1. Advokatfirmaet Selmer DA How to improve the position of gas in the European energy market? Bengt Lie Hansen, Selmer Law Firm The 10 th Russian Petroleum & Gas Congress, 26-27 June 2012, Moscow 1

2. The role of gas in the energy market Natural gas accounts for more than 20% of global energy consumption World consumption Oil remains the world’s leading fuel, accounting for 33,1%, but this is the lowest share on record Coal increases its market share back to the levels of 1969 (30,3%) (million tonnes oil equivalent) 2 Developments in the global energy market in 2011 Source: BP Statistical Review of World Energy June 2012

3. Gas is a preferable energy and is winning market shares 3 Source: *IEA – The Golden Age of Gas Scenario 2011, **IEA, LEA estimates Benefits Cleanest of the fossil fuels Play a key role in helping to meet environmental targets Competitive cost of supply World energy demand by fuel* 20,100 TWh (million tonnes oil equivalent) Global power generation fuel split in 2009** Vast gas resources close to EU EU needs to acknowledge the possibilities gas provides

4. Gas supply to Europe today and in the future 4 Source: *Total according to Cedigaz, **Energy Outlook 2030, BP 2012 EU gas map 2010* Trade flows (billion cubic meters) Sources of gas supply, Europe** (Bcf/d)

5. Arctic – a key to Europe’s future gas supply 5 Source: Norwegian Ministry of Petroleum and Energy

6. Need to develop efficient fields and transportation routes in the Arctic 6 Arctic challenges Arctic climate Ice Cold / dark Sensitive ecosystem Lack of infrastructure Remote HSE Arctic cost level (ref. Shtokman)

7. New gas projects for future supply of gas to Europe from Russia and Norway 7 Arctic pipe (Barents pipe) Infrastructure in Russian waters Best practise in field development and transportation Barents Sea Shtokman / Yamal Kara Sea New gas transportation conceptsNew areas

8. New sources for gas production and exports 8 New agreements secure gas production Rosneft / ENI, agreements in Barents Sea Rosneft / Exxon, agreement in Kara Sea Rosneft / Statoil, agreement in Barents Sea New Norwegian acreage as a result of treaty Norway / Russia 22 nd round Norway in 2012

9. Russia and Norway are producers and large exporters of gas to Europe 9 Mutual dependence Cooperation through technology sharing Secure confidence in gas supply to Europe Explore for more gas and develop the fields to operate more efficiently and under safe conditions Arctic cost levels are a challenge to viability Sub-sea solutions and multi-phase transportation of hydrocarbons vital for reducing costs to make Arctic production profitable Common goal to maximize the net back value of gas for producers Two major producers secure confidence in gas supply to Europe International partnership agreement envisage cooperation through technology sharing and employee training Maximize net back value

10. The position of long term gas sales contracts in Europe 10 Source: BBC Long term gas sales contracts Instrumental in developing large gas fields Risk / reward relationship balance Take or pay Price indexed to oil New emerging spot market for natural gas in Europe Challenges Spot market “undermines” the long term contracts and creates volatility in gas prices Buyers with long term contracts have difficulties in today’s market Need to create a platform for reasonable value creation for all parties in the gas value chain Gas is not subsidized such as coal and renewables, and can compete favourably without market distortion

11. Summary 11 Gas has a good future in Europe, despite Shale gas uncertainty Need clear signals from the EU to secure the heavy investments necessary Arctic gas is a new source of supply to Europe Gas is a preferred fuel in the market, but important to secure Cost effective gas supplies Confidence in gas Security of supply from several sources Flexibility Environment Avoid interruptions Back-up solutions and cooperation between producers and buyers *Shtokman gas and condensate field pre-development scheme Source: *Gazprom about Shtokman

12. “Let’s explore the Arctic together!” 12

13. Thank you for your attention! Oslo Advokatfirmaet Selmer DA P.O.Box 1324 Vika N-0112 Oslo, Norway Visiting address: Tjuvholmen allé 1 N-0252 Oslo, Norway Tel: +47 23 11 65 00, fax: +47 23 11 65 01 Trondheim Advokatfirmaet Selmer DA P.O.Box 869 N-7409 Trondheim, Norway Visiting address: Kjøpmannsgata 52 N-7010 Trondheim, Norway Tel: +47 73 87 90 60, fax: +47 73 87 90 61 www.selmer.no 13