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financing structures for energy supply projects - Focus on LNG

Prospects, issues, and implications of gas exploration in the Eastern Mediterranean Focus on energy developments and commercial dynamics in Cyprus. Prepared by Anastasios Giamouridis, Senior Consultant, Pöyry Management Consulting ( UK) Limited for the

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financing structures for energy supply projects - Focus on LNG

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  1. Prospects, issues, and implications of gas exploration in the Eastern MediterraneanFocus on energy developments and commercial dynamics in Cyprus Prepared by Anastasios Giamouridis, Senior Consultant, Pöyry Management Consulting ( UK) Limited for the “Security of Gas Supply: The Role of Developments in the Mediterranean Region” Malta Energy Conference 2014 10-11 July 2014

  2. financing structures for energy supply projects - Focus on LNG Project Owners from 20% to 100% Shareholder 1 Shareholder 2 Shareholder 3 Shareholder 4 Etc... Equity Equity Equity Equity Loans Loans Loans Loans Completion guarantees • Completion guarantees • Completion guarantees • Completion guarantees LNG Project Project Finance - Lenders from 0% to 80% Export Credit Ag. 1 Export Credit Ag. 2 Export Credit Ag. 3 Export Credit Ag. 4 Etc... Loan guarantees • Loan guarantees • Loan guarantees • Loan guarantees Loans Loans Loans Loans Commercial bank 1 Commercial bank 2 Commercial bank 3 Commercial bank 4 Etc... Loans • Loans • Loans • Loans Multilateral bank 1 Multilateral bank 2 Multilateral bank 3 Multilateral bank 4 Etc... Loans • Loans • Loans • Loans

  3. Financing criteria for energy supply projects - Focus on LNG

  4. Exploration and Gas commercialisation progress so far in Cyprus Blocks 2,3,9,10,11 ( 2nd Round ) Block 12 – Aphrodite field ( 1st Round ) Block 12 – other prospectivity ( 1st Round ) Blocks 1,4,5,6,7,8,13 ( potential 3rd round ) Source: Pöyry Management Consulting

  5. Steps towards gas monetisation after declaration of commerciality * Estimated Aphrodite resources insufficient to proceed on this basis alone - potential solutions Gas discoveries by Noble Energy over and above Aphrodite in its Block 12 license Gas discoveries in the new licenses awarded to Total and/or ENI-KOGAS Joint monetisation of offshore natural gas resources with Israel Oil discoveries ( liquids credits supporting gas economics) • * Reaching a positive FID presupposes • Projected revenues outweigh estimated CAPEX and OPEX by a margin superior to other investment options • The project in question can successfully compete for capital and can secure financing on attractive terms Source: Pöyry Management Consulting

  6. Potential Cyprus gas resources set In regional and eu context Cyprus EEZ Blocks ( speculated ) Aphrodite field * ( discovered but not proved ) * Actual exports from Cyprus on this basis could amount to as much as 70% of Phase 1 of the Southern Corridor Source: BP Statistical Review 2013 and Pöyry Management Consulting

  7. More offshore exploration needed – political risk real but exaggerated Source: Oxford Institute for Energy studies and Pöyry Management Consulting

  8. Exports to be decided on commercial merit or risk cancellation Source: Oxford Institute for Energy studies and Pöyry Management Consulting

  9. Relevance of Cyprus gas to the eu and how to support developments Support uninhibited exploration in internationally-recognised Cyprus EEZ Facilitate decision-making on potential exports on the basis of commercial merit Consider reasonable engagement of European multilateral banks and ECAs as appropriate

  10. Anastasios Giamouridis Email: anastasios.giamouridis@poyry.com Tel.: +44 1865 812 247 (office) / +44 7875 886 152 (mobile)

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