1Confidential

Presentation by Sara Menker, Founder and CEO of Gro Ventures

27 February 2013

A Pathway for Mozambique: From

Reserves to Production to Prosperity

Mozambique’s Natural Gas: The Facts• Offshore drilling began in 2009 and Anadarko

announced a small discovery early 2010• 2010 – 2011, 7 out of 9 wells that were drilled

discovered significant amounts of gas• 2012: one-third of global oil and gas discovery

volumes were in Mozambique– 61% of discovered volumes were in Sub-Saharan

Africa.

• Reframing the dialogue around natural resources in sub Saharan Africa: Mozambique is not being challenged with a curse, but is being presented with an opportunity

• Capturing this opportunity requires Mozambique to implement specific policies and initiatives

The Natural Resource Curse and Challenges for Mozambique

2012: The Year Mozambique Became a Natural Gas Superpower

Source: WoodMackenzie

Ten Largest Discoveries of 2012

Mozambique’s Natural Gas: The Facts

Area 1 Estimates•Reserves: 50 TCF •$28bn= Amount that will be spent over the next 30 years producing a portion area 1 gas that is sufficient for a 2-train LNG Project (11.1 TCF)•$18.5bn= Cost of a 2-train LNG Project•$17bn= The government’s profit share the 20 year production period•$16bn= Income tax revenue

Mozambique’s Natural Gas: The Facts

Area 4 Estimates•Reserves: 42 TCF •$28bn = Amount that will be spent over the next 30 years producing a portion area 4 gas that is sufficient for a 2-train LNG Project (11.1 TCF)•$18.5bn= Cost of a 2- train LNG Project•$18.5bn= The governments profit share during the 20 year production period•$16bn= Income tax revenue

Natural Resources as Opportunities, Not Curses

Data from the World Bank, Graph powered by Google

Capturing Opportunities

• The only way for Mozambique to succeed in capturing natural resource opportunities is if the Mozambican government initiates sound policy reforms while strengthening its institutions

Institutional and Regulatory Reform

• Regulatory framework must be consistent and finalized

• Fiscal policy stabilized• Policy stabilization and regulation will lower risk

premiums • Contracts must be legally enforceable and

financially sound

• Further commercializing ENH, INP and their subsidiaries

• ENH has 10% ownership in Area 1 and 15% ownership in Area 4

– Carried through exploration phase– Further commercialization essential to access the

funding required to participate in development

Commercialization

• Cost competitiveness is essential to LNG. East Africa’s infrastructure is consistently lacking and the local service sector is non-existent

• Important to increase the number of national and international service providers – Nigeria: > 400 oilfield service companies. It is the only sub

Saharan country with a substantial home-grown industry

Service Providers to the Coal and Gas Industries

• Inclusion of provisions requiring operators to be socially responsible, use local content and employ Mozambicans

• The kkey is to act immediately with regards to education. The opportunity costs of waiting are high

• Short-term costs: longer project lead times, higher costs and lower project values

• Long-term benefits: strengthened infrastructure and heightened competitiveness

Emphasis on Local Content

Emphasis on Local Content Qualitative Summary of Local Content Approaches in sub Saharan Africa

Source: Wood Mackenzie

Downstream Opportunities

• Maximizing resource value: – Multi-use infrastructure important: especially

railroads, which should be operated independently and not by resource extractors

– Gas monetization options: Liquefied Natural Gas (LNG), Gas to Liquids, Pipelines, Power Plants, Fertilizer Plants, Chemicals, etc.

Diversify Funders

• Large infrastructural projects need to be funded by diverse actors, beyond traditional developmental financial institutions (DFIs)

• DFIs alone cannot meet the funding requirements of ENH, let alone all infrastructure projects.

Revenue Management

• Ensuring new revenue is managed efficiently and transparently, and invested in a responsible way with a focus on:

• Education• Agriculture • Infrastructure• Banking and financial services • Telecommunications

• Creation of a sovereign wealth fund

Mozambique’s Natural Gas: The Facts

Area 1 and Area 4•The calculated costs and revenues were assuming only two 2-train projects. Area 1 alone has sufficient gas for 4 as does Area 4 •The reserve figures are still growing for both fields

Area 1 Estimates•Reserves: 50 TCF •$28bn= Amount that will be spent over the next 30 years producing a portion area 1 gas that is sufficient for a 2-train LNG Project (11.1 TCF)•$18.5bn= The cost of a 2-train LNG Project•$17bn= The government’s profit share the 20 year production period•$16bn= Income tax revenue

Area 4 Estimates•Reserves: 42 TCF •$28bn = Amount that will be spent over the next 30 years producing a portion area 4 gas that is sufficient for a 2-train LNG Project (11.1 TCF)•$18.5bn= The cost of a 2- train LNG Project•$18.5bn= The government’s profit share during the 20 year production period•$16bn= Income tax revenue

Summary

• Natural gas in Mozambique becomes an opportunity, not a curse, through:

• Institutional and Regulatory Reform • Commercialization • Emphasizing Local Content• Increasing number and capabilities of service providers • Capturing Downstream Opportunities • Diversified funders • Effective Revenue Management