LNG terminals of tomorrow

1. LNG terminals of tomorrow In search of the right balance between competitiveness and flexibility Jean-Marc Leroy CEO STMFCGaz de France Vice-President Major Infrastructures Division

2. Contents • European LNG market perspectives: stronger competition in the LNG terminals? • How can LNG terminals adapt to this new situation? • Fos Cavaou terminal in this context Main conclusions

3. LNG imports Pipeline imports Domestic production 1. LNG: a role in supply that increases rapidly • EU gas market : increasing dependance of foreign gas supplies • Gas consumption increase (2006-2020: ~2%/year) • Indigineous gas production decrease • Dependance: 40% in 2005 vs 65% in 2020 • LNG : the key issue • Flexibility • Security of supply • Projected growth of LNG share in supply • 2005: 10% • 2020: 27% Source : Global Insight

4. 1. Mediterranean basin: numerous LNG terminals planned • 8 existing • More than • 5 extensions or under construction • 8 in project

5. Contents • European LNG market perspectives: stronger competition in the LNG terminals? • How can LNG terminals adapt to this new situation? • Fos Cavaou terminal in this context Main conclusions

6. 2. What are the key characteristics expected from an LNG terminal? • An ideal location that ensures flexibility • Several LNG routes • Downstream gas market size • Upstream availability and downstream flexibility • Availability • Port quality • Available regasification capacities • Large LNG specifications • Downstream flexibility on send-out • Competitiveness for the whole chain LNG production (~40% of total cost) + shipping (~40%) + + regasification (~20%)

7. 2. Slope depends on send-out 1. Total storage space 3. Tanker arrival threshold: Available tank storage space > tanker volume Delta T: interval between LNG tankers Downstream objective: Low slope for continuous emission 2. LNG terminal operation requires a compromise… Volume Time Upstream objective: minimize Delta T Contradiction ! LNG operation: the right balance between price and flexibility • Key parameters: total storage space, send-out capacity…

8. ... between price and flexibility LNG terminal characteristics fix the relation between price and flexibility… … nevertheless the operator has leeway for optimisation Price Operational rules: Optimization opportunities Availibility / Flexibility

9. Contents • European LNG market perspectives: stronger competition in the LNG terminals? • How can LNG terminals adapt to this new situation? • Fos Cavaou terminal in this context Main conclusions

10. 3. Fos Cavaou terminal characteristics • A new terminal near Marseille and existing Fos terminal • Progress report • 2005: construction start • End 2007: berthing of the first LNG carrier (commissioning) • 2008: start of operation • Terminal characteristics • Annual send-out capacity: 8.25 billion m3 / year • 3 tanks with a capacity of 110,000 m3 each • Berthing facilities: ready for 205,000 m3 LNG tankers • Potential for the future: 800,000 m² site

11. Middle East Atlantic Basin Algeria Egypt Existing Fos Tonkin terminal Fos Cavaou terminal 3. Fos Cavaou: a location that ensures flexibility Several possible LNG routes Port quality • 24-hour access (tide independent) • direct access from sea

12. Conclusions • Competition in LNG terminals will increase • Shippers: reservation capacities • reservation for allowing flexibility • but not necessarily used • opportunities to develop UIOLI rules, secondary market • Consequences for LNG terminals • more variability on operation • Operators will adapt to new conditions accordingly • commercial offer creativity • operational flexibility

13. Thank you for your attention ! Visit our website : www.gnl-cavaou.com