LNG Pipeline - CNG

Comparison NG Export project to Turkey An Interactive Workshop Ronen Hadash Amirim Management

CNG vs. LNG

Marine CNG new application to proven technology

Marine CNG
Technology mature, not yet deployed in marine applications. Ready for construction. Backed by serious companies. Difficulty & footprint low. Time to market fast. Drawback - no one had the balls to implement (so far)

Target
To compare alternative supply chain costs:
Minimum supply chain cost = max netback to supplier = min price to offtaker / market Information from 3rd parties

Project fundamentals:
Distance ~ 600km Capacity ~ 6-8 BCM / annum or ~5-6 MTPA

The Model
Comparison: LNG / Pipeline / CNG
8 Annual quantity Distance: Cost of Capital Ammortization Pipeline / LNG - 8 BCM 285,714,286 mmBTU 600 km 12% 20 Years LNG - TPA 6.00 MTPA 15.00 15.00 Pipeline - inch/meter 24.00 inch - m' $/km NA $ $ $ $ NA NA $ $ $ 10.00 10.00 $ $ $ CNG - 6 BCM 6 214,285,714 mmBTU 600 km 12% 15 years CNG - Ship 5.00 Ships Included Included 10.00 10.00

CAPEX

Load / Discharging Capex Return OPEX Total Costs (annual) $ / MMbtu Shipping Discharging fee Total supply chain market price netback

$ existing $ $ $ $ $ $ $ $ $

$ $ $ $ $ $

LNG cost of TPA liquefaction capacity

$????/ton per annum

LNG OPEX

Pipeline CAPEX (1)

Selected subsea pipeline projects
Project Medgaz South Stream Nord Stream ITGI Blue Stream Europipe 1 Europipe 2 Franpipe Langeled Average
Source: Turcas presentation Paphos Sep 11th 2013

Length (KM) 210 925 1222 217 396 670 642 840 1166

Capacity (BCM) 8 63 55 10 16 18 24 19 25.5

Diameter (inch) 24 4x32 2x48 32 2x24 40 42 42 44

Depth (Meter) 2,165 2,200 210 1,800 2,200

Cost Unit Cost Unit Cost (m' US$) (US$/Inch/m) (US$ m'/km) 806 160 3.8 12,800 108 13.8 11,264 96 9.2 640 92 2.9 1,700 89 4.3 3,750 140 5.6 1,690 63 2.6 1,866 53 2.2 2,720 53 2.3 95 5

CNG

CNG 2

Conclusions
Need to assess the three delivery solution, Pipeline, CNG, and LNG. Results surprising. Footprint for loading/unloading facilities is a consideration Flexibility and scalability which are difficult with alternative solutions. Time to market !!! Size and method of investment (how much, who is investing) Pipelines and CNG work best for regional markets, while LNG works best for global reach. CNG provides flexibility to redeploy the assets (smaller reserves or geopolitical issues) CNG complement LNG projects.

Ronen Hadash Amirim Management LTD +972 54 682 7772 ronen@amirim-p.com