Gas Market Dynamics – The Ups and Downs March 11, 2009

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Asia Industrial Production Indices 3 S. Korea

Asia Industrial Production Indices 4 Taiwan S. Korea

Asia Industrial Production Indices 5 Japan Taiwan S. Korea

Asia Industrial Production Indices 6 Asia LNG Asia LNG seasonally adjusted.

LNG Forecast 7 Asia Demand

Recession LNG Forecast 8 Asia Demand

Europe Industrial Production Indices 9 Eurozone

Europe Industrial Production Indices 10 Eurozone Spain

US Industrial Production Index 11

Commodity Price History 12 Indices adjusted by CPI. Recessions

US Gas Rig Count 13 Decline of 480 in 10 Months Decline of 640 in < 6 Months

Henry Hub Japan LNG Japan LNG vs. U.S. Gas Prices 14

Japan Cumulative LNG Cost at Actual and Henry Hub Prices 15 Actual Japan Costs HH Prices

Henry Hub Korea LNG Korea vs. U.S. Natural Gas Prices 16

Korea Cumulative LNG Cost at Actual and Henry Hub Prices 17 Actual Korea Costs HH Prices

Platt’s Asia Daily Spot LNG Japan/Korea Marker (JKM) 18 High Low Forwards for March For April

Henry Hub Europe Pipeline Imports vs. U.S. Natural Gas Prices 19 Europe Pipeline

Europe Cumulative Actual Pipeline Cost and Henry Hub Prices 20 Europe Pipeline Costs HH Prices

Changes in Forward Prices and Forecasts for December

Current Price Forecasts 22

Summary The current economic crisis is leading to a significant reduction in LNG demand in Asia, which may fall below minimum contract quantities. Few if any spot cargo sales will be made to Japan, South Korea, or Taiwan through Europe gas demand will also fall, particularly in Spain, but lagging oil-based pipeline contract prices will continue to support LNG spot prices in Europe and the UK for a few more months. New liquefaction capacity and lower global demand will sharply increase LNG flows to the U.S. this year. Gas prices will be low in the US, but the unprecedented rate that drilling rigs are being laid down means that prices should not be low for long. Absent another oil price bubble North America gas prices should return to the pre-2008 situation of being competitive with prices in Asia and Europe. 23