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17th INTERNATIONAL CONFERENCE & EXHIBITION

ON LIQUEFIED NATURAL GAS (LNG 17)

Singapore: Emergence of a new LNG market

By: Dr. Anthony Barker, BG Group 16 April 2013

17th INTERNATIONAL CONFERENCE & EXHIBITION ON LIQUEFIED NATURAL GAS (LNG 17)

Legal notice

The following presentation contains forward-looking statements concerning BG Group plc’s strategy, operations, financial performance or condition, outlook, growth opportunities or circumstances in the countries, sectors or markets in which BG Group plc operates. By their nature, forward-looking statements involve uncertainty because they depend on future circumstances, and relate to events, not all of which can be controlled or predicted. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Actual results could differ materially from the guidance given in this presentation for a number of reasons. For a detailed analysis of the factors that may affect our business, financial performance or results of operations, we urge you to look at the “Principal risks and uncertainties” included in the BG Group plc Annual Report & Accounts 2011. Nothing in this presentation should be construed as a profit forecast and no part of this presentation constitutes, or shall be taken to constitute, an invitation or inducement to invest in BG Group plc or any other entity, and must not be relied upon in any way in connection with any investment decision. BG Group plc undertakes no obligation to update any forward-looking statements.

No representation or warranty, express or implied, is or will be made in relation to the accuracy or completeness of the information in this presentation and no responsibility or liability is or will be accepted by BG Group plc or any of its respective subsidiaries, affiliates and associated companies (or by any of their respective officers, employees or agents) in relation to it.

Singapore’s challenges

Source: Wood Mackenzie, November 2012 & EMA Singapore Energy Statistics Report 2012

75.7%

20.3%

4.0%

2011 gas demand

Power

Industry

Other

84.1%

15.9%

2011 gas supply

Indonesia

Malaysia

78.0%

18.4%

3.6%

2011 fuel mix for electricity generation

Natural Gas

Petroleum Products

Others

Power

Industry

Other

Indonesia

Malaysia

Natural gas

Petroleum products

Others

Consolidating demand

• Marketing multiple gas sales

contracts

• Inventory management and

24/7 commercial operations

• Market development

Sources: BG Group estimates 2012,Schlumberger Business Consulting, 2009

Singapore LNG demand

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2013 2014 2015 2016

mtp

a

Meeting Singapore’s challenges

Source: BG Group, 2012

Aggregator

(BG Group)

Terminal owner

(Singapore LNG)

Energy Market

Authority of

Singapore

Gas buyers LNG supplier

(BG Group)

BG Group’s LNG marketing

Henry Hub

mtp

a

Singapore

Source: BG Group Strategy Presentation, February 2012

Global assets, supply and markets

* Exclusive right to supply Potential liquefaction

Existing long term supply source Liquefaction under construction

Equity position

Existing import capacity

Long term customer

UK

USA

Nigeria

Egypt Trinidad

& Tobago

EG

Chile

Singapore*

Australia Tanzania

Canada

China

Japan

Brazil

India

• Pipeline gas moratorium

• Vesting contracts

• SLNG step-in and

underwriting

Policy and regulatory support

EMA initiatives and policies

0 500

1,000 1,500 2,000 2,500 3,000 3,500 4,000

Q2

20

12

Q3

20

12

Q4 2

01

2

Q1 2

01

3

Q2

20

13

Q3

20

13

Q4

20

13

Q1

20

14

Q2

20

14

Q3

20

14

MW

Incremental gas generation capacity

Source: Tri-Zen Consulting, BG Group estimates, May 2012

Long-term sales

• 3 mtpa exclusive franchise

to supply Singapore

• Approx 2.6 mtpa

contracted with 10 – 20

year supply periods

• 10 gas buyers and ~15

GSAs

Long-term sales projection

Source: BG Group, November 2012

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

3.2

Q1

20

10

Q4

20

10

Q3

20

11

Q2

20

12

Q1

20

13

Q4

20

13

Q3

20

14

Q2

20

15

mtp

a

Singapore franchise state of play

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

Remaining Sales (3mtpa Franchise Forecast) Contracted Long-term Sales

mtp

a

Source: BG Group, November 2012

Contracted long-term sales

Remaining sales (3 mtpa franchise forecast)

Long-term sales

• BG Group has contracted at

three long-term price tranches

• Singapore’s power market

is now well supplied with

long-term volumes

• Buying interest seen from

2018 onwards

– Replacement of expiring pipeline

gas import contracts

– Demand growth driven by

industry

0.0

2.0

4.0

6.0

8.0

10.0

12.0

20

13

20

15

20

17

20

19

20

21

20

23

20

25

mtp

a

Incremental demand

Sumatra pipeline gas replacement

Natuna pipeline gas replacement

Malaysia pipeline gas replacement

BG Group franchise

Short-term supply security

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2013 2014 2015

mtp

a

Source: BG Group, December 2012

Available volumes for short-term sales

BG Group committed volumes

Potential for short-term sales

Short-term sales

79%

21%

2013 volumes • Through 2012, BG Group worked

closely with the regulator (EMA) to

develop:

– Standardised master short-term GSAs

– ‘Stand alone’ short-term GSAs

• Short-term interest driven by:

– Ramp up and commissioning

requirements

– Operational concerns

– Commercial opportunities to access

spot LNG

– Pipeline gas displacement

– Power market opportunities

Long-term sales

Short-term sales

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.18

0.2

GSA1 GSA2 GSA3 GSA4 GSA5 Cargoes

mt

Consolidating demand

Aggregator's short-term and spot GSAs

1 c

arg

o

2 c

arg

oe

s

3 c

arg

oe

s

Market development

Source: BG Group, November 2012

Singapore

LNG

inventory

Term

LNG Fuel oil &

oil products

Indonesia

piped gas

Malaysia

piped gas

Spot LNG

Electricity

procurement

100

150

200

250

300

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

05

= 1

00

Relative pricing of

fuel oil & Brent

Brent Fuel oil

Singapore market overview

-

2

4

6

8

10

12

14

16

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

mtp

a

Sources: BG Group estimates, November 2012 & EMA procurement framework consultation paper, March 2012

Aggregator franchise – long-term contracted supply

Long-term supply opportunities (EMA consultation paper)

Aggregator franchise – 3 mtpa

Short-term supply opportunities

Gas demand (EMA consultation paper) Terminal max throughput – facilities under construction

Pipeline gas displacement

• LNG is competitive against

pipeline gas in Singapore

• Spot LNG prices regularly

support short-term

displacement of pipeline gas

with LNG

Pipeline gas prices S

pot L

NG

prices

Pipeline gas

displacement

Market development LNG reloads

• Physical reload capability

enables break bulk

trans-shipment

• Demand side interest in LNG

reloads for various regional

markets

• Early stage assessment of

LNG bunkering under way

SLNG full development

Source: EMA.gov.sg

Conclusions

• Close cooperation among

BG Group, SLNG and EMA

• Aggregator model tailor made

to meet Singapore’s gas

market challenges. It could be

adapted to introduce LNG to

new markets

• BG Group is committed to

ongoing development of

Singapore gas market