1. The Changing LNG Paradigm 2015-20 Gastech 2014 March 25 Peter Thompson © Gas Strategies 20141

2. 3 Events, 3 Continents, 3 Months, One Question: How is North American LNG reshaping the industry? − Houston, 12/12/13 © Gas Strategies 20142 − London, 26/11/13 − Singapore, 6/2/14

3. Our perspective – and our clients © Gas Strategies 20143

4. US LNG and the potential to change global LNG © Gas Strategies 20144 Source: IEA Source: Gas Strategies Themes 1.The disaggregated Value Chain 2.Acceleration and Disruption 3.Approach to financing 4.The effect on Global Trade Source: Gas Strategies

5. A disaggregated value chain © Gas Strategies 20145 E&P led investors (IOCs etc) Integrated Simultaneous Project Development Gas cost driven by production economics Plant a means of monetising gas Gas producers already producing Fragmented infrastructure – much pre-existing Gas cost local market-price driven Liquefaction plant an infrastructure play Offtaker upstream midstream downstream

6. A disaggregated value chain © Gas Strategies 20146 “Typical” LNG E&P led investors (IOCs etc) Integrated Simultaneous Project Development Gas cost driven by production economics Plant a means of monetising gas Utility and other market-led buyers Aggregators Price linked to end-market Some destination restriction DES or FOB US LNG Gas producers already producing Fragmented infrastructure – much pre-existing Gas cost local market-price driven Liquefaction plant an infrastructure play Aggregators Smaller volumes per contract? New entrants seeking volume FOB, part of the flexible pool? upstream midstream downstream

7. Disruption and Acceleration Acceleration − Of new technology and contractors − Of entry for new buyers and traders – but do they have the capability and organisation? − Of access to volume for niche buyers and additive value chains? © Gas Strategies 20147 Disruption − To market and marketing for pre-FID projects − To price (LT contracts and ST) − Of existing contract prices via PR?

8. Finance: the choke on US expansion? © Gas Strategies 20148 − How do developers and financiers assess market risk? Which markets? − Offtakers who do not yet have significant LNG experience? − Is access to NBP an effective mitigant to price risk? Market risks Contractual risks Operational risks − How robust and aligned are the contracts along the value chain? − Can developers really insulate themselves from market risk? − What happens if offtakers default or walk away from a project? − Management of capacity holders, sometimes within a single train − Inter-toller arrangements − Responsibility for complete value chain Construction risks − Equity investors taking construction risk: is it understood? − New Contractors and new technology: how financeable and reliable?

9. Findings and Conclusions − Effect on Global Trade? − Uncertainty prevails − Perception of big opportunity – especially for new entrants − Finance is key − Ripples around the world © Gas Strategies 20149

10. What does it mean … For developers? − Structuring for finance and educating stakeholders − Operating challenges along the value chain For offtakers? − Global, and complex, risk profile − Operational / management requirement to deliver the value chain For financiers? − Recognise the different risk profile of US LNG and invest on that basis − Be sure of mitigants © Gas Strategies 201410