1. ENERGY OUTLOOK: CONCLUSIONS AND RECOMMENDATIONS Benjamin Schlesinger, Ph.D. Benjamin Schlesinger and Associates, Inc. (BSA) Bethesda, Maryland Black Sea Energy Conference Bucharest – April 3-4, 2006 Romanian Energy Program, Phase III (REP3)

2. Agenda 1. Market overview 2. International trade 3. Competitive issues/challenges 4. Global dimensions 5. Conclusions.

3. About BSA… Independent consultants on energy economics, supply, contracting, pricing, rate design, system costs, regulatory and lender risks worldwide –Market research, energy analysis and forecasting –Due diligence for commercial banks on market risks for 10 major new LNG projects; fuel risks for 105 power projects, and gas storage and pipeline financings –Expert witness on gas markets, pricing, rates, market power, cost of capital, contract issues in 16 jurisdictions In the 1990s, BSA also provided initial consultation and set-up expertise to the United Nations ECE Gas Centre..

4. World Oil Reserves Source: Energy and Environmental Analysis 2006, from Oil & Gas Journal.

5. World Gas Reserves Source: Energy and Environmental Analysis 2006, from Oil & Gas Journal.

6. Commodity gas and oil prices are increasingly aligned. Source: Benjamin Schlesinger and Associates, Inc. 2006, from NYMEX at March 28, 2006, Platts.

7. High prices are forcing US industries off gas. Source: Benjamin Schlesinger and Associates, Inc. 2006, from EIA.

8. 2005 hurricanes damaged US oil and gas production. Henry Hub Price * (right axis) Shut In Production (left axis) Forecast Bcf/d $/Mcf Source: EIA Short Term Outlook 1/2006; note: Henry Hub trading suspended 9/23-10/6.

9. Most leading gas reserve holders will export LNG. Source: Benjamin Schlesinger and Associates, Inc. 2005, from Oil & Gas Journal.

10. International gas trading is country-concentrated. Gas Exporters (Tcf/year) Gas Exporters (Tcf/year) Source: Benjamin Schlesinger and Associates, Inc. 2005, from EIA, 2002 data.

11. Growing LNG trading in the Atlantic… Source: Benjamin Schlesinger and Associates, Inc. 2000-2006.

12. Has forced gas price signals toward the east… Source: Benjamin Schlesinger and Associates, Inc. 2000-2006.

13. But will also force price signals to the west as well… Source: Benjamin Schlesinger and Associates, Inc. 2000-2006.

14. LNG tanker flexibility will capture arbitrage. Source: Benjamin Schlesinger and Associates, Inc. 2000-2006.

15. Oil and natural gas prices will merge, even in commodity markets. Source: Benjamin Schlesinger and Associates, Inc. 2006, NYMEX at March 28, 2006. Oil, $45/ barrel Oil, $35/ barrel NYMEX gas Gas, forecast range

16. World gas trade model is a possible solution. Source: Altos Management Partners 2005.

17. Conclusions, recommendations

18. Benjamin Schlesinger and Associates, Inc. The Bethesda Gateway 7201 Wisconsin Avenue, Suite 740 Bethesda, MD 20814 Phone: (301) 951-7266 Fax: (301) 951-3381 Visit us at www.BSAenergy.com