LNG terminal project in Lithuania

1 lng terminal project in LithuaniaNovember, 2012 Klaip dos Nafta2 Areas of activitiesKlaipedosnaftaOil transshipment terminalLNG TerminalKlaip dos Nafta3 lng terminal project -BackgroundThe LNG terminal is the strategic priority project : project fully driven by Ministry of energy of the Republic of Lithuania (responsible for security of energy supply) strong political will and full support from Government of Lithuania , Ministry of energy and President. the project is included in the National energy Strategy of Lithuania , Baltic energy Market Interconnection Plan, and ENTSO-G implementation necessity to have an alternative energy source appear: Following EU requirement to ensure alternative gas supply from 3rdDecember 2014 to secure an alternative gas supply source, After shutdown of Ignalina Nuclear Power Plant on 31 December 2009, Lithuania had became even more dependent on natural gas import, As an outcome of above gas is being supplied to the country by single pipeline from Russia (Gazprom) through the Republic of Belarus,Klaip dos Nafta4 lng terminal project -Ownership KlaipedosNaftaappointedbytheGovernmentof LithuaniaonJuly10,2010forLNGT erminalProjectimplementation.

2 MajorobjectivesoftheNationalEnergyStrate gyofLithuaniaassignedtoLNGterminal: Supply of natural gas will be diversified and the country will not be dependent on a single gas supplier, Lithuania on its own will be able to cover emergency demand for natural gas. The country will gain access to international gas markets. Preconditionstoformbothnationalandregion algasmarketsinLithuaniawillbecreatedwith thepossibilityinthefuturetosupplygastone ighboringcountries. LNG terminal will start operation on December dos Nafta5 Development of Gas Transmission System of LithuaniaKlaip dos Nafta6 project scopeLNG terminal FSRUPort Infrastructure PipelineSUPPLY OF NATURAL GAS: EXECUTIONOF SUPPLY AND SALES ACTIVITIESK laip dos Nafta7 Lithuania LNG project Plan2013 TerritoryPlanning (Land for Jetty, Pipeline)Preparation for Territory Planning 201120122014 Port Dredging(Klaipeda Port Authority)PipelineDesignConstruction of FSRU Vessel and Delivery to Klaip daPortProcurement of FSRU VesselLaying of Pipeline Jurbarkas Klaip da (Lietuvos Dujos)LNGP rocurementEnvironmental Impact Assessment (Business Permit)SEIAC onception, receipt of permits, safety and navigation issues, project management, construction supervision(Lead Advisor)

3 2015 Commissioning Works of TERMINALPre- project Study of PipelineRisk and Safety AssessmentConnection of LNG terminal to Gas GridFID Contract with Hoegh for FSRU supplyDesign and construction of FSRU Jetty (Klaipeda Port Authority / KlaipedosNafta)FinishedIn progressOrganized by third partiesApproved EIAK laip dos Nafta8 Main Parameters of LNG TerminalCAPACITYTECHNOLOGYPLACE Planned capacity of 2-3 bcma year Capable to fulfil gas emergency demand approx. 1 bcma yearChosen technology Floating Storage and Regasification Unit (FSRU); Launch into operation at the end of 2014; Storage capacity 170 000 m3 Will ensure gas supply for most sensitive consumers for 14-30 daysApproved location Southern Part of Klaipeda Port near Pig s Back island Good conditions for secure operation; Safe distance to living areasUp to 11 mln.

4 M3a dayKlaip dos Nafta9 Benefit of New Technology for energy SecurityCriteriaBenefitReliableStorage capacity reflects to securityof supply -15-30 d. to most sensitive consumers (citizens, heating,hospitals, etc.)MovableFSRU canserve as LNG carrierEffectiveNew technologyallows to start up regasification system immediatelySafeFSRU will comply safetystandard applicable in gas and oil businessSecurityFSRU equipmentdesigned to comply N+1 requirementsKlaip dos Nafta10 Offshore LNG terminal popular technology due to time and price attractivenessKlaip dos Nafta11 Future Challenges of LNG TerminalOperating on a full load LNG terminal is capable to fulfill 75% of the whole gas market of Baltic States: The biggest gas consumption is in Lithuania up to 61% of the whole gas market in the Baltic; Klaipeda is non freezing port, operating all year round, which is different from other ports in the Baltics.

5 Underground gas storage in InciukalnsLatvia could serve as a balancing point; Working pressure of gas pipeline in Lithuania is higher than in Latvia and Estonia, which is an advantage to supply gas to neighboring countries; Being a central point of LNG/NG supply, LNG terminal could serve small scale LNG gas consumption of Baltic States in 2011 was5,6 bcm: Lithuania 3,4 bcm, Latvia 1,6 bcm, Estonia 0,6 designed capacity of LNG terminal : 4 bcm or11 MMcm/dayKlaip dos Nafta12 Historical gas prices in Lithuania and neighboring countryGas import prices in Lithuania increased 6 times since gas transmission system privatization in 2002 Gas import prices in Germany is lower by more than15% in recent years comparing to gas import prices in LithuaniaKlaip dos Nafta13 Current Situation in Gas MarketBasedonactualgaspricein2011-2012,e xpectedLNGpriceinLithuaniamightbe10-20% Import and Index prices (February 2010 August 2012, $/MMbtu)$/MMbtuGas import price in LithuaniaGas import price in GermanyTTF (Holland)NBP (UK)HH (USA)

6 Gas import price in JapanKlaip dos Nafta14 Global LNG Demand and SupplyPotential LNG capacity in USAK laip dos Nafta15 LNG export capacity in USA will increaseby 113,8 mtpaby 2020 which is up to 39% of current LNG export capacity (290 mtpa).Source: BG group, LNG journalShale and conventional gasKlaip dos Nafta16 Klaip dos Nafta17 Weather Conditions in the Baltic portsContainers may be transported by trucksby railwayand so reach the final consumersBunkering and Small LNGB usiness service SchemeFSRU in m3 Feeder m3 Serve ports in Baltic and North seasCreogenic 40 50 m3 containers are filled with LNGC ontainers are loaded on the barge and floated in to neighboring harborsPotential of bunkering businessStarting with 2015 ships in the Baltic and North Seas have to use low sulfur fuel due to tightened environmental requirements.

7 LNG might serve as an alternative fuel. Example of small LNG containers service schemeKlaip dos Nafta19 Thank You For Your Attentio