The conditions required to establish natural gas infrastructures

1. The conditions required to establish natural gas infrastructures Presentation by Mr. Robert Tessier, President and Chief Executive Officer CAMPUT 2005 May 2, 2005

2. A tensely-balanced North American gas market TCF Past forecasts 30 TOTAL DEMAND U.S. & CANADA 25 SUPPLY - CANADA 20 15 $ U.S. SUPPLY - U.S. 8 6 10 4 PRICE OF GAS, $/MMBTU 2 5 0 0 1990 1995 2000 1985

3. Liquefied natural gas: a diversification opportunity for the Northeast Proposed terminals Existing terminals

4. Two key development factors Time • Development periods of 5 to 7 years are necessary • A sector where just in time is impracticable • Better be too soon than too late Capital • New infrastructure requires major capital • The number of players is limited • An investment environment with the least uncertainty is favoured

5. Leveraging our geographic advantage Proposed terminals Existing terminals Near the coast Near the markets

6. Three issues at stake • Location of infrastructure • Regulatory framework • Long-term commitments

7. The location: concept phase OPTION 1 OPTION 2 OPTION 3 OPTION 4 Harbor-indutrial zone Options Lévis Beaumont

8. Challenges of the preliminary consultation • The promoter must consult the public very early in the formulation of the project • The site studies are still in their infancy • The information on the project is general • The community’s questions quickly become specific • The promoter can’t have the answers • The public is unhappy and suspicious • An environment conducive to disinformation • The dangers of slip-ups are great

9. Location: when we have a chance to work

10. Two main conclusions • Governments and industry must raise public awareness about the crucial importance of energy infrastructure • A long-term effort • The regulatory agencies must be involved from the very beginning in the consultation process • Objective third party to explain the entire regulatory review process (environment, safety, etc.) • Meetings with the public and the key entities • (e.g.: city council)

11. Regulatory framework • The inherent project development risks are known and accepted by the promoters • The multiplicity of overlapping government regulations generates additional uncertainty • Development harmonization solutions: • Structuring of the regulatory procedures • Smart regulation • Still to be done : simplify the regulatory framework • Precise rules, known from the outset

12. Long-term commitments • Infrastructure = $$$ = Long-term horizon • The past 20 years: • An increasingly efficient, open and deregulated industry • Proliferation of players, reign of the spot market • Increasingly complex financial market • Recent developments • Collapse of Enron et al • Limited number of players with acceptable credit ratings • Entry of the banks: financial and physical markets

13. GNL: Long term integreted players Natural gas production Liquefaction Shipping Import Terminal Other LDCs and market players 0,50 $ - 1,00 $ 0,25 $ - 1,00 $ 0,25 $ - 0,50 $

14. Conclusion Long term commitments from every players of the LNG chain, including LDCs, are a must.