Executive Vice President, Global Businesses Shell Gas & Power WORLD GAS CONFERENCE LNG PANEL LNG: The Enduring Value of Relationships Peter de Wit Executive Vice President, Global Businesses Shell Gas & Power

Shell provided technology to Sonatrach for the world’s first exporting LNG plant – CAMEL LNG – in Algeria The size of the LNG supply and demand market has grown dramatically over the past 30 – 40 years and will continue to do so. Over the period from 1990 to 2020, LNG imports will have grown from a relatively small 65 million tonnes to in excess of 500 million tonnes per annum. I think you will agree that this is phenomenal growth for any industry to experience. To achieve it, and in so doing help the world meet the energy challenge, places a tremendous challenge on us in the industry, but I am sure we are up to it. Many factors have contributed to this amazing growth performance but the real platform, in my view, has been the success of partnerships. Shell has been a pioneer in the development of this industry, with the provision of the technology for the world’s first exporting LNG plant – the CAMEL plant – in Algeria, which you can see on the screen, followed by the start up our joint venture operation at Brunei LNG in 1972. Which, I would like to add, is running stronger today than ever and will continue to operate for at least the next couple of decades thanks to our continuing investment and expertise in LNG technology. To expand our LNG business so rapidly, we have developed many reliable and strong partnerships, some with companies and organisations represented by my friends and colleagues here on the panel today. To initiate those early developments took real guts and determination, and could not have been done without a deep mutual understanding and trust between ourselves and country hosts like Algeria and Brunei, as well as customers like Tokyo Gas and Tokyo Electric. As our distinguished panel chairman, Mr Hached will tell you the relationship between our two companies dates back many years and was further strengthened early this year with a new MoU that covers multiple business initiatives – including LNG.

Another LNG cargo from North West Shelf in Australia reaches Toyko Harbour Relationships forged in those early days have endured, and often propered, which has been exemplified in the Asia Pacific market. For instance, having concluded the Brunei deal in the early 1970’s with Tokyo Gas led to similar deals in the 1980’s for Malaysia and North West Shelf in Australia, in the 1990’s for Oman, and in this decade with the Sakhalin II project in Russia, again a truly pioneering venture where long established trust between Shell and Tokyo Gas was critical to launch the project, which incidentally is now more than 60% complete.

But the growth of the LNG industry and the need to meet the energy challenge on a global basis means we in Shell continue to develop new relationships with both new Major Resource Holders and customers in this relationship-driven industry. On the customer side, this includes in recent times those from countries such as Mexico, India and China One the supply side, this has recently included major resource holders in Libya, Iran and Russia. And one of the biggest of these is Qatar, a country that holds the third largest proven reserves of natural gas. Their vision is to become the world’s largest LNG supplier as well as GTL Capital and I am happy to say that Shell is providing the full weight of its technical and commercial expertise to develop the Qatargas 4 LNG project as well as the world-scale Pearl GTL plant. On the back of a partnership developed in recent years between Shell and Qatar Petroleum, the two companies were able to move from a Heads of Agreement for Qatargas 4 to a Final Investment Decision in less than 12 months (Feb 2005 v Dec 2005). Truly a world-class performance. The Final Investment Decision taken on the Qatargas 4 LNG project in less than 12 months from Heads of Agreement

The near-complete Altamira LNG import terminal in Mexico that will supply the newest LNG market: North America The spectacular recent growth of the industry has led to the development of the newest, and potentially largest, market for LNG: North America. With this development have come proposals and development plans for a rash of LNG import terminals, all seeking permits to build and operate. What appears clear is that the North American LNG market will be more liquid than other markets such as Asia Pacific, bringing with it arbitrage. The emergence of cargo swapping, hedging, risk management, etc. It is fair to say that access to this critical market has become a key point in developing large new supply positions in supply countries. Entrusting such positions to this new market leads to exposures of a different nature and MRHs will continue to seek partners that can help to mitigate such exposures. So, it can easily be overlooked that despite these new developments, even for this liquid market, the role and importance of relationships remain critical. In conclusion, therefore we in Shell continue to value the strength of our ongoing relationships with both MRHs and key long-term customers as a critical success factor.