U.S. Waterborne LPG Imports When Will the Trickle Become a Flood?

1. U.S. Waterborne LPG Imports When Will the Trickle Become a Flood? knowledge to bridge the gap presented November 2007Petrochemical Feedstock Association Annual Meeting

2. Will We Be Able to Walk from Houstonto West Africa on the decks of LPG Vessels? Petral Worldwide, Inc. knowledge to bridge the gap

3. when will the tricklebecome a flood? 2008? 2009? 2010? 2012? 2003? Petral Worldwide, Inc. knowledge to bridge the gap

4. Gulf Coast Waterborne LPG Importstrends: summer & annual average Petral Worldwide, Inc. knowledge to bridge the gap data source: EIA Petroleum Supply Annual

5. Why Do We Care(?) aboutWaterborne LPG Imports? • Capturing associated gas implies large LPG recovery volumes • Ethylene industry feedstock flexibility: Europe versus U.S. Gulf Coast • Houston Ship Channel vessel handling • Mont Belvieu storage & distribution • How Much is a “Flood”? Petral Worldwide, Inc. knowledge to bridge the gap

6. LNG liquefaction plant design design of LNG import terminals International gas pipeline projects Qatar Dolphin Iran to India & Pakistan Russia to Europe (NEGP & South Stream) Turkey to Austria (Nabucco) Trans Sahara PL Algeria & Libya to Europe (Medgaz) Gas-to-liquids (GTL) Qatar -- Pearl Petrochemicals ammonia methanol LNG gets all the Attention Petral Worldwide, Inc. knowledge to bridge the gap

7. North Sea North Africa Algeria Egypt Libya West Africa Nigeria Angola Equitoreal Guinea Middle East Qatar Iran Where Will We See LPG Supply Development for the Atlantic Basin? Petral Worldwide, Inc. knowledge to bridge the gap

8. LNG Liquefaction Capacityprojects under construction • 14 projects are due to come on stream in 2008 & 2009 • 6 are in the Middle East • 1 is in Nigeria & 1 is in Peru • 13 projects are due on stream in 2010 & 2011 • 7 are in Africa • 4 are in the Middle East Petral Worldwide, Inc. knowledge to bridge the gap data source: PWI research

9. Natural Gas Pipelinesprojects under construction • NEGP • Russia to Germany • 1st gas due in 2010 with pl capacity of 2.7 bcfd expanding to 5.0 bcfd in 2012 • Nabucco • Turkey to Europe • 1st gas due in 2012 with pl capacity of 3.4 bcfd • South Stream • Russia to southern Europe • 2.9 bcfd capacity • Politics likely to cause project delays • Indo-Iranian Gas PL • South Pars field • 5.8 bcfd capacity Petral Worldwide, Inc. knowledge to bridge the gap data source: PWI research

10. New LPG Productionfrom Atlantic Basin gas projects • 2008-2009 • LNG liquefaction plants driver new LPG production • LNG projects are concentrated in Qatar, Iran, & Yemen • 2010-2012 • LNG liquefaction plants remain the predominant driver for new LPG supply • LNG projects in West Africa will become important drivers for new LPG supply • Geopolitics may delay Russian & Iranian pipeline projects Petral Worldwide, Inc. knowledge to bridge the gap data source: PWI research & estimates

11. U.S. Waterborne LPG Importsfrom all sources • Base Load Imports • Algeria & North Sea are the dominant supply sources • Imports are seasonal with peak volumes during the second and third quarter • Incremental Imports • West Africa, Libya, Egypt emerging as important supply sources • Imports may become less seasonal • incremental imports are about 100 mbpd or one-third to one-half of projected supply growth in the Atlantic Basin Petral Worldwide, Inc. knowledge to bridge the gap data source: EIA for historic data // PWI for forecasts

12. Texas Gulf Coast 2004 -- 155 mbpd 2005 -- 213 mbpd 2006 -- 237 mbpd in August 2006, 15 ships unloaded in through HSC terminals & 17 ships unloaded through all TXGC terminals Louisiana 2004 – 47 mbpd 2005 – 92 mbpd 2006 – 32 mbpd Combined Volume 2004 -- 203 mbpd 2005 -- 305 mbpd 2006 -- 269 mbpd Peak Month LPG Imports Petral Worldwide, Inc. knowledge to bridge the gap data source: Waterborne LPG Report

13. Ships & Terminals Instantaneous unloading capacity at the terminals Downtime for samples & quality control Ship Channel traffic & transit time Homeland Security regulations Weather related downtime tropical storms foggy weather Mont Belvieu limits Salt cavern receiving rate constraints Brine pond constraints Houston Ship Channelterminal capacity constraints PWI estimates HSC LPG terminals have an import capacity of 650-700 mbpd; estimates do not include downtime due to weather, ship traffic, or brine ponds Petral Worldwide, Inc. knowledge to bridge the gap

14. Waterborne LPG Importsbasis for forecast forecasts are based on demonstrated market capability to absorb supply without significant disruption Petral Worldwide, Inc. knowledge to bridge the gap

15. Propane & N Butanepercent of U.S. ethylene plant fresh feed • Ethylene Feedstock Market • trends in share of fresh feed help to determine when the trickle becomes a flood • based on peak quarterly shares of fresh feed for propane and n butane (1995-2006), combined share of propane and butane has not exceeded 33% • waterborne imports have the potential to significantly exceed historic peak share of the U.S. ethylene feedslate after 2010 Petral Worldwide, Inc. knowledge to bridge the gap data source: PWI surveys & forecasts

16. when will the tricklebecome a flood? • Increased waterborne imports may not become a “flood” if significant market development in other regions occurs • U.S. Gulf Coast ethylene producers are not likely to absorb twice as much as forecast during 2010-2012 • impact on co-product volumes • terminal & distribution system constraints • As LPG prices fall in the international market, market adjustments will occur • LPG shipments from North Africa into the Asia/Pacific region • development of new ethylene feedstock markets in Asia/Pacific • reduced LPG recovery at selected LNG liquefaction plants and increased LNG shipment to high BTU markets like Japan Petral Worldwide, Inc. knowledge to bridge the gap