Observations on the Tamar Project Leslie Nichols July 4, 2010

Leslie Nichols Professional Biography 20 years as senior oil and gas consultant 20 years as senior oil and gas consultant 28 years with Shell in E&P becoming operations manager in major operations. 28 years with Shell in E&P becoming operations manager in major operations. Sample experience: Sample experience: BG: design and development of a new offshore gas platform (Trinidad) BG: design and development of a new offshore gas platform (Trinidad) Shell: Operations Manager for Shell Companies Malaysia (300,000 bpd oil, 2.5 Billion cfd gas, 140 offshore structures, 3 loading terminals) Shell: Operations Manager for Shell Companies Malaysia (300,000 bpd oil, 2.5 Billion cfd gas, 140 offshore structures, 3 loading terminals) Shell: Operations Manager Brent Field (UK) Shell: Operations Manager Brent Field (UK) Mossgas, Offshore Operations Advisor (South Africa) Mossgas, Offshore Operations Advisor (South Africa)

Gas Processing Onshore/Offshore Operators always prefer onshore where possible Operators always prefer onshore where possible operating costs, logistics operating costs, logistics But onshore not always a reasonable option But onshore not always a reasonable option Land use/availability, population, master plan Land use/availability, population, master plan In this case, I believe offshore more practical In this case, I believe offshore more practical Onshore: lack of reasonable sites Onshore: lack of reasonable sites Offshore: unlimited site options, industry standard Offshore: unlimited site options, industry standard

Why not onshore (in Israel) Inspected 5 Carmel Coast sites Inspected 5 Carmel Coast sites None appear suitable unless absolutely no alternative None appear suitable unless absolutely no alternative Land scarcity/Population density/Transport infrastructure Land scarcity/Population density/Transport infrastructure Pollution/Disturbance/Safety/Security Pollution/Disturbance/Safety/Security Residents resistance (Corrib) Residents resistance (Corrib) Undesirable industrial spread & expansion threat Undesirable industrial spread & expansion threat Insufficient safety and risk analysis (QRA) Insufficient safety and risk analysis (QRA) Extremely high gas arrival pressure Extremely high gas arrival pressure Reduce offshore (as per PDC) ? Reduce offshore (as per PDC) ? Reduce on beach (as per IGA) ? Reduce on beach (as per IGA) ? To what pressure (150 or 250) ? To what pressure (150 or 250) ?

Offshore is a viable alternative (1) - development time as an issue - Example - Poinsettia: 3 years FEED to EPIC (in a very tight development market)

Offshore is a standard alternative (2) - Virtually as reliable as onshore operationally - When designed and managed properly When designed and managed properly As much built in redundancy (ie, maintenance, hot standby) as required As much built in redundancy (ie, maintenance, hot standby) as required Example – Shell Sarawak: no unplanned downtime in 5 years (across 3 large offshore facilities)

Small tie-in area Landing pressure low Offshore is an equally viable choice (3) - Minimum onshore real estate requirement- Source: PDC ~ 10 Dunam

Observations on Planning Documents Some questionable assumptions: Some questionable assumptions: 17 – 20 months statutory planning ? 17 – 20 months statutory planning ? 40 – 48 months development ? 40 – 48 months development ? 18 days out per year ? 18 days out per year ? 60 dunam onshore facility ? 60 dunam onshore facility ? Israel goes dark if Tamar goes down ? (what about an onshore failure ?) Israel goes dark if Tamar goes down ? (what about an onshore failure ?) Absence of basic documentation Absence of basic documentation Onshore site QRA ? Onshore site QRA ? Independent offshore evaluation ? Independent offshore evaluation ?

Recommendations (1) Independent specialist QRA report for onshore options Independent specialist QRA report for onshore options Objective detailed evaluation of the offshore option Objective detailed evaluation of the offshore option Timing Timing Onshore requirement or FSO Onshore requirement or FSO Planning approvals readily forthcoming Planning approvals readily forthcoming

Recommendations (2) Comprehensive Master Plan Comprehensive Master Plan Back-up to Tamar Back-up to Tamar irrespective of offshore or onshore irrespective of offshore or onshore Future development plan Future development plan export plans (pipeline, LNG) ? export plans (pipeline, LNG) ? domestic liquid fuels (Fischer Tropsch) domestic liquid fuels (Fischer Tropsch) where will these plants go? where will these plants go? Infrastructure security Infrastructure security Line looping and the security that it offers ? Line looping and the security that it offers ? Explore options for covering near-term supply while conducting proper planning. Explore options for covering near-term supply while conducting proper planning. EMG issues ? EMG issues ? Lateral thinking eg, near-term supply through Mary B. Lateral thinking eg, near-term supply through Mary B.

2013 Cover supply shortfall 2015 Provide backup supply Tamar Platform Lateral Thinking Example concept to solve possible Mary B shortfall before full Tamar development Proposed Tamar Development

Thank You