1. 3rd Asia Energy Security SummitCo-operation for Security, Stability and SustainabilityNorth America, South America and Chinasstandpoint on future Shale gas marketFebruary 2013

2. The Changing Global Energy Mix and Demand Supply Scenario World Primary Energy Demand (MTOE) Global energy demand expected to increase by 5000 more that ~33% in next 25 years [IEA] 4000 Highest growth in demand expected in China 3000 and India 2000 2008 Pronounced shift away from oil, coal and in 2035 1000 some countries, nuclear, towards natural gas 0 and renewables Natural Gas is projected to surpass coal in the primary energy supply mix by 2035. WEO, 2011 (Gas Scenario) Unconventional gas accounts for more than 40% of increase in gas production by 2035; major share coming from North America and China WEO 2011 Unconventional together to account for almost a fifth of the increase in global energy supply to 2030.2 2013 Deloitte Touche Tohmatsu India Private Limited

3. Global Shale Gas Reserves and PotentialSource: World Shale GasResources, Technically recoverable Continent2011, EIA (Tcm) North America 54.7 South America 34.7 China 36 Total 2193 2013 Deloitte Touche Tohmatsu India Private Limited

4. Shale Gas revolution in North America US, which currently imports 20% of its energy is expected to be net exporter in the long term because of Shale gas revolution Gas prices hit a 10 year low Infrastructure related to export of gas being set-up in North America Canada also has good reserve but relatively slower in developing shale gas Shale gas expected to spur economic activity due to low energy prices Competitiveness of nuclear energy is being challenged by relatively cheap Natural Gas. Regulations requiring more disclosure of environmental impact expected in US Natural gas Production (tcf) 19.80 10.90 2.00 4.60 9.40 6.60 4.00 4.40 Canada (2008) Canada (2035) US (2008) US (2035) Conventional Unconventional Source: WEO: 2011 *Unconventional include shale, CBM and Tight Gas4 2013 Deloitte Touche Tohmatsu India Private Limited

5. Changing Global Dynamics and Energy Trade Flows Switch in direction of international energy trade towards Asia Strategic Trade Routes Security Decreasing dependence of US on Persian Gulf Oil Exports to US from Saudi Arabia and Middle East (Thousand Barrels per day) 2000 The US - historically a major power shaping developments in ME/ Persian Gulf 1800 Changes expected in the Geopolitical environment in the region 1600 Dispute over Iran sanctions and the new 1400 balance of political influence Coal consumption in Europe 1200 Domestic Coal Surplus in US because of gas 1000 prices 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Coal flowing to Europe How long will this sustain? Source: IEA Changing scenario for Russian Gas Exports Delayed production for projects destined for US Russian Supplies in Europe Gazprom supplies to Ukraine5 2013 Deloitte Touche Tohmatsu India Private Limited

6. Economic Impact of Shale Gas on US Economy Significant price difference Low energy/ feedstock between US & Europe/ Asia prices expected to improve Producers may face financing competitiveness of industry risk due to pricing; may affect Petrochemicals, fertilizer, US Restrictions future investment steel Energy, infrastructure, on Recent report submitted to US manufacturing and Export of Gas Department of Energy suggests transportation sector to Impact of Low Cost Shale Gas US expected to benefit exports benefit the most on Economy in Strong domestic production to Direct and indirect Job North America help reduced volatility in prices creation and improve investment Reduced pressure on US U.S. becomes able to produce with respect to emission large quantities of gas from norms shale at low cost6 2013 Deloitte Touche Tohmatsu India Private Limited

7. Chinas natural gas consumption is expected to grow in the future,reducing the share of coal from the Energy basket Chinas gas consumption stands at 4% of its Energy mix, Energy Mix (2011) China considerably lower than the world average. The demand supply gas of gas in china is expected to 4% widen further owing to demand growth rate 70% 18% Although conventional gas reserves/production is limited, China is estimated to have ~36 tcm of shale gas deposits. 2% 6% 1% In the 12th 5-year plan, Chinese government has shown interest towards increasing the development of natural gas Oil Natural gas Coal Nuclear energy Hydro electricity Renewables as a preferred fuel and reduction in emissions Widening gap 7.47 5.72 5.05 4.62 4.19 2.99 3.16 3.61 2009 2011 2015 2020 Production (tcf) Consumption (tcf)7 2013 Deloitte Touche Tohmatsu India Private Limited

8. Despite large shale gas reserves, China is expected to import majorshare of its gas requirement, owing to the rapid growth in demand Supply drivers 1. Sino-US Shale Gas Resources Cooperation Initiative Demand drivers 2. LNG Terminal capacity expansion 1. Rapid urbanization 2.26 tcf planned by 2015 2. Promotion of gas based 3. Acquisition of international transportation companies to learn technical know- how and secure resources 3. Chinese governments push to reduce carbon emissions 4. Focus on increasing production of domestic unconventional fuels 4. Uncertainty over nuclear power 5. Reduction of coal based power supply China expected to play a key role in the Global Energy market: Persian Gulf and Middle East as China is expected to be major buyer in future Developing influence in Africa Diplomatic role with respect to Iranian Crude and US oils sanctions Imports from Australia and central Asia8 2013 Deloitte Touche Tohmatsu India Private Limited

9. Most of the South American nations depend on oil and hydro to meettheir primary energy requirements South and Central American energy consumption is mainly concentrated in three countries, viz. Argentina, Energy Mix (2011) South & Brazil, and Venezuela. (accounting for almost 70% of Central America the regions energy consumption in 2011) 2% Argentina produces 1.37 tcf of gas against a demand of 1.64 tcf. 26% Argentina and Brazil are the only two nations that 45% import large quantities of gas while the other nations 1% either import small quantities or are net exporters 4% Major share of imports are coming from Bolivia or Qatar 22% The region is looking to reduce its dependence on Oil Natural gas Coal hydel power because of its unreliable nature Nuclear energy Hydro electricity Renewables Gas based power generation is expected to increase in the region9

10. Discoveries of shale gas deposits in Argentina/ Brazil offer the SouthAmerican nations an alternative to meet their energy requirements Argentina has ~22 tcm of proven shale gas reserves,South American Shale Deposits and Brazil, indicates a potential of ~6.4 tcm of shale gas reserves. The shale gas reserves are expected to have significant impact the economy, especially in Argentina Argentina is taking steps towards harnessing the shale gas potential Well-head gas prices by 44% (to $7.5 per mmBtu) in order to attract private investment into the sector by Argentina India and China are also looking at shale gas assets in South America in an effort to secure supplies to their respective nations Source: Schlumberger Oilfield Services10

11. Key Challenges faced by Shale Gas Gas Prices: Uncertainties with respect to gas pricing and current low prices in North America may affect the investment environment Managing costs and financing risks are key concerns of investors because of low domestic prices and restrictions on exports Accessibility to Technology and Capital Availability of skill base Environmental issues, especially related to water management and surface impact Geo-political environment Reputation Risk and Public Opinion Select Countries where Shale Gas Remarks Development was stalled France Temporary moratorium on shale gas drilling through June 2011. Subsequently, ban on hydraulic fracturing in 2011 Quebec (Canada) Shale gas production and hydraulic fracturing put on hold. South Africa Temporary moratorium in 2012 in certain regions United States Moratorium in hydraulic fracturing in 2010 and 2011 in states of New York and Maryland, respectively11

12. The future of Shale Gas and its dominance in Global Energy mix may depend on hostof factors Policies/ Regulations Carbon Emission Norms Technology Capital Adoption Requirement Future of Shale Gas Demand and Gas Supply Pricing Environmental Issues Energy Security Geo Politics Energy Strategy/ Diversification12 2013 Deloitte Touche Tohmatsu India Private Limited

13. Shale Gas Impact How will reputational risk/ public opinion impact investments in shale gas? What environmental regulation will it attract? How long will low prices in North America sustain? Will global gas market/ pricing emerge? Will the U.S. become a long-term exporter of LNG or it will remain restrictive to Exports? How will Chinas unending energy appetite affect gas prices and Demand Supply scenario? How will the global energy trade flows and Geo-politics change in light of Shale gas developments?13 2013 Deloitte Touche Tohmatsu India Private Limited

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