Evolution of the Asian LNG Industry

ExxonMobil Gas & Power Marketing 30 years experience With our partners: »Supply about 20% of world’s LNG today »Arun 6.2 MTA, Qatar 14.3 MTA Qatar primary growth vehicle Financial Strength; Excellence in Technology; Mega-Project Skills 30 years experience With our partners: »Supply about 20% of world’s LNG today »Arun 6.2 MTA, Qatar 14.3 MTA Qatar primary growth vehicle Financial Strength; Excellence in Technology; Mega-Project Skills Active development Producing or under construction North America Europe Qatar Asia Arun Gorgon Nigeria Angola

3 LNG Value Chain All links of the chain are capital intensive businesses Chain is defined by interdependence of projects (shared risks), held together by the commercial structure ~ $ bn~ $3 bn~$0.1s bn ~ $0.5bn ~ $2 bn LNG Receiving Terminal Buying & Receiving Gas LNG Gas Distribution Shipping Gas Field Development Gas Liquefaction Upstream Projects Power Generation TownGas End-Users

4 Characteristics of Asian LNG Industry Japan, Korea and Taiwan are historic major LNG importers Durable long-term contracts secured competitive supply and supported investments and commitments High credit-rating buyers / sellers; financing available Importers control own infrastructure Sales predominantly on CIF basis

5 LNG Business in Transition Worldwide growing LNG demand Increasingly remote and technically challenging supply sources; increased scale Financial strength important throughout value chain Long-term contracts remain crucial to underpin upstream investments

6 LNG Demand Japan, Korea, Taiwan China, India Rest of World MT Source: PFC Energy

7 Changes in LNG Market Deregulation, interfuel competition, and economic growth in core markets impacting: »Volume flexibility »Contract term Spot/short-term sales increasing FOB sales becoming more common ‘Liquid’ market access in U.K. and U.S.

8 Regulation and Deregulation Legislative/regulatory principles important to investors: »Stability of legal and fiscal frameworks »Equitable laws, regulations and dispute resolution »No artificial infrastructure obstacles »No import restrictions »Sanctity of contracts »Freedom of commercial arrangements and structures »Market-based, non-subsidized commodity pricing

9 Changes in LNG Technology Increased capital intensity  developers need: »Large project development capability »Financial strength and capital market access »Long-term investment certainty Liquefaction Shipping / Receiving Field Development  Production technology advances  Increasing train size  Larger ships and terminals

10 New LNG Import Terminal Developments and Proposals 2001 LNG Demand 2010 LNG Demand Global Integration of LNG Markets

11 Requirements for Continued Growth Economic growth Balanced transition to liberalized market environment »Preserve ‘success factors’ »Consultation through Value Chain Stable framework to foster commercial freedom »International competitive fiscal regimes »Proper regulatory environment »Free market based pricing and contract terms

12 Summary Significant LNG demand growth can be met by development of competitive supplies Long-term investment certainty and risk reflective returns are required Preserve ‘success factors’ and carefully implement change Regulatory environment and successful track record are important