executive Committee of GIIGNL.

Mr. Toshihiro Sano (President) was replaced by Mr.SeijiMoriya on June 23th, 2017. Mr. Moriya becomes GIIGNL official representative for TEPCO, Fuel and Power.

Mr. Okuzono (General Manager, Strategy Planning & Coordination Unit, Domestic Energy Supply & Marketing) was replaced

by Mr.ShigeruTode on April 1st, 2017. Mr. Tode becomes GI IGNL of f ic ia l representative for Inpex Corporation.

Mr.Marco Galletti (Chairman and Managing Director) succeeds Mr. Germano Grassini as official GIIGNL representative for GNL Italia.

Mr. FabrizioRinaldi (Head of Long Term LNG & Gas Supply and Origination) succeeds Mr. Fabio Dubini as official GIIGNL representative for Enel.

Mr.CharlesRuehl (Vice President for Operations) succeeds Mr. Mark Lane as official GIIGNL representative for Excelerate Energy.

Mr.RagnarWisløff(Chief Development Officer) succeeds Mr. Tschudi-Madsen as official GIIGNL representative for Höegh LNG.

Mr.FredericBarnaud was appointed Chief Commercial Officer of Gazprom Marketing & Trading.

NEWS FROM GIIGNL MEMBERS

Study Groups

Sailing to other horizons? Notify GIIGNL at central-office@giignl.org

4 Natural Ties - The GIIGNL Letter - July 2017 #1

GIIGNL: Your company is building a 3 MTPA LNG receiving terminal in Zhoushan (Zhejiang) -the first non-NOC terminal to receive approval from the National Development and Reform Commission. Could you give us an update on the progress of the project?

Mr. Ma: The project is progressing well as scheduled. Currently completion progress of the overall project has reached 66%. It is planned that the terminal commissioning will take place in the middle of 2018.

GIIGNL: Does ENN plan to sign new long-term contracts to supply the terminal once online?

Mr. Ma: We need more supply to support our market development. Considering the current

ENN–InterviewwithMr.MaShenyuan,VicePresident,ENNGroupLimited

market situation of over supplies, we would probably focus more on medium and short-term contracts to meet our demand.

GIIGNL: The Chinese government recently announced that it was considering capping returns on investment for gas distribution assets at 6%, down from a current average of around 10%. What could be the impact for distribution companies?

Mr. Ma: The Chinese government is intending to issue policies to cap the return rate on investment for gas distribution. This is currently still in a drafting stage. It was said that 6% could be the cap but there are no details about the calculation. Gas consumption is encouraged and China’s gas market is still in the developing stage. So we believe that overall a new policy would not have any negative impact on the gas business development.

GIIGNL: What are the main challenges that your company is facing in developing LNG as a transport fuel in North America and Europe?

Mr. Ma: Despite the fact that EU and US have provided policy support for the development of LNG as transport fuels, there are serious challenges faced by business companies:

1) Low oil price is one of the main challenges, which nearly kills the whole LNG fuel market.

2) LNG stations and truck maintenance are not as available and convenient as Diesel stations and trucks

3) Venting of LNG trucks is not as efficient as Diesel trucks.

30th CSG meeting – Lille – September 12-13, 2017

62nd TSG meeting – Rotterdam – September 19-21, 2017

2017 General Assembly – Brussels – October 8-11, 2017

2018 Executive Committee – Santiago – April 15-16, 2018

2018 General Assembly – Fukuoka – November 11-14, 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

At the kind invitation of Fluxys, the next GIIGNL General Assembly will take place in Brussels, from October 9 to 11, 2017. Participants will be accommodated at the SteigenbergerWiltcher’s hotel, where the working sessions will be held on Monday, October 9 and Tuesday, October 10. Sir Philip LOWE (Former Director General Energy, European Commission), Professor Dieter HELM (Professor of Energy Policy, University of Oxford), Mr. Frank HARRIS (Head of Global LNG Consulting, WoodMackenzie) and Mr. Christophe BROGNAUX (Partner, Boston Consulting Group), are expected to join us as guest speakers.

The working sessions will be preceded on the evening of Sunday, October 8 by a welcoming reception and dinner at the restaurant LaQuincaillerie. A gala cocktail and dinner will take place on the evening of Monday, October 9 at the prestigious EgmontPalace. On the afternoon of Tuesday, October 10, participants will be offered a visit of the Magritte Museum and a guided city center tour. In the evening, a casual dinner will take place at the typical Scheltema restaurant. The 2017 General Assembly will conclude with a visit of the Zeebrugge LNG terminal on Wednesday, October 11.

(For more information regarding the event, please contact the Central-Office at central-office@giignl.org)

BRUSSELS 2017 GENERAL ASSEMBLY

UPCOMING GIIGNL EVENTS

Close-up on…

Over 45 years of existence

78 members

25 countries

GIIGNL IN A NUTSHELL

11

31

36 Europe

Asia

Americas

“It is better to debate a question without settling it than to settle a question without debating it.”

Joseph Joubert

GIIGNL THOUGHT FOR THE MONTH

Des

ign: