Europe needs gas

1
Europe needs gas
Hernstein Symposium, Austria
Sir John Grant, BG Group
23 October 2009
2
Legal notice

• No representation or warranty, express or
  implied, is or will be made in relation to the
  accuracy or completeness of the information in
  this presentation and no responsibility or
  liability is or will be accepted by BG Group plc
  or any of its respective subsidiaries, affiliates
  and associated companies (or by any of their
  respective officers, employees or agents) in
  relation to it.

3
BG Group who we are

• Market Leader
• FTSE top 15 company
• Listed in London
• Market capitalisation
• 35 billion
• Gas and Oil
• Production approximately 70 gas 30 oil
• International Major
• Almost 6000 employees 65 outside UK

The integrated gas major
4
Where we operate worldwide
Core countries
Active in 27 countries
5
Europe is aware of the advantages of natural gas

• Plentiful
• Lowest carbon fossil fuel
• High efficiency in power generation
• Versatile
• Flexible
• Compatible with renewables and CCS
• Transportable

6
Gas gaining market share in Europe
Wood Mackenzie 2009
The only fossil fuel that is a growing part of
Europes energy mix
7
Gas market challenges

• Supply patterns changing and market in flux
• Diversity of routes and sources is needed to
  promote secure supplies
• Key to future is new investment

8
Europes gas future

• Efficient markets
• Investment in
• Domestic production
• Pipeline networks
• Storage infrastructure
• LNG

9
The potential of other new technologies

• Shale gas pilots in Sweden and Poland potential
  shale reserves in France, Netherlands, Germany
• Coal bed methane reserves in Poland and Germany
• New technologies reshaping markets

10
Gas markets recent history
Middle East
Algeria
W. Africa
Trinidad
S.E. Asia
Australia
Markets
LNG
Pipe
Source BG Group (2007)
Industry evolving from three regional markets
11
The LNG opportunity gas market globalisation
Atlantic Basin
Pacific Basin

• Strong seasonal pull
• Spot at premium prices

• Deep, liquid market
• Spot sink / source

• Strong seasonal pull
• Spot at premium prices

• Deep, liquid market
• Spot sink / source

UK
Europe
US
US
N.E.Asia
China
India
Brazil
US balancing market
Key sellers
Chile
Key trade flows
LNG has increased the depth and breadth of global
gas trade
12
Globalising gas supports energy security
Norway / Russia
Sakhalin
Middle East
N.Africa
Egypt
W. Africa
Trin / Ven
S.E. Asia
Australia
S. America
Markets
LNG
Primary (gt20 mtpa)
Existing proposed LNG trade routes
(by 2015)
Secondary (lt20 mtpa)
Pipe
Possible
Source BG Group
LNG driving globalisation of gas markets
13
Europes LNG network is extending
LNG has an increasingly important role in meeting
EU demand
14
Europes share of LNG trade is growing
LNG trade (mtpa)
200
North America
Europe
150
Asia Pacific
Other
100
50
0
2000
2020
2005
2010
2015
Source BG interpretation of Wood Mackenzie data
(Aug 2009)
Basins are rebalancing connecting to global
markets
15
LNG can provide flexible supply
Dragon LNG, Milford Haven
16
The way ahead

• Energy market liberalisation
• Investment in infrastructure
• New technologies
• LNG

Diversity of supply supports security of supply
17
Thank you