Global Trends of GTS Development G.H.B. Verberg President International Gas Union GTS-2005, Moscow, 12 April 2005

INTERNATIONAL GAS UNION Covers >95 % of World Gas Sales ‘Spokesman’ of the Gas Industry www.IGU.org Non Members Membership from 67 countries and 18 Associated Members 10/11/2018 GTS, Moscow, April 2005

Global Trends of GTS Development (1) Tracking the strong growth in gas demand by timely investments; Complying to modern safety and environmental standards; Conditioning for (almost) real time information flows for regulators and third parties; Implementing management systems, including PIMS, which enables management also to handle benchmarking. 10/11/2018 GTS, Moscow, April 2005

Demand not in regions of supplies Fuel demand increases steadily: general economic growth (developed markets), fast growing ‘emerging economies’ (Asia) New gas fields lie in remote areas and require long distance transport New gas supply projects are technically and geopolitically more complex and more expensive 10/11/2018 GTS, Moscow, April 2005

Global Energy Demand Forecast IEA WEO 2004 159 139 118 187 100 100 54 10/11/2018 GTS, Moscow, April 2005

Emerging Markets Put Their Mark On Hydrocarbons Demand % of Global Hydrocarbons Demand for each region & Market Share oil/gas/coal per Region 2002 2020 2020 2002 2002 2020 10/11/2018 GTS, Moscow, April 2005

Energy consumption in perspective 1/3 of world population IEA data year 2002 10/11/2018 GTS, Moscow, April 2005

Incremental Global Gas Demand from 2002 to 2010, 2020 largest liquefaction train: 7.8 mtpa (Qatar) 148 60 2002 to 2010 2002 to 2020 10/11/2018 GTS, Moscow, April 2005

Costs in the LNG chain Average price per ship ($ million) 8 5 6 7 9 10 11 1989 1991 1993 1995 1997 1999 2001 2.5% p.a. Upstream costs ($/boe) Liquifaction costst transformed ($ per ton of capacity) From a presentation by BP (february 2003) 10/11/2018 GTS, Moscow, April 2005

LNG trade history and perspectives 15 Bcm LNG trade as % of total gas market 11 8 6 History (CEDIGAZ) Forecast (IEA weo 2004) 10/11/2018 GTS, Moscow, April 2005

International LNG Trade: Connecting Markets 10/11/2018 GTS, Moscow, April 2005

Transport by pipeline: some figures Long distances to cover (Iran-India 2775 km, investment > $4b; Alaska-Chicago >5000 km; Russian gas fields-W.EU up to 4000km) 10/11/2018 GTS, Moscow, April 2005

PIPELINES: RUSSIA -> EUROPE 10/11/2018 GTS, Moscow, April 2005

Costs of Transport for Different Routes 10/11/2018 GTS, Moscow, April 2005

Moving Energy: Gas or Electricity lines ? Transmission losses Long distance transport Per 100 km: gas ~0,3%, electricity ~1% Distribution to end users Gas: none electricity ~7% (stepwise transformation to lower voltage) De vraag voor de power sector is: power maken nabij de bron van de fossil fuel en de electriciteit vervoeren of de fuel vervoeren? Dat zal per geval bekeken worden, maar duidelijk is wel dat voor de power sector het voordeligste is de brandstof te vervoeren behalve in geval van lignite, dat een groot volume heeft en veel residu oplevert. In de distributie leidt gas tot minder verliezen, en dat kan reden zijn de power op te wekken zo dicht mogelijk bij de verbruikers waar dat mogelijk is: combined heat and power in de industry, micro chp in small businesses and at home, wat een brug slaat naar de micro wkk voor thuisgebruik 10/11/2018 GTS, Moscow, April 2005

Global Trends of GTS Development (2) Tracking the strong growth in gas demand by timely investments; Complying to modern safety and environmental standards; Conditioning for (almost) real time information flows for regulators and third parties; Implementing management systems, including PIMS, which enables management also to handle benchmarking. 10/11/2018 GTS, Moscow, April 2005

CO2 emission from power plants spread due to type of coal (lignite/hard coal) and technology (old/new-high-efficiency) CCGT as Back UP Sources: life-cycle assessment of electricity generation systems and applications for climate change policy analysis, Meier, 2002, published on website Nuclear Energy Institute; own data; IEA 10/11/2018 GTS, Moscow, April 2005

CO2 emission from conventional and modern coal power plants vs Gas-CCGT India heeft voornamelijk coal power plants. Maar zelfs de modernste coal technology geeft forse emissies IEA world energy outlook 2004 10/11/2018 GTS, Moscow, April 2005

CO2eq Emissions From GTS 10/11/2018 GTS, Moscow, April 2005

LOW CO2eq emissions from GTS are drivers in the competition 10/11/2018 GTS, Moscow, April 2005

Global Trends of GTS Development (3) Tracking the strong growth in gas demand by timely investments; Complying to modern safety and environmental standards; Conditioning for (almost) real time information flows for regulators and third parties; Implementing management systems, including PIMS, which enables management also to handle benchmarking. 10/11/2018 GTS, Moscow, April 2005

Information flows not only for own management! General public and authorities want reliable and up to date information at least with respect to safety, environmental and reliability; Third parties and regulators claim relevant information of GTS for the use of GTS for gas transport; Management needs good information systems to manage in the present complicated business environment ! 10/11/2018 GTS, Moscow, April 2005

Global Trends of GTS Development (4) Tracking the strong growth in gas demand by timely investments; Complying to modern safety and environmental standards; Conditioning for (almost) real time information flows for regulators and third parties; Implementing management systems, including PIMS, which enables management also to handle benchmarking. 10/11/2018 GTS, Moscow, April 2005

PIMS, Benchmarking, Regulation Pipeline Integrity Management System (PIMS) is a crucial management tool for GTS; Regulators/Authorities require more and more public accountability and responsibility for the performance and management of GTS; Regulators/Authorities introduce more and more benchmarking to stimulate improvements 10/11/2018 GTS, Moscow, April 2005

Benchmarking Regulators/Authorities are using benchmarking more and more; The sale of regional gridsystems by the National Grid Transco (UK) will facilitate benchmarking between different grid cies in the UK; In several countries grid cies are being benchmarked by the regulator to stimulate cost reduction and to improve performance (reliability, safety, environment) 10/11/2018 GTS, Moscow, April 2005

Thank you, for your attention See you in Amsterdam! 23rd World Gas Conference and Exhibition June 5 – 9 2006 …see you in Busan, South Korea, 23-25 May 2005 at the ICT2005, 7th Congress on ICT in the Energy Business !!

IGU mission: actively and directly promote the technical and economic progress of the global gas industry work towards improving the competitiveness of gas in the world energy markets, thereby emphasising sound environmental performance, safety and reliability promote transfer of technology and know-how, serving as a global information clearing house maximise value to its members and to gas customers 10/11/2018 GTS, Moscow, April 2005

IGU’s objectives Gas as the fuel of choice preceding a sustainable energy system (Bridging fuel) Promotion of the gas industry as a responsible corporate citizen Promotion of technology, industry and customer focus 10/11/2018 GTS, Moscow, April 2005