W-Stream Ltd - the promoter of the Trans-Caspian

and White Stream Gas Pipeline projects

Giorgi Vashakmadze – Director

GIOGIE Tbilisi, 26 March 2014

1 W-Stream Consortium

Turkmen gas for consumers in Europe

– a fully-fledged Southern Gas Corridor in 2020

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Speaking at the Petrol-Gas Summit in Istanbul, the head of

the Turkish Energy Ministry's Transit Petrol Pipelines Office,

Reha Muratoglu, said that he believes the pumping of

Turkmen gas to Europe via TANAP pipelines across the

Caspian Sea has now become likely.

Last year Turkey's Energy Minister visited Turkmenistan,

where he submitted a request for an annual supply of 5-6

bcma of natural gas to TANAP.

24 February 2014 worldbulletin

http://www.worldbulletin.net/news/129538/turkmenistan-seeks-

gas-exports-to-europe-via-turkey-azerbaijan

The latest – Turkey

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The latest – the EU

UROPEAN COUCIL

20/21 MARCH 2014

COCLUSIONS

Member States will show solidarity in case of sudden

disruptions of energy supply in one or several Member

States. In addition, further action should be taken to

support the development of the Southern Corridor,

including further spur routes through Eastern Europe,

to examine ways to facilitate natural gas exports from

North America to the EU and consider how this may

best be reflected in the TTIP negotiations with the

United States , and increase the transparency of

Intergovernmental Agreements in the field of energy.

So reducing our energy dependency, especially with

Russia, was a key topic in our deliberations.

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European Commission

Press release, Brussels, 17 December 2013

The European Commission welcomed today's final investment decision (FID) on

extracting gas from the Shah Deniz II gas field in Azerbaijan. With this long-awaited

decision, it is confirmed that Europe will get 10 bcm per year starting from end

2019…

EU Commission President José Manuel Barroso said: "Today's decision by the Shah-

Deniz-II-Consortium is a strategic door opener for stronger European energy security.

Building on the Joint Declaration I signed with President Aliyev in January 2011, this

important step will give the EU direct access to gas from the Caspian basin. This is a

major milestone for the diversification of our energy supplies, to the benefit of

European consumers and businesses."

EU Energy Commissioner Günther Oettinger said: "This decision to open the Southern

Gas Corridor is a real breakthrough. Through its further enlargement, the corridor

will have the potential to meet up to 20 per cent of the EU’s gas needs in the long

term.”

SD II gas into TANAP and TAP – the great start of the Southern Gas Corridor

Commissioner Oettinger: ‘'Ten bcm is a good start, but … If 10

bcm is all that there is, I will not fly to Baku and seek controversy

with Russia for that.'

Reuters, Nov 28, 2012

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What are the possibilities for timely Corridor

enlargement? Where should the next gas come from?

Azerbaijan has reserves in addition to SD but will take

some time to develop.

Iraq, Iran are promising, but there is no confidence in

the pace of development.

East-Mediterranean gas could be developed timely,

but where would the gas go if LNG option is chosen?

The first project of the Southern Corridor is now

under way, making it possible to bring necessary

plans for “enlargement”

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For long there were controversial views about Turkmenistan’s

reserves; the geology, costs and commercial feasibility of new

fields.

And ….although the actual works on Galkynysh field started in 2009

only, 22 wells are already drilled successfully. In September

Turkmenistan has celebrated the start of commercial production

within the 30 bcma phase one development of the field.

Now it is proven: Only the South Pars

field shared by Qatar and Iran is larger.

The next stage - Turkmen gas and the Trans-Caspian Pipeline

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The Government of Turkmenistan is building the so-called

East-West pipeline that will have the capacity of 30 bcma already

by 2016 making it possible to supply gas further West.

What will be required, is

merely 300km long, shallow

water pipeline. Such Trans-

Caspian pipeline would link

with the existing route that is

functional since 2006 and

delivers natural gas from

Azerbaijani to Georgia and

Turkey.

Trans-Caspian

pipeline.

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In parallel, the EU applies efforts

towards making transit countries less

vulnerable for outside pressure through

extending transparent rules of ACQUIS

COMMUNAUTAIRE. While speaking at

the seminar devoted to official launch of

negotiations on Georgia’s accession to

the Energy Community Treaty,

Commissioner Oettinger underscored:

Turkmenistan is ready to sell at least

30bcma. Tbilisi, February 20, 2014

Gas supply from Turkmenistan can closely follow the start

of SDII deliveries. And the choice of TAP for SDII has created even more

advantageous conditions for successful marketing of gas in regions thought

previously as Nabucco pipeline destinations.

There are no insurmountable obstacles that can be foreseen: inclusion of TCP

into the newly created Connecting Europe Facility (CEF) scheme, along

with reinforced instruments within the CDC scheme are two essential tools

introduces by the EU lately for ensuring the success with the next stages.

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Turkmen gas will start its

SGC journey at Turkmen

Caspian shore, gas will

come to Azerbaijan via the

Trans-Caspian Pipeline

(TCP), on its way to

western Georgia will use

the South Caucasus

Pipeline (SCP-(f)X), then

split into two trunks

providing two entry points

to the EU gas market:

one via TANAP in Turkey

and further through the

Trans Adriatic Pipeline

(TAP), and another via the

White-Stream Pipeline

(WSP) - under the Black

Sea waters.

http://ec.europa.eu/energy/infrastructure/pci/doc/pci_map_gas.pdf

The Southern Gas Corridor (SGC) structure under the latest

(October 2013) CEF supported plan, includes two separate

pipeline bundles. It is the first time that Trans-Caspian

Pipeline is identified as a project of Common Interest of the

EU (PCI) and it has a dedicated private promoter –

The W-Stream Caspian Ltd that cooperates with the European

Commission on the Public-Private partnership basis .

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"Southern Corridor" and the ”trust in gas”

"If the Russians reconcile

themselves to the fact that

"Southern Corridor" is inevitable

and that their former satellites of

Turkmenistan and Azerbaijan

have the right to make

independent decisions, the

Europeans will have far more

trust in gas as energy carrier of

future” Guenther Oettinger, September 2011 Deutsche Welle

Availability of sizable quantities of Turkmen gas will affect the size of the

EU's gas market positively, and thus bring more opportunities to other

suppliers:

SGC and CEF

© 2012 White Stream Pipeline Company Limited, the White Stream Consortium 11

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The strategic objective of the SGC

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The EU strategy document - Energy infrastructure

priorities for 2020 and beyond (17 November 2010) –

outlines the parameters of the Southern Gas Corridor:

“The strategic objective of the corridor is to achieve a

supply route to the EU of roughly 10-20% of EU gas

demand by 2020, equivalent roughly to 45-90 bcma”

Can the SGC fulfill all assigned

objectives?

One key point is: for the wholesale

competition to increase, the new supply

should be sizeable.

Critical role of the SGC for achieving

the desirable energy mix that is lower in emission and

keeps industry in Europe

Europe can pay less for energy

“…But the largest concentration of gas at global level is in the

Southern Corridor, in the path of countries that stretches from

Kazakhstan through to Egypt. ..Those countries are desperate to

have relationships with gas consuming countries; we have the

biggest market in the world, a great many things to offer those

countries and we should make it our responsibility to reach out

and bring that gas to the European Union."

http://www.naturalgaseurope.com/gasnaturally-gas-week-2013-brendan-devlin

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Commissioner Oettinger:

“Caspian gas is our salvation” 28 November 2012

“Access to Caspian gas - a key issue for

the EU ” 8 September 2011

“The trans-Caspian pipeline is a major

project in the Southern Corridor” 12 September 2011 EUROPEAN COMMISSION PRESS RELEASE

How important is the role of Caspian

gas?

Caspian gas

The Southern Corridor requires the implementation of

the ‘CDC concept’ along with the ‘two entry points

into the EU’ to reach the needed strategic magnitude

European Commission slide

© 2012 White Stream Pipeline Company Limited, the White Stream Consortium 18

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Our team – now ‘W-Stream’

Successful

projects to which

our team members

have contributed.

The project that failed in late

90-s in spite of all great

prerequisites

Sangachal

Kazakh

Ceyhan

Erzurum

Supsa

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.. two entry points for Caspian gas:

via Turkey and the Black Sea

Two entry points approach aligns

multiple interests

The EU needs diversity of routes

as well as of sources. The capacity

of the Southern Gas Corridor

should comply with its strategic role.

Caspian needs a clear prospect of sufficiently large, reliable

revenue stream to warrant large, new direct gas trade deals and

investment in upstream exploration and production and TCGP.

Turkey’s ‘land bridge to Europe’ is in many ways the natural

gas pipeline route, but the prospect of a transport monopoly slows

progress on agreements, while the existence of a range of joint

interests with Russia contributes towards increaser risk perception

for TCP and upstream in CA. 21 W-Stream Consortium

Two entry point approach – how

it helps?

Turkey will benefit from the concurrent

development of TANAP and White Stream

Monopoly transit to EU can severely limit developments in Caspian and

hence the flows of gas from Caspian via Turkey

Concurrent development of TANAP and White Stream

will not only result in increased transit through Turkey from the Caspian,

but also provide enhanced supply diversification and competition

Turkey is also vitally interested in helping Caspian countries to

strengthen their economies and independence; there is no better way for

this than enabling them to establish large scale strategic trade relations

with the EU

White Stream will enable Turkey

to achieve its strategic objectives

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White Stream and AGRI – components

of Southern and North-South Priority

Corridors respectively

Extract from ENTSOG MAP CAP 2013

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W-Stream, a key team player

in the EU Southern Corridor

W-Stream Consortium

THANK YOU!

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