14.09.2011

2nd Annual Gazprom Global LNG Seminar

Swissotel Krasnye Holmy, Moscow

Small Scale LNG: An Emerging Opportunity

Igor Maynitskiy, Gazprom Export

14.09.2011

Small Scale LNG Working Group

Supply Sources Marketing

Small

Scale LNG Alternative

Supply

LNG

Bunkering NGV

(CNG/LCNG/LNG)

Igor Maynitskiy

Sergei Komlev

Elena Gribinichenko

Yegor Khokhar

Gazprom Export

Tatiana Fayzullina

Fred Smits

Pavel Smotritsky

Anna Polozova

GGLNG and GMT

Singapore

David Graebe

Alexandre Bouchon

Hartmut Shult

GMT France &

Gazprom Germania

Support from Pace Global Energy Services

Small Scale LNG

Development

Eugene Pronin

OAO Gazprom

14.09.2011

What are Small Scale LNG Markets?

Why Small Scale LNG?

• New demand for gas expected to be hundreds of Bcma globally

• LNG fuel for Bunkering and NGV is cost effective and cleaner

• Few challenges to supplying LNG to Off-grid customers

• Baltic/North Sea bunkering opportunity is accessible to Gazprom

Small Scale LNG markets

LNG fueled ship LNG fueled truck Off-grid customers

14.09.2011

LNGV & LNG Bunkering Global Demand

Potential (2030)

North

America

South

America

Mediterranean

LNG Bunkering demand

Total Bunkering and NGV demand could be 345 Bcma

Baltic/

North

Seas

NGV demand

14.09.2011

Potential Global Demand for LNG Bunkering

Growth slow due to lack of availability of

Small Scale LNG

0

10

20

30

40

50

60

70

80

90

2015 2018 2021 2024 2027 2030

MM

TA

Pace Global Estimations

Global demand European demand

CERA Estimations

Global demand

Growth rate driven by availability of Small Scale LNG

Demand growth fast if LNG is

made available earlier

14.09.2011

The Prize at Stake

SSLNG is sold at premium prices

0

5

10

15

20

25

30

35

40

45

50

50 100 150 200

LNG

pri

ce in

$/m

mb

tu

Brent in $/bbl

Into Ship Price as Brent Formula (Price is higher in ports such as Gothenburg or

Copenhagen)

Ferries

Cruise

RoRo

Container

Oil Price Parity

0

5

10

15

20

25

30

35

апр.09 окт.09 май.10 ноя.10

LNG

Pri

ce in

$/m

mb

tu

Historic into Truck Price in France (Includes 30% discount to diesel + tax benefit)

Gazole

LNG equivalent for NGVs

JKM

14.09.2011

Growth of VLNG – Heavy Duty Transport & LCNG stations

Truck Companies – Ready to produce LNG vehicles

The lack of infrastructure and supply – main problem for

development

High potential European countries

Longer term potential countries

European NGV Market Scenarios 2030

European NGV

Development

Scenarios

2030

CNG LNG Total

Market

share* Bcma

Market

share* Bcma Bcma

High-case 10% 50 20% 30 80

Mid-case 6% 30 8,5% 13 43

Low-case 3,5% 18 5% 7 25

Europe 2010: 8.3 Bcma

European demand for NGV fuel could reach 80 Bcma by 2030

Competitor Activities

“Mercedes-Benz Nederland together with German transportation company Vos Logistics, has taken the initiative to enable trucks to run on environmentally friendly LNG”

Polish PGNiG is developing LNG regas …

to diversify its sources of natural gas to their

off-grid customers

Competitors are on the watsh

“We are investing in a

design for an LNG bunker

barge”

14.09.2011

Engaging with potential LNG Bunkering and NGV

customers/partners

Participation in The North European LNG Infrastructure

Project

Participation in LNG Bunkering Joint Industry Project

(Singapore)

Active development of market entry for LNG as fuel for

NGVs and Bunkering (SSLNG Working Group)

200+ CNG stations in Russia + 3 CNG stations in Europe

with significant growth planned

“Blue Corridor” project aimed at realizing international transit

routes based on CNG + LNG

Actively shaping the future of NGV markets through national

+ international co-operation

Gazprom Group’s activities

14.09.2011 14.09.2011

Leningrad obl.

Plants

Kaliningrad

Plant

Consumption of Small-Scale LNG by Off-Grid Customers

(2)

(1)

(3)

(4)

t/y

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

Poland (1) Finland (2) Germany (3) Baltic region (4)

at present by 2015

Rapid LNG consumption by Off-Grid Customers expected

High potential European countries

Longer term potential countries

Existing market

14.09.2011

Expanding Gazprom Market Reach

Gazprom Equity Gas is a Key Competitive Advantage in Capturing Market Share

We need to think bigger about Small Scale LNG

Baumgarten LNG plant

Target market area

0

20

40

60

80

100

120

140

2010 2011 2012 2013 2014 2015 2016

Expected production capacity in Russia

kton

Prefered production LNG locations

Planned Supply vs. Potential Demand

14.09.2011

Developing Small Scale LNG for Gazprom

Capturing the Market

Expand Globally

• Develop Russian liquefaction plants to

supply Baltic and North Seas

• Compliment, as needed, with LNG

supply from third parties

• Participate in and promote

infrastructure development

Build Supply Infrastructure

• Market development research

• Potential off-grid customers search

• Additional opportunities for

Gazprom to enter the market in the

near future

Analyze Markets

• Develop strategy that positions

Gazprom for accelerated market entry • Participate in pilot projects in

Europe

• Sign non-binding agreements with

potential clients

• Start with Russian coastal markets

• Baltic and North Sea

• Black Sea

• Expand market globally

• Mediterranean Sea

• Asia Pacific

• Latin America

Russian LNG required for successful entry into SSLNG market