SKANGASS.FI

THE OPPORTUNITIES OF LNG TOMMY MATTILA

7.6.2014

Skangass is part of Gasum Group ─ the leading company in the nordic LNG market

• Skangass was established in 2007. • In Finland Gasum LNG Oy:s has changed name to Skangass Oy, the

company started to operate in the spring of 2014 after Gasum acquired the majority of the Skangass company.

• Skangass sells, markets and distributes competitive LNG. The company is also developing the LNG infrastructure for customers outside the gas network, like industry, maritime and transport in Nordic market

• In 2013 a turnover was EUR145 million, 44 employees

51% 49%

Skangass – safety and quality

• Since the establishment Skangass have specialized business according to the necessity for quality, efficiency, safety and environment.

• Requirements from internal and external stakeholders as authorities, local society, customers and own employees continuously contribute to the fact that HSE&Q (health, safety, environment and quality) continues to be a natural part of our operation and our deliveries.

• Skangass is certified according to ISO 9001:2008. • Skangass provides sustainable solutions that aim at a

cleaner local environment, cleaner Baltic Sea and cleaner climate.

The natural gas network in the Nordics The gas net work in the Nordics is very limited. Increasing emission regulations - Industry - Marine - Traffic

The same infrastructure can be used for delivering biogas.

Conditions for developing the LNG market

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BENEFITS OF

LIQUEFIED NATURAL GAS

The role of LNG in Finland and the Nordic countries

Use of natural gas outside the gas grid - Industrial use, stricter emission regulations - Traffic, passenger cars, buses, trucks - Back up for Biogas use - Maritime fuel, stricter emission regulations

Injection to gas grid (Finland) - diversify gas sourcing - improve security of supply - increase consumption peak management - opening of the gas market - integration of the gas market

Clean liquefied natural gas (LNG) • LNG is produced by cooling natural

gas down to -163 °C. • In the liquid state the volume is reduced

to 1/600 of the gaseous volume. • LNG has the same properties as the

other natural energy gases, it mainly contains methane (CH4).

• LNG is an odorless, tasteless, non-toxic and non-corrosive gas.

• The energy content of 310 l of LNG corresponds to that of 1 barrel (159 l) of oil.

• LNG can be delivered outside the gas network.

Industry Natural gas as a an energy source • Versatile • Energy efficient • Low emissions

LNG enables use outside the natural gas grid

• Energy production, heat, steam and

electricity • Processes • Feed stock

Substitutes for example oil and LPG in industry applications Increasing emission regulations, IED and PIPO

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• CNG (compressed natural gas) for passenger cars, in Finland 22 stations. LNG enables CNG filling stations out side the natural gas grid.

• LNG for trucks and heavy duty. Increasing emission rules, EURO VI

• Sweden leading in the Nordics with LNG/L- CNG filling stations. Increasing heavily in US, Holland and UK. In Finland first truck is now on the road

• The same LNG/L-CNG infrastructure can be used for distributing biogas

• EU directive for alternative fuels, targets for gas infrastructure by 2025

• CNG filling stations each 150 km • LNG filling stations each 400 km

Traffic sector LNG/L-CNG filling stations

New limitations for emissions

Source: Wärtsilä

Why ? LNG is the cleanest alternative

LNG full fills all coming emission regulations as such with out any extra systems.

• LNG is sulpha free. IMO and EU directive limits the sulpha to 0,1% from 1.1.2015

• NOx reduction 85-90%. Reduction limit for new buildings 80% from 2021 (TIER III)

• CO2: EEDI index from 1.1.2013. EU and IMO is planning for more measures to reduce CO2.

• Particles: reduction of PM emissions.

No oil spill risk

Bio-LNG LBG possibilities • Biogas and natural gas both consists of

methane.

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SOx NOx Particles CO2

HFO 1S LNG

Emissions LNG vs Heavy Fuel Oil

The first LNG bunkering in the Baltics

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Gasum made the first LNG bunkering in Finland in December 2012. Bunkering 15 truck loads to M/S Viking Grace for testing.

Finnish authorities TUKES and TRAFI participated in the first bunkering.

• Safety and risk assessments

• Instructions for exceptional situations

• Training sessions

• Bunkering instructions and procedures

• Check lists

• Communication

• Naming of responsible persons

Gasum has won the contract for LNG deliveries to the Finnish coast guard, the vessel will be ready in spring 2014. Bunkering from trucks.

The new ice breaker will also be LNG fuelled, to be delivered by the end of 2015.

Why ? LNG is competitive

The price development of LNG is foreseen to be more stable than that of oil. Long term competitiveness.

• Growing ”large scale LNG” in Europe • More gas reserves than oil, shale gas

The LNG supply chain is more expensive than that of oil. Especially in the start up phase when the volumes are small.

Building the infrastructure is key

• is LNG available ? • what is the price of LNG ?

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Marine Gasoil LNG Heavy Fuel Oil + Scrubber +CAT

(EUR/MWh) delivered

LNG PRODUCTION, TERMINALS AND PROJECTS

LNG for maritime and road transport and industrial use.

Skangass LNG infrastructure

GÄVLE Terminal • 30 000 m³

storage capacity

• (planned)

PORI Terminal • 30 000 m³

storage capacity (planned)

• Estimated implementation 2016

PORVOO Production plant • 20 kilotonnes

production capacity

• 2 000 m³ storage capacity

• Started 2010

ØRA Terminal • 6 500 m³

storage capacity

• Started 2011

RISAVIKA Production plant in Lyse’s ownership • 300 kilotonnes

production capacity • 30 000 m³ storage

capacity • Started 2011

LYSEKIL Terminal • 30 000 m³ storage

capacity • Estimated

implentation summer 2014

TORNIO Terminal • 50 000 m³ storage

capacity (planned) • Estimated

implementation 2017 • (share of cooperation

ManGa LNG Oy)

LNG production since 1996

Porvoo, Finland

Risavika, Norway

The first LNG terminal in Finland ─ Pori, Tahkoluoto

• The investment decision has not yet been made. Company has applied for investment funds for the LNG terminal from the Ministry of Employment and the Economy.

• The terminal is expected to be completed in the fall of 2016.

• The construction project will employ an estimated 250 full-time equivalent workers.

• After its completion the terminal will directly employ 10 people and indirectly 50 more.

• Storage capacity 30 000 m3

• Truck loading, gas pipeline (12 km) and reloading/bunkering at the terminal

LNG summary – cleanly with natural energy gas

• Skangass is the leading company in the Nordic LNG market, part of Gasum Group.

• Strategic goal is to increase LNG supply and use in industry and in road and maritime transport - LNG will become a major fuel for shipping, it is only a question of when

• The emission rules will get stricter – natural gas is the cleanest fossil fuel

• Gas reserves are vast and increasing infrastructure will ensure competitiveness

• The (commercial) risk of choosing LNG is considered high – but what is the risk of not considering LNG ?

Oil or gas ?

The market leader for LNG-based energy solutions