World Banks Energy Week Washington DC, 6 March 2006 Natural gas:bridging fuel for the next decades A global perspective Marcel Kramer, Chairman and CEO Gasunie, The Netherlands

Global trends Fuel demand increases steadily

Total Energy Demand by Region 2002 and USA EU-25 Japan/Korea India China Russia Latin America Africa Middle East Mtoe

Regional shares in world primary energy demand Two-thirds of increase in world demand in comes from developing countries, especially in Asia Global energy demand: forecast IEA

Gas demand is expected to grow faster than total energy demand…… Total primary energy Gas Reference year Index=100 Global energy demand: forecast IEA

Global trends Fuel demand increases steadily Gas is a relatively low CO 2 emittor

Power generation is a major driver of the growth in gas demand Mtoe TOTAL PRIMARY ENERGY Gas for Power Gas for other market segments Global energy demand: forecast IEA

Life-cycle CO2 emissions from Power Plants 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 gram/kWh coal gas gas, CCGT wind nuclear hydro biomass geothermal solar pv CCGT as Back UP spread due to type of coal (lignite/hard coal) and technology (old/new-high-efficiency)

Global trends Fuel demand increases steadily Gas is a relatively low CO 2 emittor Large world gas reserves

Data: BP Statistical Review 2005 North America 2.5 South and Central America Europe Africa 4.9 Middle East 25.7 Russia Asia Pacific Region Proven reserves: 6,354 trillion cubic feet. Shown in 1000 TCF: Current proven gas reserves equivalent of 67 years gas consumption (level 2004)

Global trends Fuel demand increases steadily Gas is a relatively low CO 2 emittor Large world gas reserves Increased oil and gas prices

Gas price linkage to oil price Gas and Oil remain substitutes in major parts of the energy market Important parts of industry dual-fired Large hedging users prefer oil-related gas prices Upstream shackles of the gas and oil chains are very similar Gas Prices will remain linked to oil prices, but with their own volatility

Global trends Fuel demand increases steadily Gas is a relatively low CO 2 emittor Large world gas reserves Increased oil and gas prices LNG projects allow for global competition in gas

LNG Gas importing regions will have to compete for supply LNG market still small (6,5% of gas is traded as LNG) Bottlenecks in LNG-chains till 2008 – 2010 many large projects in execution phase Global price level of natural gas is so high that LNG is competitive wherever it originates from Traditional gas supply patterns (Russian gas to Europe, Mid Eastern gas to Pacific Rim, North America autarctic) will give way

Global trends Fuel demand increases steadily Gas is a relatively low CO 2 emittor Large world gas reserves Increased oil and gas prices LNG projects allow for global competition in gas Markets develop to more competition and short-term contracts

Will world gas prices become more aligned? Source: M. Speltz, Chevron, sept 2005

Contribution of energy to economic growth ( ) Average annual GDP growth (%) Contribution of factors of production and productivity to GDP growth (% of GDP growth) EnergyLabourCapital Total factor productivity Brazil China India Indonesia Korea Mexico Turkey United States Sources: IEA analysis based on IEA databases and World Bank (2004).

Conclusions Energy supply important driver behind economic growth Gas is attractive fuel option –Low Co2 emissions –Global market –LNG opens non-traditional gas markets –Large global gas reserves –Rapid growing gas market fosters liquidity and transparency Expanding gas infrastructure is pre-requisite for well functioning global gas market This requires a stimulating policy and regulatory framework: –predictable –consistent –transparent