Nord Stream: Secure gas supply for Europe

Russian Economic and Financial Forum in SwitzerlandVugar Veysalov, Permitting Manager, Nord Stream AG – Zurich, 16 March 2009

22

Agenda

1

Current project status2

Nord Stream’s financial concept4

Key facts about Nord Stream

Attractive business opportunities3

More gas for Europe

1. Key facts about Nord Stream

4

20252005

Imports

EU domestic gas production

Source: European Commission, DG-TREN, 2007

81% of gas to be imported in 2025, compared to 58% in 2005

543 bcm

58%

42%

629 bcm

81%

19%

Growing need for natural gas in Europe

5

Contribution to energy security

• The new gas supply route for Europe consists of two parallel 1,220 km long offshore natural gas pipelines through the Baltic Sea

• Enhances Europe’s security of supply by delivering 25% of additional gas imports

• Transports gas directly to the countries and customers where it is most needed: Germany, the UK, the Netherlands, Belgium, France, the Czech Republic and other countries

• Complements existing routes from Russia to Western Europe (the “northern route”)

• Contributes to the reduction of greenhouse gases by transporting natural gas which has the lowest CO2 emission level of all fossil fuels

• Directly connects Russia, with the largest available gas reserves in the world, to European gas networks

6

Project on track – Present situation

Completed• Feasibility study• Operational company• General technical design• EIA programme• Notification of Baltic Sea countries• Logistical concept• Pipes production, pipeline laying and

logistics contracted• Route optimisation, additional surveys

Ongoing• International consultations• National permit applications• Detailed technical planning• Financial concept• Dialogue with authorities and public

in the Baltic Sea region

2011-2012

Feasibility Study

Conceptual Design

Detailed Design

Laying Line 1

Commiss-ioning Line 1

Commiss-ioning Line 2

Laying Line 2

EIA & Approvals

2011 20122010-20112005-20061997-1999 2006-20092006-2008

2. Current project status

In dialogue with all Baltic Sea countries

8

Overview legal framework

5 StatesNational Law

EUDirectives, Regulations, TEN-E Decision

International Law

Regional Law

Between states UNCLOS, Espoo Convention, Helsinki Convention, (other) bilateral / multilateral treaties

9

5 national applications submitted – Permits to construct and operate the pipeline required

• Nord Stream is subject to national legislation in each of the countries through which the pipeline passes: Russia, Finland, Sweden, Denmark and Germany

• Submission of national application documents well underway

- Germany: submission mid-December 2008

- Denmark: submission March 2009 (concurrently with Espoo Report)

- Sweden: additional application documents submitted in October 2008; feedback received from 12 authorities after administrative referral to be answered

- Finland: submission March 2009 (concurrently with Espoo Report)

- Russia: submission end of 2008

10

International consultations – Nine states participating in largest Espoo process ever

3. Attractive business opportunities

Importance for Europe

12

European Union confirms high importance

• The "natural gas pipeline via the offshore route from Russia to the EU" is specifically nominated as a priority project under the Trans-European Network Energy Guidelines (‘TEN-E’)

• In 2000, the North European Gas Pipeline was included into the ‘TEN-E’ Guidelines - as a ‘Project of Common Interest’ (i.e. third level); 2003 status confirmed

• In 2006, Nord Stream was designated as a ‘Project of European Interest’, recognising its status as one of the most important projects to meet Europe’s energy infrastructure needs

• This means that Nord Stream…

- Is in line with the EU’s overall energy policy objectives: sustainability, competitiveness and security of supply

- Is supported by EU member states

Source: Decision 1364/2006/CE of the European Parliament and the Council of the European Communities, September 6, 2006

13

Important contracts signed

• Conclusion of major supply contracts important steps towards efficient and timely project implementation

• Supply agreements concluded for the first pipeline: over one million tons of pipes ordered

- EUROPIPE (Germany) 75% – order value 1.2 bn EUR- OMK (Russia) 25% – order value 0.4 billion EUR- Further tender will be issued for second pipeline

• Contract for logistics (concrete coating, pipe storage, transport) signed with EUPEC (France) – order value 650 million EUR

• Contract signed with SAIPEM (Italy) for pipe-laying – order value over 1 billion EUR

14

Gas Purchasers Gazprom Marketing and Trading Ltd, UK E.ON Ruhrgas AG DONG Energy A/S Gaz de France S. A. WINGAS GmbH & Co. KG

Nord Stream and Shareholder Nord Stream AG OAO Gazprom N.V. Nederlandse Gasunie BASF/Wintershall Holding AG E.ON Ruhrgas AG

Contractors Marin Mätteknik AB – Seabed survey Port of Slite – Marshalling and stock yard Port of Karlskrona – Marshalling and stock yard Rambøll Oil & Gas – EIA and permit applications Saipem S.p.A. – Pipe laying EUPEC GmbH – Concrete coating Port of Hanko – Marshalling and stock yard Port of Kotka – Coating yard PeterGaz – Seabed survey ZAO OMK – Pipe production Mukran – Marshalling and coating yard EUROPIPE GmbH – Pipe production Snamprogetti S.p.A. – Engineering/design DoF ASA – Seabed survey PetrolValves S.R.L. – Supply of valves DNV – Quality control, certification ERM – EIA IfAÖ – Environmental studies

12

3

45

1

2

3

4

5

Italy

France

UK

Denmark

Germany

Russia

Sweden

Finland

Netherlands

Switzerland1

2

3

1 2

34

7 8

9 10

11

135

64

3

1

14

Norway

15

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

16

5 2 4 512

17

18

17

18

European dimension reflected in involved companies

4. Nord Stream‘s financial concept

One of the biggest private investment in European infrastructure

16

A reliable project in financial world

• Project expenditure 7.4 billion Euro - 30% from Shareholders- 70% from Banks

• The crisis in the financial markets further intensified and resulted in- Substantially reduced liquidity more difficult to get loans- Very restrictive lending banks very cautions- Lenders demand higher margins - Lower interest rates

• However, Nord Stream still seen as attractive project for banks due to- Strong Shareholders- Low market risk (energy)- Infrastructure (long term / stable returns)- Solid contract structure

17

Nord Stream – being realised on target

In comparison to Nord Stream, no other pipeline project such as, for example,South Stream, Nabucco or Galsi...

…has the same capacity

…will be able to deliver gas already in 2011

…has conducted such a comprehensive environmental survey

…has major commercial commercial contracts in place

Nord Stream – an essential contribution to Europes’ energy security

1818

Contacts

Nord Stream AG

Grafenauweg 2

6304 Zug / Switzerland

Phone: +41 (0) 41 766 91 91

info@nord-stream.com

www.nord-stream.com

Vugar Veysalov

Permitting Manager