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Gazprom’s Role in Global LNG

Gazprom’s Role in Global LNG. John Hattenberger, LNG Director Gazprom Marketing & Trading Limited February 8, 2006 CERA Week, Houston Atlantic LNG Industry Forum. Gazprom Profile. Market confidence. Dec 2003 Dec 2004 Jan 2006 Market Capitalization $33 bn $68 bn $220 bn.

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Gazprom’s Role in Global LNG

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  1. Gazprom’s Role in Global LNG John Hattenberger, LNG Director Gazprom Marketing & Trading Limited February 8, 2006 CERA Week, Houston Atlantic LNG Industry Forum

  2. Gazprom Profile Market confidence Dec 2003 Dec 2004 Jan 2006 Market Capitalization $33 bn $68 bn $220 bn Russian Federation OAO “Gazprom” 2002 2005 2002 2005 Credit Rating (S&P) BB+ BBB- B+ BB+ Gas: the largest in the world Reserves29 TCM (1,020 TCF) gas 1.87 billion tonnes condensate/oil Production 2004545 BCM (53 BCFD) gas 12 million tonnes condensate/oil Exports 2004193 BCM (18.7 BCFD) gas28 countries

  3. Gas Reserves Position Russia • 75% of world’s gas reserves are held by 10 countries • Russia holds 27%, the highest share • Gazprom holds 16% of world reserves Source: BP Statistical Review of World Energy 2005, Gazprom annual report

  4. Owned Leased Gazprom’s Pipelines in Europe 155,000 km pipeline (95,000 miles) Exports to 21 countries through GazpromExport Supplies over 25% of Europe’s natural gas Reliable supplier for over 30 years

  5. Gazprom LNG Strategy • Gazprom will become: • A leader in the world LNG sector • A major participant in the North American gas market • Capitalize on reserves position, market skills, and pipeline supplies • Partner with major LNG players • Build expertise in the near term • Participate in all elements of the value chain Upstream Liquefaction Regas Shipping Mktg & Trading

  6. Russian LNG to Markets Shtokman LNG Sakhalin 2 LNG Baltic LNG

  7. Shtokman LNG: World-class Resource • Reserves: 106 TCF (3 TCM) • Phase 1: 15 MTPA LNG (20 BCM) • Phase 2: 15 MTPA LNG • Phase 3: 15 MTPA LNG • + local market • Target market: North America • Phase 1 startup: 2010-2012 • Integrated through to gas markets Shtokman Field

  8. Baltic LNG Norway Sweden Baltic Sea Baltic LNG – Unique Opportunity • Gas from the Unified Gas System • 5 MTPA (7 BCM) LNG plant • Target market: North America • Startup: 2009-2010 • Integrated through to gas markets St. Petersburg

  9. Near Term LNG Plan 2006-2010 • Spot cargo trades • Pipeline gas for LNG swaps • Market experience, relationships • Regas capacity, LNG supplies • Establish gas marketing and trading in US

  10. Pipeline gas from Gazprom LNG Pipe Pipeline Gas for LNG Swaps • Producing “Virtual LNG” from Russian pipeline gas • A unique role for Gazprom LNG from existing supply sources

  11. BCM MTPA Belgium UK 80 60 France Supplies Spot cargoes from 70 US Spot 60 45 Spain 50 30 40 Qatar Nigeria Trinidad Contracted 30 Oman To 15 20 Egypt 10 Algeria Malaysia 0 0 Australia 2005 Atlantic Basin LNG Source: Gazprom analysis - January to November only

  12. 2005 Atlantic Basin LNG Regas Terminal Utilization 40 Capacity 30 Imports BCM 20 10 0 US UK Italy Spain France Greece Turkey Belgium Portugal Dominican Puerto Rico Rep. Source: Gazprom analysis - January to November only

  13. Atlantic Basin Market Forces • Demand: Strong US, UK, Europe • Seasonal draws to the Far East • Regas: Plentiful, developing fast • Supplies: Short, but more flexibility • Ships: Full order books • Prices: Strong and transparent, not (yet) converging

  14. Atlantic Basin Price Signals 18 UK NBP 16 US Henry Hub US to UK Europe gas & LNG, oil index 14 12 $/MM BTU UK to US 10 Europe to US 8 6 4 2006 2007 2008 Based on forward curves 10 January 2006

  15. Gazprom LNG Strategy 2005 2010 2015 Shtokman LNG Phases 2-3 Shtokman LNG Phase 1 Baltic LNG LNG marketing and trading Sakhalin LNG Short Term Mid Term Long Term

  16. US Norway Russia Algeria Libya Brunei Egypt Abu Dhabi Qatar Trinidad Indonesia Venezuela Nigeria Peru Iran Oman 1990 Eq Guinea 2004 Yemen Angola Australia Malaysia 2015 World LNG Exports

  17. Conclusions • LNG: attractive for Gazprom • New markets • Strong pricing • Gazprom has the resources • Gas reserves, marketing skills, pipeline supplies • Reliability, international reputation • Strong balance sheet • Major LNG development efforts ongoing • Marketing and trading already underway

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