The role of gas in the UK energy mix

Vitaly Vasiliev, Chief Executive Officer

Gazprom Marketing and Trading

Gazprom Marketing & Trading Limited 2

Gazprom at a glance

$99bn Market capitalisation

404,600 Employees globally

40 years Supplying European customers

Years of Gas export experience

15% Of global gas production

25% Of European gas

168,000km Gas pipeline – world’s largest

Moscow HQ

40

GM&T HQ

Gazprom Marketing & Trading Limited 3

GM&T Switzerland

GM&T France

GM&T USA GM&T Global LNG

GM&T Retail

GM&T Singapore

24/7 Trading capability

Supplying approx 40,000 retail gas and power sites

950 Global employees of 46 nationalities

10 per cent market share across all business segments in the UK

Over 130 cargoes of LNG traded to date

150 + Products across Gas, Power, LNG, Coal, Carbon, Oil, FX, Green Certificates, Helium

Gazprom Marketing & Trading Limited 4

Gas supply: Key criteria

Security of supply 1 Relative costs 2 Environmental 3

Gazprom Marketing & Trading Limited 5

News hysteria about security of supply

Gazprom Marketing & Trading Limited 6

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LNG Imports

Netherlands Imports

Belgium Imports

Import dependence

DECC DUKES 2012 – Chapter 4, Natural Gas

Norway biggest source of UK gas imports

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LNG Imports

Netherlands Imports

Belgium Imports

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Import dependence

BBC – Have I Got News For You

Gazprom Marketing & Trading Limited 8

Source of supply Russian gas exports to Europe

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1973 1975 1980 1990 2000 2012

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Approx four trillion cubic metres of Russian gas delivered for export since 1973

Gazprom Export – 2012 annual report

Gazprom Marketing & Trading Limited 9

Gazprom investment in Europe

Gazprom Marketing & Trading Limited 10

UK Coal imports by country of origin

DECC UK Energy Trends 2012 - Section 2 - Solid Fuels and Derived Gases DECC UK Energy Trends 2012 - Section 2 - Solid Fuels and Derived Gases

2012

Coal demand: 64 million tonnes Coal imported: 45 million tonnes

Russia 41%

Columbia 27%

USA 23%

Australia 5%

EU 1%

Other 3%

Gazprom Marketing & Trading Limited 11

It’s a long way from the wellhead to the EU border

Gazprom Marketing & Trading Limited 12

Mott MacDonald - UK Electricity Generation Costs Update 2010 DECC Consultation on proposals for the levels of banded support under the Renewables Obligation for the period 2013-17 and the

Renewables Obligation Order 2012

Cost of generation

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Biomass Onshore wind Nuclear Coal IGCC Offshore wind Solar Gas CCGT

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Generation technology

Gas fired generation cost: Lowest available technology

Gazprom Marketing & Trading Limited 13

Switching coal for gas

2011 Fuel mix for power generation (MWh) If coal switched for gas (assuming 80% load factor)

CO2 Emissions from coal: 90 Mt CO2 Emissions from gas : 50 Mt Sum = 140Mt

CO2 Emissions from coal: 15 Mt CO2 Emissions from gas : 80 Mt Saving = 45Mt CO2

Gas 146,8

Coal 108,6

Nuclear 69,0

Others 43,4

MWh

Gas 236,0

Coal 19,0

Nuclear 69,0

Others 43,4

MWh

Electricity: chapter 5, Digest of United Kingdom energy statistics (DUKES) DECC 2013 Statistical release – 2011 UK greenhouse gas emissions, final figures

Gazprom Marketing & Trading Limited 14

CCGT Load Factors in the UK

https://www.gov.uk/government/publications/electricity-chapter-5-digest-of-united-kingdom-energy-statistics-dukes

Gazprom Marketing & Trading Limited 15

EU ETS surplus

Bloomberg L.P. (2013) ECX front month settlement price 01/04/2008 to 23/05/2013. Retrieved 24 May 2013

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Historic Forecast

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Conclusions

DECC statistical release, 28th March 2013

Security of supply 1 Relative costs 2 Environmental 3