LNG as transport fuel – the need for speed in Europe GAZPROM Germania GmbH Tobias Jacobs 24 November 2015

NATURAL GAS – THE FUEL AGAINST AIR POLLUTION 2 GAS FOR TRANSPORT GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015

EU-TARGETS FOR 2020 OF 95 GCO2/KM WILL ONLY BE REALIZED, IF THE NUMBER OF NGVS WILL BE SIGNIFICANTLY INCREASED Oil Vehicle Market Share = 89% CNG Vehicle Market Share = 8% 2010 Oil Vehicle Market Share > 98% CNG Vehicle Market Share < 1% EU-targets for CO2- emissions in road transportation GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015 GAS FOR TRANSPORT

OUTLOOK OF FREIGHT TRANSPORT 4 GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015 Source: Energie Agentur NRW  By end of 2015 the volumes of freight transport in Germany for example will rise by 70%  This will lead to significant raise of GHG and air pollutions emissions  Environmental, economical and safe solutions in transport are needed! GAS FOR TRANSPORT

COMPARISON CNG VS. LNG 5 GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November  Accessible and proven technology  Choice of vehicles available with new models being added by the automotive industry  Generally able to meet EU 6 standards  “Zero” or reduced excise duty in many European countries, expected to last until 2030 –  Extra weight of gas cylinders decreases fuel efficiency and driving performance  For buses: sometimes height restrictions for low bridges due to mounting of storage on the roof  Lower energy density than conventional fuels or LNG +  Higher energy density than CNG resulting in smaller tanks, less weight and higher mileage  Lower weight of vehicles resulting in higher utilization of fuel efficiency  For buses: lower centre of gravity due to lighter and internal fuel tank with higher driving comfort  Reduced excise duty with high chances of sustainability until 2030 (no alternative for HDV)*  Independency of pipeline infrastructure –  New and well tested technology, but refueling infrastructure yet to be developed  More complex supply chain than for CNG requires reliable partners for supply + refueling  Choice of OEM vehicles still limited *as for CNG, but in some countries CNG and LNG are treated differently GAS FOR TRANSPORT

SOME PRACTICAL REMARKS TO THE MARKET SITUATION FOR THE NATURAL GAS FOR TRANSPORT BUSINESS 6  Currently low oil/Diesel pricing delays investment decision and challenge a change towards LNG But,…  very volatile oil/Diesel pricing have recovered and are assumed to increase again within next years  investors keep investing into refueling stations (subsidies with deadlines, lead time)  investment cost “Premium“ for NGV and refueling stations (especially for LNG) is expected to decrease  Gas for transport infrastructure is slightly growing but still limited across Europe (especially for LNG) But,…  CNG station network development extended by LCNG station (for off-grid areas/customers)  Increasing SSLNG applications at LNG import terminals enlarges LNG for transport availability.  EU and regional programs for clean mobility are in place (e.g. Clean Package for Transport, Ten-T, LNG Blue Corridors, …) and facilitate the infrastructure development by financial support, regulation and standardization  Even with an increased awareness for NGV prejudices and wrong information block the change But,…  New, improved and additional NGV models become available on the European market  Awareness campaigns for transparent price information for alternative fuels started the political decision process GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015

7 GAZPROM‘S MARKET POSITION TODAY – FROM REGIONAL MARKET DEVELOPMENT TOWARDS A GLOBAL STRATEGY GAZPROM Germania (100% owned by Gazprom export): 28 CNG stations, 3 in construction, 9 planned GAZPROM Germania: 7 CNG stations, 2 in construction, 6 planned VEMEX (50% owned by GAZPROM Germania): 5 CNG stations + gas supply to third party stations GAZPROM Germania: 1 LNG station + 1 LNG station in construction, 5 CNG stations planned VEMEX: gas supply to one third party CNG station JV between Gazprom and Petrovietnam: development of NGV-infrastructure and gas supply to gas filling stations GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015 GAS FOR TRANSPORT

LAUNCH OF LNG CITY BUSES IN THE POLISH CITIES OF OLSZTYN AND WARSAW October 2013: launch of Europe’s first LNG city buses in the Polish city of Olsztyn  11 x 12m solo LNG buses up to later 50 LNG buses by 2016/2017  Operations 7 days per week / km per bus p.a.  Since Oct 2013: refueling by GPG’s mobile LNG station  Implementation and operation of fixed skidded station in Q4/2014 January 2015: launch of 35 LNG city buses in Warsaw and construction of the first LCNG station in Poland  35 x 18m articulated LNG buses up to later 200 LNG buses by 2016/2017 as well as LCNG-add-on for 30 CNG buses  Operations 7 days per week / km per bus p.a.  From Q1/2015: refueling by mobile LNG station  Implementation of fixed station in Q3/ GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015 GAS FOR TRANSPORT

EXPLORE NEW MARKETS FOR LNG-FUELLED BUSES IN 4 SLOVAKIAN CITIES TOGETHER WITH SOLBUS 9 Bratislava Dunajská Streda Trnava Prievidza Zvolen GAS FOR TRANSPORT  Inform potential clients (e.g. local bus operators) about the great potentials of natural gas as fuel  Solbus Solcity LNG bus will be in operation on regular lines of public transport in Dunajská Streda Trnava Prievidza Zvolen GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015

GAZPROM GOES MARITIME: DEVELOPMENT SSLNG HUB AT BALTIC SEA GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November GAS FOR TRANSPORT  Assessment of the feasibility of a LNG Hub in the port of Rostock  Planned LNG storage capacity of 3,000 to 5,000m³ and an annual quantity of up to mtpa (= 0,13 bcm) by 2025*  Potential for loading and unloading of bunkering ships, tank wagons, trailer and containers  Potential customers are in the marine, road and off-grid sector  Potential of modular Expansion  Expected start of operation: 2018 *subject to positive FID

GAS FOR TRANSPORT LNG LESSONS LEARNED (TECHNIQUE) 11 GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November One source of LNG preferable Consideration of Boil off handling from beginning Flexible utilization of mobile station is crucial Different LNG qualities (mixing of cold and warm LNG) causes challenges for the operation Boil off is unavoidable during normal operation (especially heat input from vehicles) Mobile stations enable fast realization of LNG projects and are necessary as backup solutions for the initiating phase LCNG station solution is favorable Redundancies at all components are crucial Modular setup & short connection lines are crucial Combination of LNG and CNG demand increases project profitability and stabilize operations LNG clients (buses and trucks) are very sensitive to outages/failures of the LNG station (no refueling alternatives, delicate load, time pressure, etc.) Base load demand and conservative expectations on fleet size growth and additional clients define initial station size

GAS FOR TRANSPORT LNG LESSONS LEARNED (MARKET) 12 GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November LNG pricing crucial with expected fix Diesel discounts Support for 2 nd market for LNG vehicles needed Skilled application crucial & need for EU harmonization Main interest for potential LNG clients (buses and trucks) are cheaper but also more projectable TCO costs Financing of LNG vehicles as bottleneck for LNG projects due to a low/non-existing risk appetite of banks with respect to uncertainties about resale values Differences in national and local permitting and operational requirements (e.g. safety standards) hinder a predictable commissioning of LNG stations (especially without mobile stations) Customer oriented project approach needed Additional SSLNG sources in Europe are needed Additional LNG manufacturer & Eco.of sales crucial Fuel savings are not the only decision criteria for fleet owners; noise (city traffic at night/morning hours) and operational improvements like faster refueling or no fuel losses/theft become more important The reliability and profitability of LNG station projects strongly depends on the availability of small scale LNG volumes (e.g. reasonable distances, qualified logistics) Currently to less LNG vehicle manufacturer available which results in lower competition (higher price mark ups and inferior after sales service)

GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015 LET’S DRIVE THE FUTURE TOGETHER WITH NATURAL GAS AS FUEL 13 Natural gas is clean, abundant and affordable Vehicles and refuelling technology are proven, safe and reliable Market potential for natural gas as fuel for road transport and marine fuel is significant CNG and LNG are complimentary fuels covering almost all transport sectors As market is still developing, policy measures are required to motivate investors and end users to switch to natural gas as fuel Gazprom is ready to contribute to market development by providing reliable supplies of natural gas GAS FOR TRANSPORT

Powered by Natural Gas! THANK YOU FOR YOUR ATTENTION! Tobias Jacobs GAZPROM Germania GmbH

LNG STATION IN WARSAW – GAZPROM DELIVERS 15 GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015 GAS FOR TRANSPORT

LNG STATION IN WARSAW – GAZPROM DELIVERS 16 GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015 GAS FOR TRANSPORT