Poseidon Med IIGeorge Polychroniou

Poseidon Med II - Project Manager

Executive Director

Strategy, Business Development, Administration & IT

DEPA – Public Gas Corporation S.A.

“Poseidon Med II calls at Piraeus” Piraeus Municipal Theatre, Piraeus

December 8, 2016

I. LNG as Marine Fuel

II. Small Scale LNG in Greece

III.Poseidon Med II

Content

I. LNG as Marine Fuel

II. Small Scale LNG in Greece

III.Poseidon Med II

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1990 2004 2018 2032

History Rivalry Vertigo Autonomy© 2016 IHS

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Average annual crude oil prices (real), 1990–2040

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Oil Europe Contract

Europe Market Henry Hub

Asian Market Asian ContractSource: IHS

Comparative gas prices (Real), 2000-2040

$/M

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LNG in the international energy market

LNG globally commoditized

Increased decoupling of oil and gas prices

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Africa OECD Asia Non-OECD Asia CIS

Europe Latin America Middle East North America

LNG Demand (includes boil-off gas) (Mmtpa)

Global LNG Demand

LNG Demand growth under all scenarios

Non-OECD Asia is the main growth market

Europe remains the residual market

LNG demand as transportation fuel

grows in importance

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Supply – Demand Balance

293 270 202

43 88 145

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2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Opportunity gap for all un-sanctioned projects

Total un-contracted LNG flows from existing and under construction projects

Contracted supply from existing and under construction projects

Global LNG demand

Contracted supply and viable un-contracted supply versus global LNG demand

Note: MMtpa = Million metric tons per annum of LNG. Does not include market-driven underutilization from global projects© 2016 IHS

MM

tpa

No more FIDs “needed” this decade

Buyers market

Reduced capacity utilization 80%-90% vs. 88% (in the period of 2000-2016)

• Recent decision of IMO/MEPC will speed up developments

• LNG competition with Low Sulphur Bunker Fuels and EGCS (scrubbers) but:

Competition depends on oil price level and LNG decoupling

LNG can offer compliance with potential future environmental regulation

(NOx, PM, COx)

Conversion Investments payback often < 5 years

LNG could be the most beneficial option for:

− Smaller vessels

− New builds

− Vessels operating on fixed routes (e.g. Container vessels, Ferries,

Cruise ships)

• Other issues also matter (safety, reliability)

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LNG as marine fuel

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LNG Demand for Bunkering

Different views often diverging.Drivers that could speed up the

demand:

New environmental regulations

Availability and cost of ownership for other bunker fuels

Optimization of the SSLNG supply chain

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LNG Consumption as a bunker fuel

Source: BCG analysis

263 252 210155 116

23143

191 237

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2014 2015 2020 2025 2030

Shipping Industry

Conventional HFO cleaned by scrubbers LNG

Tons (millions)

I. LNG as Marine Fuel

II.Small Scale LNG in Greece

III.Poseidon Med II

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Small Scale LNG in Greece

Existing NetworkNetwork under Development

New Regions

Main HP System

New Markets for transport (bunkering, road transport)

High density residential areas & large industrial & commercial customers in

Western Greece and the islands

Non interconnected power generation plants

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Small Scale LNG is possible and suitable in the area

Greece could be an international LNG

bunkering & distribution hub in

SE Europe

Tradition - Greece is a world leader in shipping

Strategic geographical position

Important internal short sea activity (53 Islands with population >1.000 - 111 ports)

Need for LNG for other uses (potential for gasification of remote areas)

Availability of LNG supply / infrastructure (LNG Terminal – Revithoussa)

I. LNG as Marine Fuel

II. Small Scale LNG in Greece

III.Poseidon Med II

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LNG at Ports

Piraeus

Patra

Heraklion

Igoumenitsa

Limassol

Venice

3 Countries

6 Ports

Greece

Italy

Cyprus

Duration: Jun.2015 – Dec.2020

Budget: ~€53M

Coordinator: DEPA

Technical Coordinator:

DESFA

Partenrs: 26

Co-financed: 50% by EU - CEFConnecting EuropeFacility

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Activities

Project Organization Coordination – Management – Dissemination Social & Public Consultation – Awareness

Ports & LNG Terminal Infrastructure

Environmental/Safety/Site Studies – Ports Master Plans updating Supporting/Preliminary/Detailed Design Studies – Tender documents

Vessels Infrastructure Technical studies for selected vessels

Pilot case (Venice) Executive Design and Construction of an Innovative LNG Vessel

Financial aspects Installations Financial Assessment Financial Instruments for the Global Projects Investments

Regulatory framework Adaptation of the Regulatory Framework

Sustainability-Synergies Assessment of Efficient Supply Chain/Synergies Sustainable LNG Pricing Patterns

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Partners

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Progress in 2016

HAZID Workshops

Stakeholders Dissemination Events

Assessment and consultation process with selected shipyards

Special working groups for the formulation of Regulatory

Framework

Selection of 10 candidate vessels for retrofitting

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Progress in 2016

Preliminary layoutof the truck loading station

Specifications for the design of the LNG Feeder

Market research for other NG uses

Meetings with stakeholders to explore synergies

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Plans for 2017

Design of a Pilot Truck loading station on the island of Revithoussa LNG import terminal

Bunkering Vessel Designs

LNG As Fuel on new building Designs

Preliminary EIA for all ports and Revithoussa

Technical recommendations detailing quantity and quality measurements across the LNG bunkering supply and custody transfer chain

Supporting (Baseline ) Engineering studies

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Poseidon Med II – Key considerations

Well known Project in the market

Wide interest in the project from local and international players

Need for intense effort for adapting the required legislative framework

European & national support on investments for ship-owners & infrastructure developers

Attention to infrastructure permitting and public acceptance

Rapid development of LNG technology provides new options

Pilot case will boost the implementation of the necessary infrastructure

Signs that Cruise shipping could be a very promising market

Economic benefits for final users depending also on economies of scale

• LNG: a fast growing fuel in a globally commoditized market, gradually delinked from oil

• A byers market in the short-medium term

• LNG for bunkering: The best choice especially for long term viewers

• Chicken – Egg problem creates uncertainty in the short term;

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Conclusions

Synergies are a possible way out &

Poseidon Med II could be a catalyst for market development