Flame conference, Amsterdam, 13th March 2007 06/04/2017 14:14 Liberalisation and Security of Supply Steve Surrall, Director Business Development, Europe Downstream Flame conference, Amsterdam, 13th March 2007 Strictly Confidential

This presentation includes forward-looking statements. 06/04/2017 14:14 Legal notice This presentation includes forward-looking statements. Such statements are only predictions and actual events or results may differ materially. For a discussion of important factors which could cause actual results to differ from the forward-looking statements, please refer to BG Group plc’s Annual Report and Accounts 2005. Strictly Confidential

Changes in the UK gas market 06/04/2017 14:14 Introduction Changes in the UK gas market Implications for the European gas market European consumers able to seize opportunity? Liberalisation and security of supply Strictly Confidential

Changing composition of UK gas supply 2003-07 06/04/2017 14:14 Changing composition of UK gas supply 2003-07 50 100 150 200 250 300 350 400 2004 2005 2006 2007 million cubic metres / day UK production Norway IUK imports BBL LNG terminals Stock withdrawals Source: National Grid New import flows replace declining UKCS production Strictly Confidential

Investments decided in lower price environment 06/04/2017 14:14 Investments decided in lower price environment 100 100 90 90 80 80 70 70 60 60 Langeled, BBL UK NBP month ahead (p/therm) 50 Dated Brent ($/bbl) 50 40 40 30 30 20 20 Grain LNG 10 10 South Hook, IUK Dragon 2000 2001 2002 2003 2004 2005 2006 2007 Source: Argus UK NBP (p/therm) LH scale Dated Brent ($/bbl) Capital deployed to supply growing import demand Strictly Confidential

Oil price indexation: is it sustainable? 06/04/2017 14:14 Oil price indexation: is it sustainable? European Buyers’ Term Contract Indexation by Region 0% 20% 40% 60% 80% 100% UK W.Europe E. Europe per cent % Other Other energy prices Electricity Crude oil Heavy FO Gasoil Gas price Source: Energy Sector Enquiry 2005-06 High oil prices may encourage revision of oil-indexed pricing Strictly Confidential

Implications for investment 06/04/2017 14:14 Implications for investment Competition and uncertain prices a challenge to investment? UK and US examples prove this is not the case BG Armada rig, North Sea Strictly Confidential

Transportation – investment in infrastructure 06/04/2017 14:14 Transportation – investment in infrastructure Access to infrastructure remains problematic Alternatives to unbundling must be demonstrated BG pipe infrastructure Unused capacity rarely released to market Strictly Confidential

Access to storage is key 06/04/2017 14:14 Storage Access to storage is key Role of the regulator incentivise new facilities ensure fair access for new entrants make storage available on non-discriminatory basis Rough storage facility TPA exemption can incentivise investment Strictly Confidential

Implications for new entrants and NOCs 06/04/2017 14:14 Implications for new entrants and NOCs New entrants/NOCs seeking downstream role European Commission recognises attributes of new entrants/NOCs EU member states should welcome NOCs Egyptian LNG Strictly Confidential

Open markets do not prevent the incentive to invest 06/04/2017 14:14 Conclusion European Commission assert liberalisation and security of supply can co-exist Open markets do not prevent the incentive to invest Future UK gas supply position may have knock-on effects on aiding liberalisation Strictly Confidential

06/04/2017 14:14 Thank you Strictly Confidential