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Copyright: SIPC LNG: Demand opportunities and supply challenges Kathleen Eisbrenner Executive Vice-President, Global LNG Shell Gas & Power EIA 2008 Energy Conference Washington D.C., 7 th April 2008

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Page 1: LNG: Demand opportunities and supply challenges · Nigeria LNG: Rapidly growing capacity PLANT CAPACITY (YEAR END 100%, MTPA) 0 5 10 15 20 25 1999 2001 2003 2005 2007. Sakhalin II:

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LNG: Demand opportunities and supply challenges

Kathleen Eisbrenner

Executive Vice-President, Global LNG

Shell Gas & Power

EIA 2008 Energy Conference

Washington D.C., 7th April 2008

Page 2: LNG: Demand opportunities and supply challenges · Nigeria LNG: Rapidly growing capacity PLANT CAPACITY (YEAR END 100%, MTPA) 0 5 10 15 20 25 1999 2001 2003 2005 2007. Sakhalin II:

The energy challenge

• Population growth

• Economic growth

• More affluent society

• End of ‘easy oil’

• Resource nationalism

• More unconventionals

• Hydrocarbons remain dominant

• CO2 consequences

1. RISING DEMAND 2. SECURITY OF SUPPLY 3. ENVIRONMENT & SOCIETY

Page 3: LNG: Demand opportunities and supply challenges · Nigeria LNG: Rapidly growing capacity PLANT CAPACITY (YEAR END 100%, MTPA) 0 5 10 15 20 25 1999 2001 2003 2005 2007. Sakhalin II:

Major economies are climbing the energy ladder

Page 4: LNG: Demand opportunities and supply challenges · Nigeria LNG: Rapidly growing capacity PLANT CAPACITY (YEAR END 100%, MTPA) 0 5 10 15 20 25 1999 2001 2003 2005 2007. Sakhalin II:

The growing role of LNG

0

1000

2000

3000

4000

2000 2006 2010 2020

TCF

Indigenous & Pipeline Imports LNG % increase over 2000

344%

53%

Sources: BP Statistical Review 2007, CERA 2006, EIA 2006

Page 5: LNG: Demand opportunities and supply challenges · Nigeria LNG: Rapidly growing capacity PLANT CAPACITY (YEAR END 100%, MTPA) 0 5 10 15 20 25 1999 2001 2003 2005 2007. Sakhalin II:

Global market developments

Shell analysis

TODAY2012

29

2012

LNG importers

# Countries

70.6%17

% increaseTODAY

.

.

.

.

.

.

.

LNG importers

LNG exporters

Page 6: LNG: Demand opportunities and supply challenges · Nigeria LNG: Rapidly growing capacity PLANT CAPACITY (YEAR END 100%, MTPA) 0 5 10 15 20 25 1999 2001 2003 2005 2007. Sakhalin II:

Supply challenges

• Growing energy demand

• Natural gas exporting countries

• Competition with exports

• Skyrocketed costs

• Construction delays

• More complex projects

• Large integrated projects

• Technical and project management challenges

1. DOMESTIC DEMAND 2. HIGH EPC COSTS 3. PEOPLE AND SKILLS

Page 7: LNG: Demand opportunities and supply challenges · Nigeria LNG: Rapidly growing capacity PLANT CAPACITY (YEAR END 100%, MTPA) 0 5 10 15 20 25 1999 2001 2003 2005 2007. Sakhalin II:

Energy sector inflation

INDEX (2000 = 100)

80

100

120

140

160

180

200

220

2000 2001 2002 2003 2004 2005 2006 2007 2008

Q3 2007

Q1 2007

Q3 2006

CERA Upstream Capital Cost Index (UCCI)

Page 8: LNG: Demand opportunities and supply challenges · Nigeria LNG: Rapidly growing capacity PLANT CAPACITY (YEAR END 100%, MTPA) 0 5 10 15 20 25 1999 2001 2003 2005 2007. Sakhalin II:

People and skills to deliver complex projects

Construction of Pearl GTL at Ras Laffan Industrial City in Qatar

Page 9: LNG: Demand opportunities and supply challenges · Nigeria LNG: Rapidly growing capacity PLANT CAPACITY (YEAR END 100%, MTPA) 0 5 10 15 20 25 1999 2001 2003 2005 2007. Sakhalin II:

Global market developments

Shell analysis

TODAY2012

18

29

2012

70.5%17LNG importers

LNG exporters

# Countries

20%15

% changeTODAY

.

.

.

.

.

.

.

LNG importers

LNG exporters

Page 10: LNG: Demand opportunities and supply challenges · Nigeria LNG: Rapidly growing capacity PLANT CAPACITY (YEAR END 100%, MTPA) 0 5 10 15 20 25 1999 2001 2003 2005 2007. Sakhalin II:

Nigeria LNG: Rapidly growing capacity

PLANT CAPACITY (YEAR END 100%, MTPA)

0

5

10

15

20

25

1999 2001 2003 2005 2007

Page 11: LNG: Demand opportunities and supply challenges · Nigeria LNG: Rapidly growing capacity PLANT CAPACITY (YEAR END 100%, MTPA) 0 5 10 15 20 25 1999 2001 2003 2005 2007. Sakhalin II:

Sakhalin II: World’s largest integrated oil and gas project

Page 12: LNG: Demand opportunities and supply challenges · Nigeria LNG: Rapidly growing capacity PLANT CAPACITY (YEAR END 100%, MTPA) 0 5 10 15 20 25 1999 2001 2003 2005 2007. Sakhalin II:

Floating LNG (FLNG)

• Unlocking stranded offshore gas accumulations

• Small environmental footprint

• No pipeline or dredging

• Limited onshore support base

• Cyclone tolerant

• Redeployable

Page 13: LNG: Demand opportunities and supply challenges · Nigeria LNG: Rapidly growing capacity PLANT CAPACITY (YEAR END 100%, MTPA) 0 5 10 15 20 25 1999 2001 2003 2005 2007. Sakhalin II:

Shell’s global LNG portfolioLeading position … and 5 new trains under construction

LNG SUPPLY:

IMPORT CAPACITY:

OPERATION CONSTRUCTION

Start up 2008

NLNG T6

Start up 2010+

Qatargas 4

Start up 2008-09

Sakhalin T1 & 2

Start up 2008

NWS T5

Start up 2010+

Pluto

Page 14: LNG: Demand opportunities and supply challenges · Nigeria LNG: Rapidly growing capacity PLANT CAPACITY (YEAR END 100%, MTPA) 0 5 10 15 20 25 1999 2001 2003 2005 2007. Sakhalin II: