Underground Gas Storage in the World – 2017 Status

1 Cedigaz Insights n 22 July 2017 Underground Gas Storage in the World 2017 Status Report prepared by Sylvie Cornot-Gandolphe for CEDIGAZ SIXTH EDITION OF CEDIGAZ'S REFERENCE REPORT (JUNE 2016) 49 countries surveyed - 500 pages, 104 tables, 103 charts & figures, 46 country maps. Since its first publication in 1990, " Underground Gas Storage in the World " has been the industry's reference on Underground gas Storage (UGS). The updated 2016 edition includes for the first time the coverage of LNG Storage in the World . The report includes detailed analyses of the latest developments and trends in the Storage industry, CEDIGAZ s Outlook to 2035 at regional and global levels, and extensive country analyses with complete datasets including current, under construction and planned UGS and LNG import facilities for 49 countries.

2 COUNTRIES SURVEYED Comprehensive analysis of UGS/LNG Storage in 49 countries: North America: Canada, Mexico, United States. Europe: Albania, Austria, Belgium, Bosnia&Herzegovina, Bulgaria, Croatia, Czech Republic, Denmark, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Netherlands, Poland, Portugal, Romania, Serbia, Slovakia, Spain, Sweden, Turkey, United Kingdom. CIS: Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Russia, Ukraine, Uzbekistan. Asia/Oceania: Australia, China, India, Japan, New Zealand, Pakistan, South Korea, Taiwan Rest of the World : Argentina, Brazil, Iran MAIN FINDINGS INCLUDE: 100 billion to 170 billion Investment Needed in Underground Gas Storage to 2035 Global UGS capacity is expected to increase from 413 bcm in 2015 to between 547 bcm and 640 bcm in 2035.

3 This wide range reflects the uncertainties surrounding the evolution of global gas markets plus the uncertainties specific to the gas Storage business, such as challenging geology and the competition from other sources of flexibility. New Storage markets which include, Asia-Oceania, the Middle East, and potentially Central and South America are expected to drive the growth. Conversely, the growth in working capacity should be limited in mature markets, and could even be negative in the EU. UGS Profitability Challenged in the Wider Flexibility Market In liberalized markets the traditional roles of gas Storage in dealing with seasonal or short-term demand variation, providing security of supply and allowing optimization of the whole gas chain have been expanded to the financial sphere where Storage is used for seasonal or short-term price arbitrage.

4 In this context, the seasonal spreads become the main drivers of Storage valuation, ignoring the many other values of physical Storage . In an increasingly competitive flexibility market, gas Storage profitability comes under increasing pressure, especially in Europe. FSRUs Allow a Growing Number of Countries to Access the LNG Market The number of LNG importing countries has grown rapidly over the past ten years, from 18 in 2005 to 35 in 2015. This trend is expected to continue, with 20 new countries planning to import LNG from now to 2025. With lower costs than traditional onshore plants and shorter lead time, FSRUs are playing a central role by facilitating access to the LNG markets for new importers.

5 At the beginning of 2016, 118 LNG import terminals (including 17 FSRUs) and 429 LNG Storage tanks existed worldwide, with 16 new terminals under construction, of which four FSRUs and 12 terminals being expanded. In addition, CEDIGAZ has identified more than 100 projects at different stages of planning. The Underground Gas Storage & LNG Storage Market in the World 2015-2035 ABOUT CEDIGAZ CEDIGAZ is an international association dedicated to natural gas information. Since its creation in 1961, CEDIGAZ has been recognised by the gas industry as one of the most reliable and independent sources of information on the whole gas chain.

6 CEDIGAZ products include a comprehensive service dedicated to LNG, the annual survey "Natural Gas in the World ", databases and news reports. CEDIGAZ Underground Gas Storage Database is the only worldwide Storage database to be updated every year. ABOUT THE AUTHOR Sylvie Cornot-Gandolphe is an independent consultant on energy and raw materials, focusing on international issues. She is the author of the 2013 report on Underground Gas Storage in the World . She also works with the Energy Centre of the French Institute of International Relations (IFRI), the Oxford Institute for Energy Studies (OIES), and with CyclOpe, the reference publication on commodities.

7 Sylvie Cornot-Gandolphe has a long and proven experience in global gas and energy markets, gained during her past positions at IFPEN/CEDIGAZ, the UN/ECE, the IEA and ATIC Services. Report price (PDF format ): One user licence Five user licence* CEDIGAZ Full & Corporate Members 2 000 4 000 CEDIGAZ Associate & Corresponding Members 2 800 5 600 Non members 4 000 8 000 * for more than 5 licences, please contact us Order Before June 30 to Benefit from the 10% Early Bird Discount PRICE OUR MEMBERS CEDIGAZ has members in more than 25 countries among which leading Oil & Gas Companies (BP, Cheniere Energy, Chevron, CNPC, ENI, Gazprom, Repsol, Saudi Aramco, Sempra Global, Sinopec, Sonatrach, Statoil, Total, YPFB, )

8 , international and national energy organisations (International Energy Agency, Gas Exporting Countries Forum, OPEC, US Department of ), utilities (EDF, Engie, Gas Natural Fenosa, Kogas, Tokyo ), oil and gas industry contractors (Saipem, ), banks and consulting companies (Barclays Bank, Bloomberg, The Boston Consulting Group, McKinsey, Mizuho Corporate Bank, Thomson ). CONTACT US Contact: +33 1 47 52 67 20 Website: CEDIGAZ 1 et 4 Avenue de Bois-Pr au 92852 Rueil Malmaison - France MORE ON OUR WEBSITE: July 2017 Underground Gas Storage in the World 2017 Status Contents 1.

9 Current capacity of Underground gas Storage in the World .. 2 No significant changes compared with 2015, except in Europe .. 2 North America leads the market .. 2 Historical evolution: the growth decelerated in 2016 .. 4 Depleted fields dominate, but UGS in salt caverns is growing faster .. 5 Top Ten league .. 6 2. Storage projects .. 8 Only 25 bcm of working capacity is under construction .. 8 Identified projects would add 52 bcm, but remain uncertain .. 9 Annex: Methodology .. 12 List of Tables and Figures .. 13 1 July 2017 Underground Gas Storage in the World 2017 Status 1. Current capacity of Underground gas Storage in the World No significant changes compared with 2015, except in Europe As of end 2016, there were 672 Underground gas Storage (UGS) facilities1 in operation in the World , representing a working gas capacity of 424 billion cubic meters (bcm), or 12% of 2016 World gas consumption.

10 The number of Storage facilities has decreased (680 UGS in 2015), mainly due to closure/mothballing of UGS in the United States and Europe. However, the global working capacity has slightly increased (+11 bcm) driven by expansions in the Commonwealth of Independent States (CIS), the Middle East and China. In Europe, Storage capacity has continued its decline. Working gas capacity decreased by bcm due to the closure of Storage facilities in Germany, Ireland and the UK. The temporary closure of the Rough depleted field was confirmed as a permanent one in June 2017 .