1. The conditions required to establish natural gas infrastructures Presentation by Mr. Robert Tessier, President and Chief Executive Officer CAMPUT 2005 May 2, 2005

2. 2 A tensely-balanced North American gas market SUPPLY - CANADA SUPPLY - U.S. 0 5 10 15 20 25 30 1985 199019952000 TCF PRICE OF GAS, $/MMBTU 8 6 4 2 0 TOTAL DEMAND U.S. & CANADA Past forecasts $ U.S.

3. 3 Liquefied natural gas: a diversification opportunity for the Northeast Proposed terminals Existing terminals

4. 4 Two key development factors Time n Development periods of 5 to 7 years are necessary n A sector where just in time is impracticable n Better be too soon than too late Capital n New infrastructure requires major capital n The number of players is limited n An investment environment with the least uncertainty is favoured

5. 5 Leveraging our geographic advantage Proposed terminals Existing terminals Near the coast Near the markets

6. 6 Three issues at stake n Location of infrastructure n Regulatory framework n Long-term commitments

7. 7 The location: concept phase Harbor-indutrial zone LévisBeaumont OPTION 1 OPTION 2 OPTION 3 OPTION 4 Options

8. 8 Challenges of the preliminary consultation  The promoter must consult the public very early in the formulation of the project  The site studies are still in their infancy  The information on the project is general  The community’s questions quickly become specific  The promoter can’t have the answers  The public is unhappy and suspicious  An environment conducive to disinformation  The dangers of slip-ups are great

9. 9 Location: when we have a chance to work

10. 10 Two main conclusions  Governments and industry must raise public awareness about the crucial importance of energy infrastructure  A long-term effort  The regulatory agencies must be involved from the very beginning in the consultation process  Objective third party to explain the entire regulatory review process (environment, safety, etc.)  Meetings with the public and the key entities  (e.g.: city council)

11. 11 Regulatory framework  The inherent project development risks are known and accepted by the promoters  The multiplicity of overlapping government regulations generates additional uncertainty  Development harmonization solutions:  Structuring of the regulatory procedures  Smart regulation  Still to be done : simplify the regulatory framework  Precise rules, known from the outset

12. 12 Long-term commitments  Infrastructure = $$$ = Long-term horizon  The past 20 years:  An increasingly efficient, open and deregulated industry  Proliferation of players, reign of the spot market  Increasingly complex financial market  Recent developments  Collapse of Enron et al  Limited number of players with acceptable credit ratings  Entry of the banks: financial and physical markets

13. 13 GNL: Long term integreted players 0,25 $ - 1,00 $ 0,50 $ - 1,00 $ 0,25 $ - 0,50 $ Natural gas production Liquefaction Import Terminal Shipping Other LDCs and market players

14. 14 Conclusion Long term commitments from every players of the LNG chain, including LDCs, are a must.