Natural Gas and LNG Market in Thailand Tom Parkinson 25 June 2014

Overview of the industry structure

Domestic gas supply

LNG market outlook

Economics of gas supply

Open access possibilities

Conclusions

1

2

3

4

5

6

Overview

1

PTT has a dominant position in virtually all aspects of the natural gas value chain

2

Exploration &

Production

(PTTEP)

Transmission

& Distribution

(PTT PLC)

LNG Regas

(PTT LNG)

Gas Separation

(PTT PLC)

Chemicals

(PTTGC)

NGV/CNG

(PTT NGV)

Electricity

Generation

(GPSC)

Industry

Service

Stations

(PTT NGV)

59%

19%

7%

14%

PTT Market Share

All Competition

PTTs value chain also extends across the oil and petrochemical sectors

3

PTTEP is the largest producer of natural gas selling to PTT PLC

0

5

10

15

20

25

30

35

40

PTTEP Chevron Petronas TOTAL MOECO Others BG Group Hess

Sh

are

of

Th

aila

nd

Gas P

rod

ucti

on

an

d I

mp

ort

s

(perc

en

t)

4

PTTEP recently

acquired Hess

on 22 April 2014

Overview of the industry structure

Domestic gas supply

LNG market outlook

Economics of gas supply

Open access possibilities

Conclusions

1

2

3

4

5

6

Overview

5

Thailands gas comes from the Gulf of Thailand, Myanmar, and LNG imports

6

Pool 1 Legacy gas coming from the Gulf

of Thailand and JDA is dedicated to PTTs

gas separation plants

Pool 2 all remaining wellhead gas plus

LNG imports is primarily directed toward

the power sector

Gas in zone 5 (northeast Thailand) is not

part of the pooled pricing system

Led by the power sector, gas demand will grow steadily for the next decade

0

1,000

2,000

3,000

4,000

5,000

6,000

7,00020

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

2026

20

27

20

28

20

29

20

30

An

nu

al G

as D

em

an

d (

mm

cfd

)

C2+

Industry

NGV

Power

Power Sector

7

Where will future supply come from?

0

1,000

2,000

3,000

4,000

5,000

6,000

7,00020

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

2019

20

20

20

21

20

22

20

23

20

24

20

25

20

26

2027

20

28

20

29

20

30

mm

cfd

North_Contracted Northeast_Contracted Gulf of Thailand_Contracted

Myanmar_Contracted Northeast_Uncontracted Gulf of Thailand_Uncontracted

Myanmar_Uncontracted Northeast_Yet-to-find Gulf of Thailand_Yet-to-find

LNG_Spot LNG_Qatar LNG_Uncontracted

UNCONTRACTED?

NEW LNG?

YET TO FIND?

8

Reserves estimates have shrunk by 25 percent since 2005

9

0

5

10

15

20

25

30

35

1994 1995 2000 2005 2010 2012

Es

tim

ate

d R

ese

rves

(Tc

f)

Can this decline be reversed?

PROVEN

PROBABLE

POSSIBLE

Yes! If gas prices were higher, more reserves might be economic

Hydrocarbon reserves are estimates, based on two parameters, each of which is an

estimate, subject to substantial uncertainty and dependent on price!

Reserves = GIIP x recovery factor

Gas initially in place (GIIP)

An estimate of the volume of oil or gas in the field or reservoir before production commences

Recovery factor

An estimate of the percentage of the hydrocarbons in-place which will be produced under a

set development plan

Under a different development plan, perhaps incentivised by higher gas prices, the

size of the reservoir could be larger, as marginal pockets of gas become economic,

and the recovery factor could increase as more advanced techniques are used to

exploit more gas.

10

Overview of the industry structure

Domestic gas supply

LNG market outlook

Economics of gas supply

Open access possibilities

Conclusions

1

2

3

4

5

6

Overview

11

Gas is not yet a global market but prices offer incentives to integrate

12

Source: NYMEX, UK DECC, TLG

0

2

4

6

8

10

12

14

16

18

20

Henry Hub

(US)

NBP

(UK)

Asian LNG

(assuming

13.85 slope)

USD/mmbtu

Post-Fukushima Japanese LNG demand has exacerbated high Asian prices

Half of Japans post-Fukushima fuel

response came from LNG, a quarter

from fuel oil, and a quarter from crude

oil

This response highlights the option

value of having LNG available

If nuclear restarts, the LNG will revert

to be available for other demands

For every ~10 GW of nuclear restarts

LNG import requirements fall by about

4 mmtpa

But how much and when?

Nuclear capacity and change in LNG demand

-18

-16

-14

-12

-10

-8

-6

-4

-2

0

10 20 30 40

Ch

an

ge i

n L

NG

De

man

d (

mm

tpa)

Nuclear Restarts (GW)

13

The USA is being eyed as a key source of low-cost, flexible gas for Asia

US

Canada

Alaska

Cove Point by

Dominion Cove

Point 7.8

mmtpa

Lake Charles by BG & Southern

Union 15 mmtpa

Cameron by Sempra

12.4 mmtpa

Sabine Pass T1-4 by

Cheniere 18 mmtpa,

with T5-6 adding

another 9 mmtpa

Freeport by Freeport LNG and

Macquarie Energy 9 mmtpa;

Expand by another 10 mmtpa by

using FLNG

Jordan Cove by Jordon

Cove Energy 8.7 mmtpa

Gulf Coast LNG by Gulf Coast

LNG Exports 23 mmtpa

Kitimat LNG Chevron,

Apache 10 mmtpa

LNG Canada Shell, KOGAS, Mitsubishi, CNPC and

Petrochina 12 mmtpa

Pacific Northwest -

Petronas and Inpex -

12 mmtpa

Douglas Channel Energy Partnership

proposed a 0.9 mmtpa

Valdez LNG by Alaska Gasline Port Authority and others 18

mmtpa

Existing terminals with

proposed liquefaction

Greenfield proposed

liquefaction

West Coast

Canada

ExxonMobil - 10

mmtpa project,

expansion to 30

mmtpa

Prince Rupert BG - 14 mmtpa

project

Pieridae Energy 10

mmtpa

14

0

5

10

15

20

25

30

35

2013 2014 2015 2016 2017

Liq

uefa

cti

on

cap

acit

y (

mm

tpa)

Australia

USA

Others

Australia is also developing traditional LNG for Asia but delays are rife

15

Angola T1

Skikda GL2K

Arzew GL3Z

PNG LNG

Donngi-Senoro

QC LNG T1

Gorgon T1-3

QC LNG T2

AP LNG T1

GLNG T1

Petronas FLNG1

AP LNG T2

GLNG T2

Wheatstone T1-2

MLNG T9 and Petronas FLNG2

Sabin Pass T1-2

Ichthys T1-2

Prelude FLNG

Sabine Pass T3-4

LNG liquefaction projects under construction/reached FID

Source: TLG analysis

Liquefaction Regasification

Operating

Constructing

Planned

Possible

Development of LNG regasification is a popular activity in SE Asia

Rayong

Son My

Bataan

Batangas

Arun

Lumut

Singapore

Satu/Dua/Tiga

Brunei

Bontang

Donggi-

Senoro

Tangguh

Abadi

Semarang

Nusantara

Source: TLG;

www.globalnginfo.com

Kanowit

Lampung

Melaka Pengerang

2014 Data

Rotan

Thi Vai

Pagbilao

16

http://www.globalnginfo.com/

SE Asia regasification will expand greatly in this decade

17

Project Location Online Date Capacity (mmtpa)

Map Ta Phut Rayong, Thailand 2011 5 (to 10)

Nusantara FSRU Jakarta, Indonesia 2012 3

Singapore Singapore 2013 3 (to 6)

Melaka Melaka, Malaysia 2013 4

Lampung FSRU South Sumatra, Indonesia 2014 3

Arun Arun, Indonesia 2015 3

East-Central Java FSRU Semarang, Indonesia 2016 3

Vietnam Thi Vai, Vietnam 2017 1 (to 2)

Vietnam Son My, Vietnam 2019 2 (to 6)

Philippines Pagbilao ? 3

Pengarang Malaysia ? ?

Source: TLG compilation from various online sources

Overview