The European gas landscape Rannveig S. Stangeland, VP, Marketing & Trading, Statoil European Gas Summit, Sept 29 2014, Berlin

Europe is well positioned with respect to gas

• Europe enjoys significantly lower gas

prices than on the global traded market

• Europe is surrounded by gas-rich regions

with Europe as their prime market

• The global LNG market is growing,

increasing the availability of gas

2

Source: Statoil

A growing LNG market increases gas availability

European gas prices are lower than global gas prices

0

100

200

300

400

500

600

700

2013 2015 2020 2025 2030

LN

G c

ap

acit

y (

bcm

)

Pacific

Atlantic

Middle East

0

5

10

15

20

Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14

Ga

s p

ric

e (

US

D/m

mB

TU

)

JKM NBP Day Ahead Henry Hub

Source: Platts, ICIS Heren, Argus

Reduced gas demand will not increase security

• Reduced use of gas in EU may

• push out marginal sources of gas

such as LNG and domestic shale gas

• increase the dependence on

traditional supply sources

• lead to a less diverse supply mix

• Mixed signals on the future of gas in

Europe may undermine the confidence of

investors

3 Source: IHS CERA, European Commission

Outlook for gas supply to EU

0

100

200

300

400

500

600

2012 2020 2025 2030

Ga

s s

up

ply

(b

cm

)

Indigenous EU North Africa

Norway Russia

Caspian LNG

Other pipe Demand EE30*

* Estimated gas demand in EC’s scenario with 30% energy efficiency by 2030

Supply security is best ensured by an attractive market

• A well-functioning market is beneficial for

both consumers and suppliers

• Competition and integration enhance cost

efficiency

• A strong European gas market will attract

investors in gas supply and infrastructure,

and is the best guarantee for energy security

0

5

10

15

20

25

30

35

40

45

2011 2012 2013 2014

Ga

s p

ric

e (

EU

R/M

Wh

) NBP TTF NCG Italy PSV

European gas prices are converging

Source: ICIS Heren 4

Gas liberalisation – a model to follow

• Gas market maturity varies strongly between

regions

• In Central and Eastern Europe, liberalisation

is moving slowly

• Development of Central/Eastern European

markets and infrastructure will support supply

security and cost efficiency

A “three speed” Europe

North West Europe

Market maturity

Infrastructure

Regulatory stability

Central/East Europe

Market maturity

Infrastructure

Regulatory stability

South Europe

Market maturity

Infrastructure

Regulatory stability

Illustration: Statoil 5

The 2030 framework will impact future role of gas

• A separate target for energy efficiency

will lead to increased costs

• Statoil supports a single target for CO2

and a strengthened ETS

• A robust price on CO2 will drive both

carbon reduction and energy efficiency

in a cost efficient way

6 Source: European Commission 6

Energy efficiency-

costs are outweighing benefits

0

10

20

30

40

50

60

70

80

90

100

110

120

20 % 25 % 30 % 35 % 40 % 45 %

Bill

ion

Eu

ro/y

Energy Efficiency target in 2030

Total system costs

Fossil fuel savings

• Europe is in a beneficial position with respect to gas, with competitive prices

• Less use of gas may lead to a less diverse supply, compromising energy security

• A strong and well functioning European gas market is the best guarantee for energy security

Concluding remarks

7