LNG in Australiaand the emerging roll of CSM

2

The Australian petroleum industry is dominated by gas

Oil

CondensateGas

Legend

CSM current 2P reserves

CSM Potential

Location and relative size of Australian petroleum reserves

3

What is LNG?

Liquefied Natural Gas (LNG) is not in itself a product but rather a transport system for natural gas.

By cooling natural gas to minus 163 degrees Celsius it is turned into a liquid that takes only 1/600th the volume that can be transported in specially designed ships.

At the destination the LNG is heated and turned back into natural gas and used for electricity generation or domestic gas supply.

4

LNG MARKET - Demand

The GFC in 2008 lead to the first year on year reduction in LNG demand in history.

The large number of proposed projects suggest that LNG market may be entering a period of potential over supply.

• LNG supply is a long term relationship and buyer and sellers need to see through current market conditions to secure long term supplies.

• LNG demand growth is forecast to resume it long term growth trajectory with the re-emergence of global economic growth.

>Source: Gas Strategies

5

LNG MARKET - Supply

Projects face stiff competition from other LNG projects in the region & globally

There is only a finite amount of capital available & the majors will not want to flood the market to

create an imbalance.

6

LNG MARKET – Potential LNG projects in Australian

7

LNG MARKET – Potential LNG projects in Australian

Plant Capacity

mtpa

Estimated Capital Cost A$ Billion

Proposed Start Date

Existing Projects

NWS Project Trains 1 -5 16$27 ~$50b

todayOperating

1989 Woodside, BP, Shell, BHPB, Chevron, MIMI

Darwin LNG 3 2Operating

2005 ConocoPhillips, INPEX, ENI, Santos

Under ConstructionPluto Train 1 4.3 12 2010 Woodside, Tokyo Gas, Kansai ElectricGorgon 15 48 2013 Chevron, ExxonMobil, Shell

Possible projectsNWSPNG LNG 6.3 18 2014 ExxonMobil, Oil Search Santos, othersPluto Train 2 5 12 2014 WoodsideWheatstone 5 12 2014 ChevronNWS Train 6 4 8 2015 Woodside, BP, Shell, BHPB, Chevron, MIMIBrowse 15 50 2015 Woodside, BP, Shell, BHPB, ChevronScarborough LNG 8 15 2015 ExxonMobil, BHPB

Darwin/ Timor Sea LNGIchthys 15 30 2014 InpexTotalTimor Sea LNG 4 8 2014 MEOGDF Suez Floating LNG 4 12 2016 GDF Suez, Santos

Gladstone LNG (Coal Seam Methane based)GLNG 3.5 8 2014 Santos, PetronasAPLNG 14 35 2014 Origin, ConocoPhillipsCurtis LNG 7 12 2014 QGC, BGFisherman's Landing 2014 Arrow Energy, ShellGladstone LNG 1.5 0.5 2012 LNG limited, Golar LNG, Arrow Energy

Total Proposed Projects 130.6 280.5

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Proposed Qld LNG Projects

Project / Sponsors Estimated Cost Size 1st LNG Status / Detail

Queensland Curtis LNG $12B 7.4Mt/p.a

(2 train)

2014 In FEED; EIS released; Final Investment Decision expected in 2010.

GLNG (Santos / Petronas) $7-8B 3.5Mt/p.a

(1 train – initially)

2014 In FEED; EIS released; Final Investment Decision expected Q2 2010.

Gladstone LNG (LNG Ltd, Golar LNG, Arrow Energy)

US$500M 1.5Mt/p.a.

(1 train – initially)

2012 In FEED; Site works commenced; will use Korea technology; CB&I appointed Project Manager; BNP Paribas Financial Advisor.

Gas supply agreement in place with Arrow for 1.5mt p.a.

Australia Pacific LNG $35B 14Mt/p.a.

(4 trains by 2020)

2014 - 2020 Estimates Final Investment Decision to be reached by end 2010.

Shell Gladstone LNG ? Well behind the other projects. No FEED commenced. Declared significant project in June 2009

9

Specifics of the LNG cycle from Coal Seam Gas fields

UPSTREAM DOWNSTREAM

10

Gladstone LNG projects Development potential and local impact

•It is unlikely all the proposed project will proceed.

•However, it is realistic to anticipate the development of a ~28 mtpa LNG industry in Gladstone over the next 10 years. This assumes the sanction of a 3.5mtpa train each year from 2010 with first production commencing in 2014.

•The construction of a 28 mtpa LNG industry in Gladstone will have significant economic benefits to Queensland and the Gladstone region in particular.

•An economic study for the Queensland government Studies suggest that a mid size 28 mtpa LNG industries located at Gladstone would:

Increase the Gross State Product by $3.056 billion (or 1 per cent) and create over 18,000 jobs for Queensland.

Generate a royalty return of $850 million per annum to Queensland

Create 18,100 jobs, 10,300 jobs during its 10-year construction phase at Gladstone and 7400 in regional Queensland associated with wells and pipelines.

Appendices

12

Appendix: Gladstone LNG ProjectsNational Economic Impact

The Queensland Premier Anna Bligh has said:

“This is a once in a lifetime opportunity. The LNG industry can do for Queensland what coal did to the Bowen Basin and the rest of the state in the 1970s and 1980s, and beyond.”

“They could be part of a new industry with a potential worth of more than $40 billion to the Queensland economy.”

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Appendix: LNG Market - LNG prices are recovering after the recession

Source: Gas Strategies

14

Appendix: Price relationships trending to oil parity since 2005

Recent price deals in long-term contracts with buyers in Asia have been within a relatively narrow range, from 10% below crude oil parity to 5% above crude oil parity at an oil price of $60/Bbl. Price review clauses have also been introduced into many recent contracts. They typically call for a review after a fixed number of years but do not provide clear guidance on what factors should be taken into account in the renegotiations.

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