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“Balancing the regional gas supply and demand equations”

Presented by: Sam Barden, CEO SBI Markets

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Agenda

1. Balancing regional gas supply and demand is a global equation

2. Increasing gas demand is driving supply side efficiencies

3. Inter-bank market failure is leading to market change

4. Future market will deliver energy security and price stability

5. Summary

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Middle East gas exports to the global market necessitates that regional supply and demand is balanced as part of the global equation

Americas

EuropeRussia & CIS

Asia PacificMiddle East & Africa

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• Global growth in energy demand – particularly emerging markets

• Reduce global warming / pollution through cleaner gas fired electricity generation to replace / reduce use of oil and coal

• Increase energy security as countries diversify their energy demand across renewables, nuclear, gas and oil

• Gas OPEC• Create economic and political

inter-dependence to facilitate infrastructure investment (replace military dependence)

• Share extraction, refinement and transportation technologies (e.g. capture more associated gases rather than flaring)

• Develop strategic facilities to smooth the supply chain (bunkering, shipping & terminals, pipelines)

‘Gas OPEC’ cooperation should deliver supply side efficiencies to meet global demand driven by growth, climate change and energy security

Demand Supply

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Inter-bank market

The inter-bank market can no longer solve the supply & demand equation therefore should be replaced by a global network of regulated

exchanges

Bank Bank Consumers

Consumers

EUR

RUR

JPY

CNY

US$

GBP

AUProducers

Exc

han

ge

trad

ed

BankProducers

OT

C t

rad

ed

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The region, via Gas OPEC, has an opportunity to establish price stability and energy security by leading the development of exchange markets

• Formalise Gas OPEC cooperative framework and organisation

• Expand regional investment in global gas supply chain infrastructure and services

• Commit long-term & large volumes of regional gas production and other commodities to exchanges for trading

• Transparent regulated exchange environments will improve price stability and facilitate stable long-term supply-chain investment

• Ubiquitous market access for producers and consumers creates political & economic inter-dependence and improved energy security

Region & Gas OPEC Exchange Network

Balanced supply and demand to deliver price stability and energy security

• Continue regional development of exchanges and markets

• Create gas & other physically deliverable commodity futures from long-term & large volume supply commitments

• Trade futures across network of regional and global exchanges with consistent regulation and price / volume visibility

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Summary

• Increasing globalisation of the gas market requires the supply and demand equation be balanced on a global basis

• ‘Gas OPEC’ production and investment coordination will be required to meet global demand growth and remove inefficiencies in the supply chain thereby ensuring smooth and reliable delivery of gas to customers

• The emergence of a global network of regulated exchanges to replace the inter-bank market will provide the price and volume visibility required to effectively balance the supply and demand equation

• The region, through Gas OPEC, has an opportunity to improve price stability and energy security by expanding its investment in the global gas supply chain and selling large volumes of gas production via the emerging global exchange network

SBI – Bridging Global Energy