LAREVOLUCIÓNDELGASNATURAL

11April2019

Menelaos (Mel)YdreosExecutiveDirector,PublicAffairs

PresentationAgenda

2018Demand,SupplyandInfrastructureDevelopments

IGU2019WorldLNGReport

SecurityofSupplyandFlexibility

Transportation– CNG,LNG&LNGBunkering

Top Observations from 2018 Demand & Prices

Henry Hub annual 2018 average price closes at

$3.16 mmBt, up from $2.99 mmBtu in 2017;

Currently at ~ $2.73 mmBtu

LNG Freight rates reach a record high above $195,000 USD/day in November.

Currently at ~ $ 70,000 USD/day

Chinese demand jumped 150 percent between 2017 and 2018, over half of the global gas demand increase

Asian LNG Spot prices spike to a 4-year high for

the October 2018 delivery in Asia at $11.40 per

mmBtu;

Currently at ~ $4.50 mmBtu

European Monthly Spot price increases in 2018 and peaks at

$9.52 mmBtu in September;

Currently at ~ $4.50 mmBtu

Asia leads global LNG demand, with Japan, S. Korea, China importing over half of the world’s LNG.

China becomes the largest natural gas importer.

Prelude, the world’s largest FLNG platform becomes

operational, making Australia the largest LNG exporter,

surpassing Qatar for the first time.

The US nearly doubled its LNG

exports, well on the way to reaching 60

mmtpa by the end of 2019

Yamal LNG reached full capacity (16.5 mmtpa) in December, under budget

and well ahead of schedule.

Progress on major pipeline projects: TAP, TANAP scheduled for 2020; Power of Siberia –near complete; Nordstream 2 –scheduled for end of 2019.

InSeptemberChinaimposesa10%tariff onUSLNG.

First major LNG FID, since 2015, was taken – LNG Canada.

Top Observations from 2018 Supply & Infrastructure

2019 World LNG Report www.igu.org/LNG

LNG Trade sets a Record for the Fifth Consecutive Year

Joined the club ofLNG exporterswith the world’ssecond floatingliquefaction project

Cameroon

Two new markets beganreceiving LNG supply in 2018

Bangladeshand Panama

LNG import growth in 2018 was driven by China and South Korea,the world’s second- and third-largest LNG importers.

of the increasein net trade

Represented nearly

80%Combinedincrementalgrowth of 22.2MT

Australia led allexporters in

incrementalgrowth

Increased by

28.2MTSetting a newannual record of

316.5MT

5thconsecutive yearof incremental growth

3rdlargest annualincrease ever(behind only 2010and 2017)

LNG Trade sets a Record for the Fifth Consecutive Year

Spot charter rates for a modernfuel-efficient tanker averaged$76,000/day for the firsttwo months of the year, an

81% YOY increase

Spot charter rates in Q4 2018peaked at an all-time high of

$195,500/dayand averaged

$150,000/day

This was short-lived and spot charterrates had returned to around

$74,000/dayby January 2019

Spot charter rates tapered offduring the spring and summermonths, averaging

$56,000/day

525LNG VesselsAt end-2018

5,119Trade voyagesIn 2018

Global LNG Fleet

+53Conventional carriers added

to the global fleet in 2018

Propulsion systems

41%Active vessels with DFDE/TFDE,

ME-GI, or XDF propulsion systems

Charter Market

Steam $53,400TFDE/DFDE $85,500

Average spot charter rateper day in 2018

Orderbook Growth

+52Conventional carriers

ordered in 2017

Growth in LNG Trade Enhances Security of Supply

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Growth in LNG Trade Enhances Security of Supply

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Growth in Trade Enhances Security of Supply

EnablingGasSupplySecuritythroughthedevelopmentofenhancednetworksandinfrastructure,moreflexiblecommercial

models,andnewmodularaccess-enablingtechnologies

Critical Elements for Enhancement of Security of Supply:

• Increasing of Gas Supply Globally

• Sufficient availability and supply orders for LNG carrying vessels

• Sufficient availability of storage and infrastructure connectivity

• Continued development of midstream secondary markets and flexibility of contracting

• Prudent Investment Policies and Long-term Planning Decisions

Innovation and Growth in Trade Enhances Security of SupplySupportstheintegrationofdailyandseasonalrenewables

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100000

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1000000

Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18

TemperatureLNGimportstn/month CoolingsecurityinKuwait

AtlantcBasin MiddleEast PacificBasin Temperature◦C

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0.50

1.00

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2.00

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3.00

3.50

4.00

4.50

Demand(TWh/d) HeatingsecurityintheUK

Powerdemand Gasheatingdemand

Source:NationalGrid Source:IHSMarkit

Innovation and Growth in Trade Enhances Security of Supply

Supportstheintegrationofdailyandseasonalrenewables

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LNGse

ndoutm

cm/h

Powergen

eration(GWh)

SupportsdailypowergenerationinSpain

Wind Solar LNGsendout(nm3)

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50,000

100,000

150,000

200,000

250,000

300,000

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400,000

450,000

2009

2010

2011

2012

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2014

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2016

LNGim

ports(mcm

)

Powergen

eration(M

Wh)

BacksupseasonalhydroinBrazil

LNGimports Gasgeneration Hydrogeneration

Source:IHSMarkit,WeatherChannelSource:Naturgy,Enagas

Unpredictable Demand Impacts Reliability, Drives Hidden Costs300MW Chasing Wind – Location: Western US Unit: Coal-Fired (CE)

Friday Saturday Sunday Monday Tuesday

Recent impact of wind on load profile of a 305MW coalunitThursday Wednesday

Pre-wind Post-wind

320MW

250MW

180MW

Source Ovation. © 2018 IHS Markit®.

CNG Vehicle Market Share by Region and CNG cars per station

NaturalGasVehicles: 26,455,793

NaturalGasFuelingStations: 31,246

ASustainableFuture– Poweredby Gas 4

China LNG fuelled heavy-duty transport Europe LNG fuelled heavy-duty transport

0

6.7 MT of LNG consumed in China for road transport in 2018

2,552 LNG fuelstations in 2018

1532

4000

5,500600050004000300020001000

02016 2017 2018

280,000 LNGtrucksexpected by 2030

155 LNG fuel stationsin 2018

BioLNG EuroNet is building 39 LNG stations, 2000 LNG trucks and a BioLNG production plant

Source : Shell analysis of Woodmac, SCI, and NGVA data

200

100

400

300

2012 2013 2014 2015 2016 2017 2018

LNG HD trucks

000s of vehicles

LNG busesNumber of vehicles

Source : Shell

LNG for Heavy-Duty Vehicles is Growing Rapidly in China and Europe

Argentina - Virtual Pipelines can reshape gas-to-power projects

Source:Galileo Source:Galileo

Current Uptake of Alternative Fuels Technologies in Shipping

137VesselsontheOrderBook

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carri

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HSL

C

IN OPERATION

ON ORDER

Source: DNV GL, 2018

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2000

2006

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IN OPERATION

ON ORDER

LNG READY

LNG for Marine is Growing Virtually zero SOx & PM, 80% less NOx, 21% less GHG

126VesselsinOperation

Enabling Clean Marine Transport via LNG

Regulatory Commercial Technical Cultural

• Regulatory regimes not aligned

• Inter and Cross-Jurisdiction Gaps in Emissions Controls

• Lacking Policy Certainty

• Hard to Access Financing

• Diffuse Benefits not aligned with Costs

• Resale Value Uncertainty

• Future Price Uncertainty

• Bunkering access

• First mover “tax”

• Space, Range, Efficiency

• Industry Resistance to change

• Regulate Pollution & Price Externalities

• Improve access to credit for marine LNG projects

• Fund innovation, demonstration, and data collection projects

• Help de-risk technologies

• Will be addressed through the other listed measures

q Lead the harmonization global emissions regulations, especially for the developing world.*

q Find and Eliminate Gaps in Domestic Regimes

q Enable credit access

q Supplement traditional financing / de-risk share

q Provide de-risking funding for technology innovation and unique bunkering investment

Barrier

Solutio

nG2

0Options

Gracias