LNG Workshop Centrica LNG 11 February 2008 Simon Sydenham

2 Presentation Outline Introduction Global LNG Market LNG access to the UK market Conclusions

3 Introduction Centrica is UK largest buyer of gas and a supporter of liberalised energy markets As UK switches to being an importer of gas, then there is a requirement for new infrastructure Centrica has played a key role in encouraging the build of new gas infrastructure for the UK Centrica/Statoil contract => Langeled pipeline Centrica/Gasunie contract => BBL pipeline Centrica Reverse flow in Interconnector => enhanced reverse flow capacity Centrica is making significant investment in LNG Regas capacity in Isle of Grain Phase 2 and 3 Upstream investment in Nigeria

4 The original British Gas is back in LNG… British Gas Canvey Island LNG Terminal January 1959: A World First: ‘Methane Pioneer’ British Gas Isle of Grain LNG Terminal November 2008: A British First: ‘Al Khuwair’ “What a difference 50 years make…”

5 LNG importing countries are expanding

6 Global Regas throughput utilisation is around 50% CERA FORECAST ASIA EUROPE GLOBAL USA Utilisation can be defined in terms of slot, storage or throughput All LNG terminals are used at times for storage (particularly in Asia) Global regas terminal utilisation was below 50% for the whole of 2007 This trend is forecast to continue though 2008 and 2009.

7 Significant global regas facilities vs supply Probable Under Construction Existing Atlantic Basin Middle East Asia Pacific Source: CERA/Platts/WoodMac PROBABLE REGAS PROBABLE LIQUEFACTION LIQUEFACTION UNDER CONSTRUCTION ONSTREAM LIQUEFACTION PROBABLE REGAS GROWTH IN GLOBAL RELIQ & REGAS CAPACITY

8 LNG should flow to the highest priced available market, but there are logistical constraints Currently there are 4 main gas price structures February 3 rd Forecast

9 LNG Buyers “playing field”

10 Isle of Grain vs Lake Charles terminal utilisation 2005 – December 2008 utilisation based on UK/US Price differential 2008 – Asia price is higher than both UK and US prices November 24 th 2008 Forecast

11 World LNG Imports for December 2008

12 UK LNG Regas facilities ISLE OF GRAIN DRAGON LNG Bacton St Fergus Easington LNG can access the UK market via 4 terminals and regas capacity is held by 10 companies SOUTH HOOK TEESSIDE ISLE OF GRAIN

13 NW Europe Regas Increased supply sources and market outlets Diversions can happen with short notice BILBAO SINES HUELVA SAGUNT0 CARTAGENA BARCELONA MONTOIR DE BRETAGNE FOS SUR MER LA SPEZIA ROVIGO BRINDISI DRAGON LNG ISLE OF GRAIN ZEEBRUGGE TEESSIDE SOUTH HOOK EL FERROL 1 DAY Construction Existing Shipping Time Liquefaction Port 1 DAY Snohvit Algeria Middle East Qatar Nigeria Trinidad GATE 10 DAYS 1 DAY 10 DAYS 3 DAYS 1 DAY 11 DAYS

14 Centrica LNG sourcing Centrica is actively looking to secure LNG supplies through: Equity production Term purchase contracts Spot purchases Cargoes have so far been sourced from Qatar and Trinidad Multiple discussions are being held for future deliveries with increasing interest in the UK market Centrica intends to make maximum use of our capacity in Grain Final mechanisms that are in place are: Centrica Secondary Capacity Mechanism (SCM) Grain UIOLI mechanism

15 Final Terminal Access Mechanisms Centrica Secondary Capacity Mechanism Auction process for a slot, temporary storage and deliverability Centrica sends out LNG ahead of slot to create sufficient space for cargo Cargo is sent our over period until next Centrica slot Centrica retain option to swap LNG in store for NBP gas User has a direct contractual relationship with the terminal LNG must meet terminals gas quality specification Ship must have undergone terminal vetting procedure Example timetable D-14Notification of slot availability sent to registered users D-13User submits bid D-12If bid accepted, winner notified D-11User provides credit and supporting cargo information D-10Centrica begins emptying space D0Ship arrives and unloads D+1User begins withdrawal D+9 Withdrawal ends D+10 Next ship arrives Grain UIOLI mechanism Slot released to Grain at D-7 Grain advertise slot on Grain bulletin board

16 Conclusions Global demand for LNG is greater than available supply Average Regas utilisation is around 50% The market for LNG supply is highly competitive Gas market structures show significant differences across the globe Centrica is actively seeking LNG supplies for the UK from a range of sources Final access mechanisms are in place Our contact details can be found on the Grain website.