Are the dynamics of the LNG

industry changing?

CERA week ● 5 March 2014

Chris Finlayson, Chief Executive, BG Group

Methane Shirley Elisabeth LNG vessel

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2

Securing energy supply for Singapore

3 Near-term outlook – supply hiatus and market tightness

• New LNG import terminal

• Second terminal from 2020+

• Capacity has nearly doubled to 6 mtpa in

a year

• Singapore’s vision: to create a competitive

LNG market and become a regional

energy hub

LNG today

• 2013 trade = ~240 mt* (~176 bcma)

• ~10% of all gas consumed

• A global trade:

– 17 exporters

– 27 importers

– ~382 ships

• An increasing dynamism:

– 3 new markets added in 2013

– 2012 short-term trade** = 25% of total,

2013 likely to be similar.

– 2013 AB to PB = 22.7 mt* (16.7 bcma)

4 Near-term outlook – supply hiatus and market tightness

*Source: BG Group interpretation of IHS Waterborne data (Jan 2014).

**Source GIIGNL – contracts of less than 5 years

Note: AB = Atlantic Basin, PB = Pacific Basin

BG Group LNG trade outlook

5

Market outlook

Global LNG supply (mtpa)

Source: BG Group outlook 2013; Yamal not included in under-construction as the BG oultook was done prior to Dec 2013 FID

* Range of trade forecasts (2013): Wood Mackenzie, PFC Energy acquired by IHS, IHS CERA, Poten & Partners, PIRA, FACTS, Global

Energy, Gas Strategies

**Some US capacity (Sabine Pass T1-4) is under construction

Range of external

LNG trade forecasts*

New

supply

~120

mtpa

Supply:

existing

and under

construction

BG trade outlook

Demand

upside

Existing

Under construction

Other

US**

Are the dynamics changing?

6 Near-term outlook – supply hiatus and market tightness

• New suppliers, markets and players

• Increasing flexibility

• New pricing constructs

• LNG as a transport fuel

But there are limits

7 Near-term outlook – supply hiatus and market tightness

• US LNG not a universal solution

• Pricing will remain regional

• Oil indexation will remain important in

Asia

• Increasing liquidity is not a given