PECHORA LNG
Corporate Presentation
Russia in the context of global natural gas market
Top 10 by Reserves of Natural Gas
Market overview
Top 10 Gas Exporters
2
Top 10 Gas Producers
Top 10 LNG Producers
0
10000
20000
30000
40000
50000
0
200
400
600
800
0
50
100
150
200
0
10
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60
Source: BP Energy Review, 2011
Gas reserves Oil reserves Gas production Oil production
The cumulative proven reserves of natural gas – 560 bcm
Prospective annual production – 15 bcm p.a
Current gas production is less than 0.2 bcm p.a. or nearly 1% from
potential output
Gas reserves of the Netets autonomous district are underdeveloped
due to remoteness from the existing pipeline network
504 (MTOE) 1400 (MTOE)
99%
13,8 (MTOE)
1%
0,18 (MTOE)
Source: Nenets Autonomous District Administration
Nenets Autonomus District
Market overview
Regional market overview Nenets Autonomus District
Reserves: oil and gas Production: oil and gas
Source: Nenets Autonomous District Administration
64% 36%
3
LNG technology is the most economically justified method
to develop gas potential of the region
Project overview
Project
Pechora LNG Yamal LNG
Sakhalin-2
Vladivostok LNG
Shtockman LNG
Pechora LNG Project in terms of Russian LNG market
Pechora LNG Project is based on reserves of Kumzhinskoye and
Korovinskoye gas-condensate fields in Nenets Autonomous District,
licensed to ALLTECH Group in the course of open bids held in
December 2007 and June 2009, respectively
Kumzhinskoye field was licensed at a decision of NAO Administration,
considering environmental issues related to consequences of gas
leakage accident happened in 1980
In line with license obligations, ALLTECH Group has performed
profound work to liquidate consequences of the accident and has
developed the program of environmental monitoring
Project Feasibility Studies (FS) have been completed, i.a.: field
development plan, gas treatment and pipeline transport, several
LNG plant options, shipping and LNG marketing
Kumzhinskoye field reserves have increased by 20 Bcm of gas
based on completed 3D seismic
Appraisal well on Kumzhinskoye field was drilled: gas flow rate was
proven at 1.1 mcm/day
Public Consultations on the Project were held in Naryan-Mar with
Declaration of Intentions presented to the public and local
administration
Additional preinvestment study was completed by Gazprom’s
subsidiary JSC «Giprospetsgas»
Positive expert opinion on preinvestment study was issued by
«Gasprom VNIIGAS»
Project status Project development history
4
Integrated production chain: gas production → gas treatment and
transportation → LNG production
Relative simplicity of implementation :
• proven resource base
• production and transportation from onshore fields
• light ice conditions in the region
Project key advantages
Project concept
Project
Existing Project resource base: Kumzhinskoye and
Korovinskoye fields, Nenets autonomous district
Perspective resource base: Vasilkovskoye, Vaneivisskoye,
Layavozhskoye fields, Nenets autonomous district
Gas treatment at GTP (village Krasnoye) and transportation to
LNG plant, Barents sea shore
LNG production: 2.6 - 8.0 mtpa
5
Resource base
Project
Kumzhinskoye field
Field discovered in 1968
On state balance since 1980
Wells drilled : 29
Total acreage : 225 km2
2D seismic completed on
262 line kilometers
License holder : CH Invest
License received in 2007
Korovinskoye field
Field discovered in 1975
On state balance since 1985
Wells drilled : 26
Total acreage :134 km2
2D seismic completed on
626 line kilometers
License holder : EvroSeverNeft
License received in 2009
Existing resource base Perspective resource base
Licensed resource base
6
Field License status Cate-
gory
Gas,
Bcm
Conden-
sate,
mln.t
Oil,
mln.t
Vasilkovskoye Pechoranefte-
gazprom
С1
С2 78.4
8.5
3.0
0.3
-
-
Vaneivisskoye Open acreage С1
С2 85.2
-
3.9
-
5.7
0.9
Layavozhskoye Open acreage С1
C2 138.0
2.2
7.0
0.1
8.6
1.2
TOTAL
reserves C1+C2 312.3 15.7 39.9
Field License status Cate-
gory
Gas,
Bcm
Conden-
sate,
mln.t
Oil,
mln.t
Kumzhinskoye Alltech Group С1
С2 105.6
18.4
3.499
0.5
-
-
Korovinskoye Alltech Group С1
С2 40.9
0.2
0.9
0.1
-
-
TOTAL
reserves C1+C2 165.1 4.95 -
Gas and LNG production options (JSC «Giprospetsgas»)
Project
Gas production 7.0 Bcm. LNG production 4.0 mtpa Gas production 4.2 Bcm. LNG production 2.6 mtpa
Gas production 7.0 Bcm. LNG production 4.0 mtpa
(incl. processing of gas Vasilkovskoye field) Gas production 13.4 Bcm. LNG production 8.0 mtpa
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LNG, Ttpa
Gas, mcm Gas: Kumzhinskoye Gas: Korovinskoye LNG
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LNG, Ttpa
Gas, mcm Gas: Kumzhinskoye Gas: Korovinskoye LNG
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LNG, Ttpa
Gas, mcm
Gas: Vasilkovskoye Gas: Kumzhinskoye
Gas: Korovinskoye Gas: Layavozhskoye
Gas: Vaneyvisskoye LNG
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LNG, Ttpa
Gas, mcm
Gas: Vasilkovskoye Gas: Korovinskoye
Gas: Kumzhinskoye LNG
Developing Nenets region gas potential (JSC «Giprospetsgas»)
Project
8
VASILKOVSKOYE
Pechoraneftegazprom
VANEIVISSKOYE
Open acreage
LAYAVOZHSKOYE
Open acreage
KUMZHINSKOYE
CH Invest
KOROVINSKOYE
EuroNorthOil
Ø 720, L 21 km
Ø 1020, L 300 km
GTP
Naryan - Mar
LNG plant
Advantages :
shipyard-based construction
Possibility of relocation
Does not require jetty infrastructures
Disadvantages
High LNG storage vaporization at sea swells
Substantial ice management requirements
LNG offloading limitations in open sea conditions
Advantages
Proven design
Conventional technology packet
Disadvantages
Requires port infrastructures
Longer construction schedule
Higher CAPEX combining port infrastructures
Advantages
High ice loads
Structural stability during offloading in the open sea
Does not require jetty infrastructures Disadvantages
High weights characteristics and construction cost
Sea bottom installation requires supplementary investigations
Advantages
High ice loads
Structural stability during offloading in the open sea Low LNG storage construction cost
Disadvantages
Installation works at install point required
Sea bottom installation requires supplementary investigations
Onshore LNG plant (Technip/Air Products) Floating LNG – FLSO (Technip/DSME)
Floating LNG case – GBS (TGE Gas Engineering) Floating LNG case – GBS (Aker Solutions)
Project
Dimensions (hectares) - 210
Capacity (mtpa) - 2.6
LNG storage (m3) -180,000
Technology packet- APCI C3MR
Dimensions (L x W x H) (m) - 320 x 65 x 32
Capacity (mtpa) - 2.6
LNG storage (m3) - 235,000
Technology packet - APCI DMR
Dimensions (L x W x H) (m) - 330 x 75 x 40
Capacity (mtpa) - 2.6
LNG storage (m3) - 235,000
Technology packet - APCI DMR
Dimensions(øx H) (m) - 150 х 65
Capacity (mtpa) - 2.6
LNG storage (m3) - 250,000
Technology packet - APCI DMR
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2.6 mtpa 4.0 mtpa (K+K)
4.0 mtpa (К+К+V)
USD/mmbtu
Liquefaction
Production, transportation, treatment
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2.6 mtpa 4.0 mtpa (K+K)
4.0 mtpa (К+К+V)
8.0 mtpa
USD/mmbtu
Liquefaction
Production, transportation, treatment
**
* Gas cost level at which NPV of upstream & midstream stages equals zero, taking discount rate equal to 10%
** LNG cost level at which NPV of gas liquefaction stage equals zero, taking discount rate equal to 10%
Onshore LNG Plant: CAPEX Offshore LNG Plant: CAPEX
Offshore LNG Plant: Gas unit costs Onshore LNG Plant : Gas unit costs
10
CAPEX and Per Unit Costs (JSC «Giprospetsgas»)
Financial parameters
*
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2.6 mtpa 4.0 mtpa (K+K)
4.0 mtpa (К+К+V)
8.0 mtpa
MUSD Offshore infrastructure
Liquefaction
Transportation +treatment
Production
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2.6 mtpa 4.0 mtpa (K+K)
4.0 mtpa (К+К+V)
MUSD Offshore infrastructure
Liquefaction
Transportation +treatment
Production
**
*
IRR results (JSC «Giprospetsgas»)
Financial parameters
IRR comparison of Project options
11
10%
15%
20%
25%
30%
35%
40%
Poten&Partners forecast
RF EDM forecast (negative)
RF EDM forecast (basic)
RF EDM forecast (optimistic)
Poten&Partners forecast (+risks)
Onshore: 2.6
FLSO: 2.6
GBS: 2.6
Onshore (К+К): 4.0
FLSO (К+К): 4.0
GBS (К+К): 4.0
Onshore (К+К+В): 4.0
FLSO (К+К+V): 4.0
GBS (К+К+V): 4.0
Onshore 8.0
Ряд11 IRR=15%
Project options ↓
Feasibility study results and next steps
Project development
12
• Pechora LNG is a technically feasible project
• Financial and economic results are attractive
• Risk analysis is performed. Risk factors are within the acceptable limits
• Market niche for the 2018-20 period was identified
• Next steps:
• Freezing Project’s resource base
• Negotiating the terms of cooperation with Russian gas players
• Formation of partnership with foreign partners