GREENGATE

GREENGATE

Alaska LNG in the Market Context

Valdez, Alaska13 September 2012

Radoslav ShipkoffDirectorGreengate LLC

GREENGATE

I. Introduction to Greengate LLC

GREENGATE

Who We Are

Independent financial advisory services firm

Specializing in complex project and infrastructure debt financings

Our clients: Sponsors and developers Financing institutions Government entities Institutional investors

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Our Sector Experience

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Sectors

Oil & Gas and Refining

Petrochemicals, Chemicals and Industrial

Pipelines

Conventional Power

Renewable Energy

Nuclear Energy

Satellites and Telecom

Infrastructure / PPP

LNG Experience

Multiple Closed Project Finance Transactions:

45+ MMTA Aggregate Volume

$60 BillionAggregate Project cost

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Greengate Deal Map

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League Tables: Project Finance International

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2011 PFI League Tables

Americas Advisory Mandates Won in 2011

1. Ernst & Young

2. HSBC

3. PWC

4. Greengate

5. Taylor de Jongh

2010 PFI League Tables

Americas Advisory Mandates Won in 2010

1. PWC

2. Greengate

3. BNP Paribas

4. KPMG

5. HSBC

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The Financing Timeline: Our Role

Advise on equity purchase agreements Advise on JV and shareholder agreements Assist in EPC contractor bid evaluation Advise on project commercial agreements Develop and maintain financial models

and advise on key assumptions Advise on financial structuring issues:

Capital structure, leverage ratios, lease structures, credit counterparty issues, etc.

Develop and evaluate financing plan options: sources of funding, amounts, pricing, tenor, etc.

Identify, analyze and develop solutions for mitigating project risks

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Development Period Financial Close

Pre-Financing Activities Project Financing

Advise on implementation of overall financing strategy

Prepare and evaluate financing term sheets Prepare information memoranda and

related materials for financing institutions Financial model: Base case and sensitivities Interact and manage work performed by

independent consultants: technical and environmental, market, insurance, shipping

Advise on selection of lead arrangers where applicable

Assist in negotiating financing terms Advise on financing documentation Assist in financial closing activities

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II. Project Finance for LNG: Issues and Challenges

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Project Finance for LNG: Issues and Challenges

LNG Projects: Highly capital intensive, large capital requirements: Liquefaction/Storage/Marine Facilities: At 1,200 per ton capital

cost, $12 billion for each 10 MMTA LNG capacity; some projects’ costs are higher

Upstream: If upstream development required, significant additional capital cost; can exceed cost of liquefaction field development and production gas processing pipeline transportation

Commercial Structure: Vertically Integrated / Non-Integrated

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Project Finance for LNG: Issues and Challenges

Potential Funding Sources: Commercial Banks

in current environment, liquidity/funding cost challenges, higher pricing

market may recover in coming years

Export Credit Agencies (OECD / Non-OECD) option for direct loan or guarantees, depending on program “tied” and “untied” loans long tenors generally available

Project Bonds (144A, Private Placement) project rating: completion risk and mitigation, offtaker rating,

coverage ratios, etc. availability predicated on general market conditions

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III. Alaska LNG in Context

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Case Study A: PNG LNG

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Location: Papua New Guinea

Initial Capacity: 6.6 MTPA (2 trains)

Unincorporated Joint Venture: ExxonMobil 33.2% Oil Search Limited 29.0% Santos Limited 13.5% Nippon Oil 4.7% Government of PNG 16.8% PNG Landowners 2.8%

LNG Offtake: TEPCO 1.8 MTPA Osaka Gas 1.5 MTPA CPC (Taiwan) 1.2 MTPA Sinopec: 2.0 MTPA

First LNG Cargo: 2014

Project Cost: $16 billion

Project finance loan agreements signed: December 2009

Financial Close: March 2010

Largest ever project financing in the energy sector

PFI 2009 Asia Pacific Deal of the Year

Project Finance 2009 Asia Pacific Oil & Gas Deal of the Year

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Case Study A: PNG LNG (cont’d)

Vertically integrated commercial structure: Upstream Production, Processing Facilities, Pipelines and LNG Plant

Large financing requirements (70/30 leverage). Multi-source financing: Six ECAs (US Ex-Im Bank, JBIC, NEXI, China Ex-Im, SACE and EFIC): $ 8.30 billion Commercial Banks: $ 1.95 billion ExxonMobil Co-Loans: $ 3.75 billion Total : $14.00 billion

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Non-associated and associated gas sourced from multiple fields

700 km new onshore and offshore gas pipeline and new 120 km condensates pipeline

6.6 MTPA, 2 train LNG plant, storage and marine facilities near Port Moresby

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Case Study B: Australia Pacific LNG

Location: Queensland, Australia

Initial Capacity: 9 MTPA (2 trains)

Joint Venture between: ConocoPhillips 37.5% Origin Energy 37.5% Sinopec 25.0%

LNG Offtake: Sinopec 7.6 MTPA Kansai Electric 1.0 MTPA

Project Cost: $20+ billion

First LNG Cargo: 2015

Financing commitments for downstream portion secured in May 2012: $8.5 billion China Ex-Im Bank US Ex-Im Bank Commercial Banks

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First project financing for a coal seam gas (CSG) to LNG project

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Case Study B: Australia Pacific LNG (cont’d)

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Upstream CSG development in Surat and Bowen basins:• hundreds of wells per year• gas gathering lines• gas processing facilities• water treatment facilities

530 km gas transmission pipeline

9 MTPA, 2 train LNG plant, storage and marine facilities at Curtis Island, near Gladstone

Multiple LNG projects located at Curtis Island

Non-integrated structure: Downstream (LNG plant, storage and marine facilities) financed separately

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Alaska LNG: Challenges and Advantages Some of Alaska’s challenges are not

unique; many of its advantages are

Extensive existing infrastructure on the North Slope

Competitive with USGC and other LNG export projects: cost of 800-mile pipeline, but… lower gas acquisition costs relative to

US Gulf Coast export projects lower shipping cost to Asian markets lower unit liquefaction costs in

comparison with some other projects (high pressure feed gas from pipeline, ambient conditions)

Deep water port in Valdez allows use of large LNG tankers

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Alaska LNG: Commercial/Development Considerations

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Non-integrated development: Pipeline developed and financed as a separate

entity Smaller capital requirements for the LNG

component as a standalone project More focused development, simpler “story” to

market Allows for tolling or similar structure LNG buyers could contract with

producers/state for supply, or purchase from LNG project

Strong interest from Asian market in procuring North American LNG

Significant development work ahead is required for Alaska LNG to succeed

Alaska should not miss its “window of opportunity”

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Questions / Discussion

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Contact Information

Radoslav ShipkoffDirectorGreengate LLC

1752 N Street, NW8th FloorWashington, DC 20036

Phone: +1.202.887.6122Email: rshipkoff@greengatellc.com