Vol. 49, n° 22, December 24, 2010 Main news LNG: Processing Australia Pacific LNG and Pluto projects have been delayed-***-Invitations to Tender for the major onshore construction packages for the Ichthys LNG Project have commenced -***- Australia given recently environmental approval for Shell to install a floating liquefied natural gas plant -***- Inpex Corp said that it now sees the start of liquefied natural gas production from the Abadi gas field in the Masela block of the Timor Sea in 2018 -***- The Liquefied Natural Gas project in Papua New Guinea will be exempted from import duty during its construction and preparation phase -***- Cheniere Energy Partners announced that its subsidiary, Sabine Pass Liquefaction, LLC, has entered into a non-binding memorandum of understanding with Gas Natural Fenosa, in relation to the potential acquisition by Gas Natural Fenosa of certain bidirectional LNG processing capacity.

LNG: Supplies- Imports - Exports Cyprus electricity authority said that the country may choose soon its natural gas supplier for the next 20 years -***- In Europe, global LNG supply is expected to rise by 23 to 24 percent this year and grow 11 percent in 2011 -***- The U.S. Department of Energy's Office of Fossil Energy issued n order granting Sempra LNG Marketing, LLC blanket authorization to export liquefied natural gas. LNG: Storage The Irish energy regulator exempted the proposed Shannon LNG project from third party access requirements -***- Petronas Gas will develop the LNG terminal near Sungai Udang Port in Malacca -***Exxon Mobil Corp. said that it has suspended plans to build a floating liquefied natural gas import terminal off the New Jersey coast. Natural Gas: Production Melrose Resources plc announced first gas production from the Kavarna and Kaliakra gas fields offshore Bulgaria -***- Santos announced the final investment decision approving development of the Wortel gas project, located offshore Madura Island in the Sampang PSC, East Java, Indonesia -***- Aramco said recently that Saudi Arabia’s gas demand is growing 5 to 6 percent annually. Natural Gas: Reserves China has 53 trillion cubic meters of natural gas reserves, with the estimated recoverable reserves amounting to 14 trillion cubic meters. Natural Gas: Transportation - Distribution The European Commission presented its energy infrastructure priorities for the next two decades -***- GazSystem, the new operator of the Polish stretch of Russia's Yamal- Europe gas pipeline plans to admit third parties access to the pipeline as soon as the second quarter of 2011 -***- Afghanistan, Pakistan, Turkmenistan and India signed an agreement on a gas pipeline project. Natural Gas: Supplies- Imports - Exports China's demand for natural gas will reach 350 billion to 400 billion cubic meters by 2020 -***- Petrovietnam Gas Corp' technical department said that he expects Vietnam's domestic gas demand to more than double to 23 billion cubic meters per annum by 2020. Natural Gas: Storage Scottish & Southern Energy recently put off the final decision on the Aldbrough II gas storage facility.

Cedigaz News Report - Vol. 49, n°22 December 24, 2010

LNG PROCESSING

***AUSTRALIA – Planned project – Approval delayed. CNR49/22/1 An Australian ministerial decision on the environmental impact statement (EIS) for the Australia Pacific LNG joint venture's project in Queensland has been delayed. The joint venture, a partnership between Origin Energy Ltd and ConocoPhillips, said a determination by federal Environment Minister Tony Burke on the EIS for their coal seam gas-to-liquefied natural gas project has been extended from the current deadline of December 21 to February 22, 2011. "The minister advised this additional time was required because of the scale and complexity of

the Australia Pacific LNG project," Australia Pacific LNG said in a statement. The project will involve the progressive development of coal seam gas fields in south central Queensland over a 30year period and a 450km transmission pipeline from the gas fields to Curtis Island near Gladstone, where an LNG facility will be built. APLNG project director Page Maxson said "The project will not be able to proceed to FID until, at least, such time as the EIS approval process is complete". (December 15, 2010)

AUSTRALIA – Planned Project - Small Scale. CNR49/22/3 AGL Energy is planning to construct a smallscale LNG and gas storage project in the east coast city of Newcastle, according to plans for the project lodged with the federal environment department. The project would include a refrigeration plant to cool natural gas into LNG, an LNG storage tank, and regasification units to convert LNG back into pipeline quality gas, according to the plans submitted by AGL to the Department of Sustainability, Environment, Water, Population and Communities. The project also requires a new gas pipeline connecting it to the existing network at Hexham near Newcastle. The plant would be able to liquefy around 10 terajoules/day (8 mt/hour) of natural gas and is expected to operate for around nine months in

any given year, producing 130,000 mt/year of LNG. The above-ground gas storage tank would have a capacity of about 1.5 petajoules (30,000 mt or 63,000 cubic meters) of LNG, AGL said in its submission. The regasification plant would be able to regasify around 2,185 mt/d of LNG. AGL is aiming to complete the project in 2014. The LNG stored at the Newcastle facility would be regasified and reinjected into the New South Wales gas distribution network for supply into the Newcastle, Central Coast and Greater Hunter region markets, AGL said. Up to around 80% of the gas leaving the site would be transferred to the state pipeline network for sale. About 20% of the gas could be shipped as LNG in road tankers, each carrying around 18 mt. (December 7, 2010)

***AUSTRALIA – Planned Project - Engineering. CNR49/22/4 President Director Australia, INPEX Corp., Seiya Ito said recently that Invitations to Tender (ITT) for the major onshore construction packages for the Ichthys LNG Project (INPEX Browse, Ltd. 76%, Operator, and Total E&P Australia 24%) have commenced. ITT packages for the gas processing facilities and associated infrastructure, planned for Blaydin Point in Darwin, Northern Territory, include: Fabrication and construction of the gas processing units LNG, LPG and condensate storage tanks. Ito said the onshore frontend engineering and design (FEED) contractor, the JKC Joint Venture (JGC Corp., KBR and Chiyoda Corp.), was undertaking the tender process for the various onshore contracts. “This is another important milestone for the Ichthys Project as we move toward a final investment decision in 4Q 2011,” Ito said. Ito said construction of the Ichthys Project would not proceed until all environmental and other relevant regulatory approvals from the Australian and Northern Territory governments had been received. “Once all the environmental and development approvals are in place and we have reached a final investment decision we will be in a good position to start construction on Ichthys in early 2012”. Gas from the Ichthys Field, in the Browse Basin offshore of Western Australia, will undergo preliminary processing offshore to remove water and extract condensate. The gas will then be exported to the onshore processing facilities in Darwin via an 885km subsea pipeline. The Ichthys Project is expected to produce 8.4 million tonnes of LNG and 1.6 million tonnes of LPG per annum, along with 100,000 barrels of condensate per day at peak. (December 1, 2010) 2

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Cedigaz News Report - Vol. 49, n°22 December 24, 2010

***AUSTRALIA – Ongoing Project - Delay. CNR49/22/5 Woodside Petroleum Ltd said recently that costs for its Pluto liquefied natural gas project have blown out by A$900 million and that it will take another six months to begin production while it rebuilds equipment that falls short of design specifications. The Pluto project, offshore from Karratha in Western Australia, will cost A$14 billion, up 6.9 percent from its prior estimate of A$13.1 billion. Woodside said it was continuing its search for gas to support Pluto's expansion to a second production train and beyond. Woodside

has drilled nine wells in the central hub region in search of its second expansion train. Woodside chief executive Don Voelte said he expected to build another train from nearby exploration opportunities, the inner and central hubs. Woodside would "either find an additional train or two, or backfill the first two trains at Pluto from our future discoveries in the Claudius area and potentially the Cazadores hubs," Mr Voelte said. (November 30, 2010)

***AUSTRALIA – Planned project – Final Investment Decision. CNR49/22/6 Australia given recently environmental approval for Shell to install a floating liquefied natural gas plant. Environment Minister Tony Burke gave the green light with conditions aimed at protecting the area, off sparsely populated north-western Australia, from damage including oil spills. A final investment decision was expected to be made in 2011, with the platform scheduled to open in 2016. (November 22, 2010)

BRAZIL – Planned project – Final Investment Decision. CNR49/22/7 BG Group Plc said recently it will decide whether to go ahead with a floating liquefied natural gas production project in Brazil in 2011. A final investment decision will be taken in the fourth quarter, Betsy Spomer, BG’s vice president for regional business development, Americas & Global LNG, said. “We will be coming to a

decision point in March 2011 as to whether we go forward and solicit firm, binding bids,” she said. BG and Petroleo Brasileiro SA are studying a potential floating unit to liquefy associated gas from pre-salt oil production off Brazil. Local industry may consume the associated gas, Spomer said. (November 30, 2010)

***INDONESIA – Ongoing project - Forecast. CNR49/22/8 Inpex Corp said recently that it now sees the start of liquefied natural gas production from the Abadi gas field in the Masela block of the Timor Sea in 2018, delayed from the previous plan of 2016. The floating LNG project will have capacity of 2.5 million tonnes per year. An Inpex spokesman said the final investment decision would be made by the end of 2013. (December 21, 2010)

INDONESIA – Planned Project - Forecast. CNR49/22/9 Legowo, oil and gas director general at Indonesia's Energy and Mines Ministry, said recently that Inpex plans to build a 4.5 million mt/year floating LNG plant for Indonesia's Masela block in two stages, as a single. The first train will have a capacity of 2.5 million mt/year

and the second 2 million mt/year, she said. Indonesia's upstream regulator BPMigas said in August that Inpex could begin development on the Masela gas block next stream in 2016. The Masela block has estimated gas reserves of 14 Tcf. (December 14, 2010)

INDONESIA – Planned project - Extension. CNR49/22/10 Upstream regulator BP Migas’s deputy chairman Hardiono said recently that BP Plc plans to start building a third liquefied natural gas train at its Tangguh plant in Papua, in 2011. “The train is expected to have a production capacity of 3.8 mtpa and to be on stream by 2014,” Hardiono said. However, BP Indonesia president William Lin said the company had not made a decision yet. “We are evaluating options for the further development and expansion of Tangguh. No decisions have been made at this time,” he said. The Tangguh LNG plant consists of two production units, each with a production capacity of 3.8 million tons of 3

Cedigaz News Report - Vol. 49, n°22 December 24, 2010 LNG per year. BP is the operator of the Tangguh field, holding a 37.16 percent stake in the project. Other partners are MI Berau B.V (16.3 percent), CNOOC Ltd (13.9 percent), Nippon Oil Exploration (Berau) Ltd (12.23 percent), KG Berau/KG Wiriagar (10 percent), LNG Japan Corporation (7.35 percent) and Talisman (3.06 percent). (December 17, 2010)

NORWAY – Planned Project - Extension. CNR49/22/11 Head of early phase development in Statoil said recently that Snøhvit’s onshore LNG terminal at Hammerfest may be expanded to accommodate the extra volume seen resulting from accelerated production systems and resource tie-ins that now are under study. Statoil plans to drill 25 wells including two new wells in the Barents Sea. (December 16, 2010)

***PAPUA NEW GUINEA – Planned Project - Regulation. CNR49/22/12 The Liquefied Natural Gas project in Papua New Guinea will be exempted from import duty during its construction and preparation phase according to the Customs Tariff (2011 Budget) (Amendment) Bill currently before parliament. The bill clarifies any doubt about the import Duty Exemptions granted to the PNG LNG Project to be consistent with the intent of the PNG LNG Gas agreement. (November 23, 2010)

RUSSIA – Planned Project - Regulation. CNR49/22/13 Finance Ministry proposed recently scrapping the extraction tax from January 1, 2012 for gas produced in the Yamal peninsula for conversion to liquefied natural gas. The Finance Ministry said it proposed changing the Tax Code so that a zero tax rate would be applied for gas and gas condensate before total production reaches 250 billion cubic metres and for deposits that have been developed for fewer than 12 years. (December 6, 2010)

RUSSIA – Planned Project - Engineering. CNR49/22/14 CB&I announced recently that CB&I Lummus has been awarded a contract for the front-end engineering & design (FEED) services for the Shtokman LNG storage and loading facility at the sea port in Terriberka in the Murmansk region of the Russian Federation. The sea port is part of the Shtokman Gas-Condensate Field Development Project developed by Gazprom Dobycha Shelf LLC, a fully owned subsidiary of Gazprom JSC. CB&I's contract, which is scheduled for completion in 2011, has been awarded by Giprospetsgas JSC, the project

general designer. CB&I's project scope includes concept and FEED development of the LNG storage and loading facility, including multiple 160,000 cubic meter full containment LNG storage tanks and the associated process piping and loading facilities. Concept and FEED development will provide the project schedule and cost estimates for the engineering, procurement and construction phase. CB&I will also prepare the Russian design dossier (Proyekt) in accordance with regulatory requirements. (November 16, 2010)

***UNITED STATES : Planned Project - Agreement. CNR49/22/15 Cheniere Energy Partners, L.P. announced recently that its subsidiary, Sabine Pass Liquefaction, LLC, has entered into a non-binding memorandum of understanding with Gas Natural Fenosa, in relation to the potential acquisition by Gas Natural Fenosa of certain bi-directional LNG processing capacity up to 1.5 million tonnes per annum at the Sabine Pass LNG terminal located in Cameron Parish, Louisiana. Under the MOU, Gas Natural Fenosa and Sabine have agreed to proceed with negotiations of definitive agreements for Gas Natural Fenosa to contract bi-directional capacity, subject to certain conditions precedent, including but not limited to the receipt by each party of requisite internal approvals, Sabine's receipt of regulatory approvals and making a final investment decision to construct the liquefaction facilities. Charif Souki, Chairman and CEO of Cheniere Partners, said "Including this MOU we have entered into MOU's for approximately 4.7 mtpa of LNG processing capacity and look forward to finalizing discussions with additional customers".The terminal has send out capacity of 4.0 Bcf/d and storage capacity of 16.9 Bcfe. As currently contemplated, the Sabine Pass liquefaction project would be designed and permitted for up to four 4

Cedigaz News Report - Vol. 49, n°22 December 24, 2010 modular LNG trains, each with a peak processing capacity of up to approximately 0.7 Bcf/d of natural gas and an average liquefaction processing capacity of approximately 3.5 mtpa. The initial project phase is anticipated to include two modular trains and the capacity to process on average approximately 1.2 Bcf/d of pipeline quality natural gas. We intend to enter into contracts for at least 0.5 Bcf/d of natural gas liquefaction capacity per train. Cheniere Partners anticipates LNG export could commence as early as 2015. (November 29, 2010)

TRANSPORTATION-DISTRIBUTION INDONESIA - Regulation. CNR49/22/16 Evita Legowo, oil and gas director general at the Energy and Mines Ministry said recently that Indonesia will delay until May 2011 the implementation of a controversial policy, the cabotage rule, under which all vessels operating in its waters have to be registered in the country and use the Indonesian flag. R. Priyono, chairman of Indonesia's upstream regulator BPMigas, said that the policy would result in a drop of 275,000

b/d, or nearly 30%, in the country's daily oil and condensate output. The main compromise that the Energy and Mines Ministry is seeking is an exemption on vessels used in oil and gas activities that would allow foreign-flagged to be used when no Indonesian-flagged vessels exist for a particular purpose or when none are available, she said. December 2, 2010)

SUPPLIES - IMPORTS – EXPORTS CHINA – Planned Project - Market. CNR49/22/17 Shanghai Petroleum Exchange Ltd., a Shanghai-based market for fuel exchanges, said recently it will launch China's first LNG and LPG spot trading system in December 2010. The market will charge a 0.2 percent fee for each transaction, the spokesman said. In the beginning, most traders in the market were expected to be smaller private companies, the spokesman added. (November 24, 2010)

***CYPRUS – Import - Forecast/. CNR49/22/18 The head of Cyprus electricity authority said that the country may choose soon its natural gas supplier for the next 20 years. Authorities are conducting negotiations with short-listed companies for natural gas to come on stream by 2014. "Negotiations are now in the final stage and I believe we should have more information on this before the end of the year," said Haris Thrassou, head of the electricity authority EAC. In a parallel process to the selection of a supplier, the EAC wants a strategic partner to participate in a

liquefied natural gas terminal project. The EAC and its partner will be responsible for running the terminal and regasifying gas, while the government controlled company, Defa will be responsible for its distribution. According to Defa projections, Cyprus will require an estimated 0.77 mln metric tonnes of LNG each year for electricity generation to start with in 2014, rising gradually to 1.37 mln metric tonnes per annum in 2035. (December 1, 2010)

***EUROPE – Supply - Forecast. CNR49/22/19 Christof Ruehl, BP Plc’s chief economist said recently that increased global liquefied natural gas production has eased Europe’s dependence on pipeline deliveries. Global LNG supply is expected to rise by 23 to 24 percent this year and grow 11 percent in 2011, Ruehl said. LNG production advanced 8 percent in 2009, he said. “These are big numbers,” Ruehl said. “As a consequence, the market is rebalancing with more in Europe consuming LNG and with pipeline imports and domestic production going down”. (November 24, 2010)

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Cedigaz News Report - Vol. 49, n°22 December 24, 2010

MALAYSIA – Gas price. CNR49/22/20 The President/Chief Executive Officer of Petroliam Nasional Bhd, Datuk Shamsul Azhar Abbas, said recently that the company plans to present a revision of gas prices to the government. He said the company was currently working with Performance Management and Delivery Unit and Economic Planning Unit towards establishing market-based pricing. "The establishment of new gas prices is critical for Petronas because the company cannot afford to subsidise them," he said. Meanwhile, Petronas executive vice president, gas and power business, Datuk Anuar Ahmad, said gas demand in Malaysia was predominantly driven by the power sector. (November 30, 2010)

QATAR to BULGARIA – Export - Agreement. CNR49/22/21 Bulgargaz announced recently the signing of a confidentiality agreement with Qatar that paves the way for talks on LNG imports. "These talks will define what the quantity will be and when the deliveries will start," Bulgargaz chief executive Dimitar Gogov said. (November 21, 2010)

***UNITED STATES to WORLD – Export - Approval. CNR49/22/22 The U.S. Department of Energy's Office of Fossil Energy issued recently an order granting Sempra LNG Marketing, LLC blanket authorization to export liquefied natural gas that had previously been imported to the company's Cameron LNG terminal in Louisiana. According to DOE, the authorization permits Sempra to export up to 250 billion cubic feet on a short term or spot

market basis from Cameron LNG on a cumulative basis over a two-year period starting on February 1, 2011. Sempra can export this LNG to any country capable of importing LNG via ocean-going carrier and with which U.S. law or policy does not prohibit trade. The order does not allow Sempra to export domestically produced LNG. (December 8, 2010)

STORAGE BANGLADESH – Planned project. CNR49/22/23 The government has recently taken an initiative to set up the first ever LNG-based power plant in the private sector. "We have already floated notice to submit expression of interest from the interested private party," Bangladesh Power Development Board (BPDB) secretary Mohammad Azizul Islam said. The plant at Chittagong will have at least 200 megawatt capacity and operate under build, own and operate (BOO) basis, he said. "The BPDB will buy electricity from the plant at a fixed rate for a period of 22 to 25 years”. The sponsors will have to import LNG, arrange LNG vessel including construction of LNG terminal and regasification system, he said. (December 15, 2010)

CHINA – Planned project - Approval. CNR49/22/24 The 2 million tonnes per year liquefied natural gas receiving terminal planned by CNOOC Group in southern China has received environment clearance. The investment will include a berth to anchor LNG vessels of between 80,000 cubic meters and 267 cubic meters and a gas pipeline of 170 kilometers. (December 21, 2010)

INDONESIA – Planned Project - Engineering. CNR49/22/25 Foster Wheeler AG announced recently that its Global Engineering and Construction Group has been awarded a contract by Perusahaan Gas Negara (PGN) for the provision of project management consultancy (PMC) services for a new floating LNG receiving terminal (the "Medan Floating LNG Terminal" facility) to be built in Medan, North Sumatra, Indonesia. Foster Wheeler's scope of work includes technical assistance through the initial phase of the development of the project, conceptual design of the terminal, basic design of the subsea and onshore pipeline as well as the preparation and issue of an invitation to bid for engineering, procurement and construction (EPC), EPC bid evaluations, preparation of the EPC contract and support to PGN in EPC contract negotiation. Foster Wheeler will fulfil the role of owner's engineer during the EPC phase of the project through to start-up of the terminal. November 2, 2010) 6

Cedigaz News Report - Vol. 49, n°22 December 24, 2010

INDONESIA – Planned Project - Engineering. CNR49/22/26 Hamworthy signed recently a contract with Golar LNG to deliver a liquefied natural gas regasification system for the West Java FSRU. Golar LNG Energy announced had been previously selected by PT Nusantara Regas, a joint venture between Pertamina and PGN, to provide the FSRU Project. The project will see the existing LNG carrier Khannur converted into a floating terminal that can be situated offshore or at a new or purpose-built jetty/pier. The FSRU will

receive LNG from offloading LNG carriers and the onboard regasification system will provide gas send-out through pipelines to shore. As part of a letter of intent, Golar will enter into a long term time charter for the lease of the FSRU and associated mooring until the end of 2022, with provision for automatic extension options to 2025. The FSRU for the West Java FSRU Project will be similar in design to the Golar Freeze, recently delivered to Dubai. (November 17, 2010)

***IRELAND – Planned project - Regulation. CNR49/22/27 The Irish energy regulator exempted recently the proposed Shannon LNG project from third party access requirements. The conditions of the exemption include the development of a use it or lose it policy and anti hoarding arrangements. Project developers Hess and Poten Partners have previously announced their intention to conduct a market test to assess interest in long term capacity at the terminal. (December 5, 2010)

NETHERLANDS – Ongoing Project - Update. CNR49/22/28 Nederlandse Gasunie NV said recently the Gate liquefied natural gas terminal under construction in Rotterdam will be ready in September 2011. The facility will have three 180,000 cubic meter storage tanks, one jetty and capacity for 12 billion cubic meters of gas a year. The terminal’s throughput capacity may be increased to 16 billion cubic meters. E.ON Ruhrgas AG, Dong Energy A/S, EconGas GmbH and RWE AG all have import rights at Gate. (November 30, 2010)

***MALAYSIA – Planned Project - Agreement. CNR49/22/29 Petronas signed recently a heads of agreement with its subsidiary, Petronas Gas, to develop a LNG terminal on the west coast and provide regasification services. Under the HOA, Petronas Gas will develop the LNG terminal near Sungai Udang Port in Malacca. The project would consist of two floating storage units to receive and store LNG, an island jetty and regasification units, as well as subsea and onshore pipelines to transport the regasified LNG to Malaysia's Peninsular Gas Utilisation pipeline network. The regasification facilities will have a maximum throughput capacity of 3.8 million mt/year, and is expected to be completed by July 31, 2012. The LNG terminal is likely to receive gas from Petronas' share of the Santos-led Gladstone LNG project. (December 2, 2010)

UNITED KINGDOM – Ongoing Project – Open season. CNR49/22/30 National Grid has announced recently the start of commercial operations of its second capacity expansion at the company's Isle of Grain LNG importation facility. The commissioning process has been completed in just over a month, delivering a 50 per cent increase in terminal capacity for the start of winter. National Grid is progressing discussions on a further phase of expansion at the terminal with a number of interested parties through an open season process. Timescales and capacity will depend on final market interest, but additional capacity could be available from winter 2015-2016. Peter Boreham, National Grid's Director of UK LNG, said: "This latest expansion of our Grain

LNG terminal is a real boost for Britain's ability to secure gas from diverse sources, giving the capacity to bring in another 6.7 billion cubic metres of gas per year. (December 2, 2010)

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Cedigaz News Report - Vol. 49, n°22 December 24, 2010

***UNITED STATES – Planned Project - Suspension. CNR49/22/31 Exxon Mobil Corp. said recently that it has suspended plans to build a floating liquefied natural gas import terminal off the New Jersey coast due to changes in the outlook for natural gas supply and demand. The project had a planned capacity to deliver about 1.2 billion cubic feet. (November 22, 2010)

LIQUEFIED PETROLEUM GAS STORAGE TUNISIA – Planned project - Engineering. CNR49/22/32 Entrepose Contracting announced recently that it has signed a contract with Société Nationale de Distribution des Pétroles (SNDP) for the construction of an LPG storage centre in Gabès. The project foresees the construction of LPG storage tanks, with six trenched 4,000 m³ LPG spheres. Entrepose Contracting’s mission includes the engineering, the sourcing of equipment, the construction and the commissioning of the facilities. (December 6, 2010)

VIETNAM – Planned Project - Engineering. CNR49/22/33 The PetroVietnam Gas Corp. and its contractors signed recently a contract to build the Thi Vai liquefied petroleum gas depot in Ba Ria-Vung Tau province. The contractors, the PetroVietnam Construction Corp. (PVX) and the Daewoo Engineering Co. (DEC) from the Republic of Korea, will carry out the project within 22 months after the contract comes into effect. Covering a site of 5.3 hectares in the Cai Mep Industrial Zone, the depot is capable of storing 60,000 tonnes, equivalent to 15,000 m3 of LPG. (December 1, 2010)

NATURAL GAS LIQUIDS PROCESSING UNITED STATES - Production. CNR49/22/34 According to a recent report from BENTEK Energy, LLC, the U.S. natural gas liquids market is surging, driven by the combination of high NGL prices relative to natural gas, growing production in rich gas shale plays and the increased use of cryogenic gas processing technologies. “A large portion of financial windfall from shale gas production is flowing to companies near rich plays such as the Eagle Ford and Granite Wash,” said BENTEK Managing Director E. Russell Braziel. More than 75% of incremental NGL production added over the past six months has been in the Texas Inland region. Rich gas plays in this region such as the Eagle Ford and the Texas side of the Granite Wash, plus associated gas from crude plays in the Anadarko and the Permian Basins, are responsible for a majority of the growth. (December 7, 2010)

UNITED STATES – Planned project. CNR49/22/35 ONEOK Partners, L.P. announced recently plans to invest approximately $180 million to $240 million between now and the first half of 2012 for natural gas liquids projects in the Cana-Woodford Shale and Granite Wash plays. When completed, the projects are expected to add approximately 75,000 to 80,000 barrels per day of raw, unfractionated NGLs to the partnership's existing NGL gathering systems in the MidContinent and the Arbuckle Pipeline. This investment includes: Constructing more than 230 miles of 10and 12-inch diameter NGL pipelines that will expand the partnership's existing Mid-Continent NGL gathering system in the Cana-Woodford and Granite Wash areas by connecting to three new third-party natural gas processing facilities being constructed with total capacity of 510 million cubic feet per day; and to three existing third party natural gas processing facilities that are being expanded; and installing additional pump stations on the Arbuckle Pipeline to increase its capacity to 240,000 bpd. These projects are expected to be completed during the first half of 2012. (December 15, 2010) 8

Cedigaz News Report - Vol. 49, n°22 December 24, 2010

NATURAL GAS EXPLORATION – DISCOVERY ALGERIA - Discovery. CNR49/22/36 Sonatrach and E.ON Ruhrgas made recently their first gas discovery at the Rhourde Yacoub block in the eastern Algerian Sahara. E.ON Ruhrgas completed the drilling and testing of the Zemlet Cherguia1extension (ZCH-1ext) exploration well. The gas field, about 250km south-east of the town of Hassi Messaoud, tested with a flow rate of 19,500 cubic metres of gas per hour and 4.7 cubic metres of condensate per hour. (November 22, 2010)

CHINA - Discovery. CNR49/22/37 BG Group announced recently a discovery on Block 64/11 offshore China after the Lingshui 22-1-1 exploration well encountered gas-bearing sands. The well is in the deepwater Qiongdongnan Basin in the South China Sea, approximately 130 kilometres offshore. BG Group will now conduct further analysis of the well results to increase understanding of the hydrocarbon potential in the Block. (December 15, 2010)

EGYPT - Discovery. CNR49/22/38 BP Egypt announced recently that it has made a significant gas discovery in the Deepwater West Nile Delta area. The Hodoa discovery is located in the West Mediterranean Deepwater, Nile Delta concession, some 80 km northwest of Alexandria. The WMDW-7 well was drilled in the West Nile Delta area. Further appraisal is underway. BP operates and holds 80% of the West Mediterranean Deepwater concession with RWE Dea holding the remaining 20%. (November 24, 2010)

MOZAMBIQUE - Discovery. CNR49/22/39 Anadarko Petroleum Corporation announced recently a major new discovery of natural gas in the Rovuma Basin, off the coast of the northern Mozambican province of Cabo Delgado. The discovery at the Lagosta field is close to the company's two other gas finds at Barquentine and Windjammer. According to Anadarko's Vice-President for Worldwide Exploration, Bob Daniels, stated that "although additional appraisal drilling will be required, we believe the three discoveries announced to date already exceed the resource size threshold

necessary to support an LNG development, and we have assigned an integrated project team to begin advancing commercialization options. Anadarko is the operator of Offshore Area 1 and holds a 36.5 per cent share of the fields. Its coowners are Mitsui of Japan (20 per cent), BPRL Ventures and Videocon (both of India, with 10 per cent each) and Cove Energy of Britain (8.5 per cent). The Mozambican government is represented by Empresa Nacional de Hidrocarbonetos which holds a 15 per cent interest in the fields. (November 29, 2010)

PRODUCTION

***BULGARIA – Ongoing Project – First gas. CNR49/22/40 Melrose Resources plc announced recently first gas production from the Kavarna and Kaliakra gas fields offshore Bulgaria. The Kavarna and Kaliakra fields contain combined reserves of 74 Bcf and are located in the Galata exploration concession in the Bulgarian sector of the Western Black Sea. Commissioning activities on the fields started in November 2010. The combined field production plateau rate is expected to be approximately 45 MMcfpd. The fields were developed using single subsea wells tied back to the existing Galata field production platform, from where the gas is exported by pipeline to the Company's onshore gas plant near Varna for processing. A similar development plan will be adopted for the recent 12 Bcf East Kavarna discovery which will supplement the production from the two new fields and has the potential to extend the combined field production plateau period to around three years. (November 4, 2010) 9

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Cedigaz News Report - Vol. 49, n°22 December 24, 2010

CHINA – Production. CNR49/22/41 Ran Xinquan, general manager of the Changqing oil field located in the Erdos Basin in northwest China, said recently that natural gas output at PetroChina's field will rise 5.5 percent annually to 20 billion cubic meters in 2010. Along with the exploitation, the company has been involved in the construction of natural gas processing plants, Ran said. With the plant's newly added capacity of 5 billion cubic meters, Changqing oil field's gas handling capacity totals 32.1 billion cubic meters per year, he said. (December 2, 2010)

INDONESIA – Planned Project - Engineering. CNR49/22/42 Chevron Corporation announced recently the award of major front-end engineering and design (FEED) contracts for the Gendalo-Gehem natural gas development in East Kalimantan, Indonesia. The Chevron-operated GendaloGehem project is located in the Makassar Strait offshore East Kalimantan. The project will include two separate hub developments, each with its own floating production unit, subsea drill centres, export gas and condensate pipelines and an onshore receiving facility. Gas from the project will be used both domestically and also converted to liquefied natural gas at the Bontang LNG facility in Indonesia for export. Maximum daily production

from the project is expected to be 1.1 billion cubic feet of natural gas and 31,000 barrels of condensate. Chevron's Indonesia subsidiary awarded the contract for the FPUs to PT Technip Indonesia; the contract for the subsea and flowline system to PT Worley Parsons Indonesia; the contract for the export pipelines to PT Worley Parsons Indonesia; and the contract for the onshore receiving facility to PT. Singgar Mulia. Chevron currently has an 80 percent interest in the project and is seeking regulatory approval for a partial farm-down of the holding. (December 2, 2010)

***INDONESIA – Planned Project – Final Investment Decision. CNR49/22/43 Santos announced recently the final investment decision approving development of the Wortel gas project, located offshore Madura Island in the Sampang PSC, East Java, Indonesia. Wortel is the next project in Santos’ East Java near-field development strategy and adds to the company’s existing producing assets in the region, Maleo and Oyong. Wortel is located seven kilometres west of the Santos-operated Oyong oil and gas field, which has been on production since 2007. Wortel will be developed as a tie-back to Oyong, thereby maximising the value of both assets. The scope of the Wortel development includes two gas wells, a minimum facility wellhead platform and a 10kilometre gas pipeline to the existing Oyong wellhead platform. Wortel gas production will then

flow through the existing 60-kilometre pipeline to the onshore gas processing facility at Grati for processing and onward sale. Wortel gas will be sold to PT Indonesia Power under a recent agreement. Wortel development costs are estimated at US$100 million gross. First gas is expected by the end of 2011. Gross gas production rates from the combined Oyong and Wortel fields are expected to be about 90 mmscf/d at plateau. Oyong currently produces about 60 mmscf/d gross of gas and 3,500 barrels per day gross of oil. Santos has a 45% interest in the Sampang PSC and is the operator. Other participants are Singapore Petroleum Company (40%) and Cue Energy Resources (15%). (November 26, 2010)

IRAN - Regulation. CNR49/22/44 BP confirmed recently that, pending clarification from the UK Government on certain aspects of the new EU Regulations concerning restrictive measures against Iran, production from the Rhum gas field in the central North Sea has been suspended. This action has been taken in order to comply with the notification requirements in the Regulations. Rhum started production in 2005 and is a subsea gas field which is tied back to the Bruce Field in the central North Sea. Rhum is owned by BP (50%) and the Iranian Oil Company (50%) under a Joint Operating Agreement dating back to the early 1970s. The field is capable of producing up to 5.9 million cubic metres of gas per day. (November 16, 2010)

KUWAIT – Consumption - Forecast. CNR49/22/45 The chief executive of Kuwait Petroleum Corp, Farouk Al Zanki, said recently that Kuwait may continue burning more fuel to fire power plants due to limited gas output. “The plan is to burn less oil than gas, but if worse comes to worse we will continue to use expensive fuel” he said. Kuwait pumps around 1 billion cfd of 10

Cedigaz News Report - Vol. 49, n°22 December 24, 2010 gas from oilfields, and 145 million cfd from gas fields not associated with oil. It plans to nearly quadruple its gas production to 4 billion cfd by 2030. (November 30, 2010)

MALAYSIA – Planned Project - Regulation. CNR49/22/46 Government announced recently new tax incentives to develop the country's oil and gas resources, which will be implemented by state oil firm Petronas. Details of the incentives include: An investment tax allowance of 60-100 percent of capital expenditure to be deducted against statutory income to encourage the development of capital intensive-projects. (i.e. Enhanced oil recovery, high co2 gas fields, high pressure high temperature, deepwater and infrastructure projects for petroleum operations); A reduced tax rate from 38 percent to 25 percent for marginal

oil field development to improve commerciality of the developments; An accelerated Capital Allowance to 5 years from 10 years for marginal oil field development where full utilisation of capital cost deducted could improve project viability; A qualifying exploration expenditure transfer between non-contiguous petroleum agreement with the same partnership or sole proprietor to enhance contractors' risk taking attitude, which could encourage higher level of exploration activity. (November 30, 2010)

***SAUDI ARABIA – Gas Demand - Forecast. CNR49/22/47 Ahmed Al Sa’adi, vice-president of gas operations at Aramco, said recently that Saudi Arabia’s gas demand is growing 5 to 6 percent annually. “There is a lot of effort in adopting energy efficient programmes to curtail demand,” he said. Saudi is raising gas production from non-associated gas fields to cater for rising domestic demand which has been growing by 7 percent annually in recent years due to an economic boom fuelled by the oil price rally. Aramco is currently developing Karan, its first non-associated offshore gas field project, which is expected to be completed in 2013. It is also working on two new projects, the Wasit gas development programme and Shaybah natural gas liquids which Sa’adi said would be online by mid-2014. Wasit, along with Khursaniyah and Karan gas plants, would help the kingdom process its targeted production increase of unprocessed natural gas to 15.5 billion cubic feet per day by 2015 from 10.2 billion cfd. Wasit would be designed to process 2.5 billion cf of gas from the offshore non-associated sour gas fields Arabiyah and Hasbah and produce around 1.75 billion cfd of sales gas. (November 30, 2010)

RESERVES

***CHINA – Recoverable Reserves - Forecast. CNR49/22/48 Huang Hui, an expert from the Research and Development Center of the CNOOC Gas and Power Group, said that according to the third national oil and gas assessment, China has 53 trillion cubic meters of natural gas reserves, with the estimated recoverable reserves amounting to 14 trillion cubic meters. Furthermore, China is also very rich in unconventional natural gas, including nearly 27.4 trillion cubic meters of coal-bed gas, and the natural gas hydrates in the South China Sea alone are equivalent to 700 billion tons of oil. (November 22, 2010)

EQUATORIAL GUINEA – Resources. CNR49/22/49 Domingo Mba Esono, the nation’s presidential adviser on mines and hydrocarbons, said recently that the discovered gas resources in Equatorial Guinea are estimated at approximately 9 trillion cubic feet. Equatorial Guinea LNG Holdings Ltd. can expand by adding a second production unit and load its first cargo in 2016, according to Marathon Oil Corp. estimates made in 2009. Exploration blocks O, I, R and the Zafiro field will supply the second LNG train, Esono said. Gas supplies from Nigeria and

Cameroon may be needed to make the plant commercially viable. Esono said less than half of the country’s gas, from the Alba field, is currently used for commercial purposes. The Zafiro field flares 100 million cubic feet of gas each day, with another 44 million wasted at offshore fields. The offshore deposits will cut flaring, or the burning off the fuel as unwanted alongside oil production, to 10 million cubic feet a day by 2013, Esono said. (November 18, 2010)

11

Cedigaz News Report - Vol. 49, n°22 December 24, 2010

INDONESIA - Reserves. CNR49/22/50 Eni SPA announced recently that three wells drilled off Indonesia’s East Kalimantan confirmed more than 1.4 tcf of gas in place in Jangkrik field on the Muara Bakau permit. Jangkrik-3, 70 km off eastern Borneo, encountered more than 60 m of net gas pay excellent quality reservoir sands. Further exploration is planned nearby in 2011, Eni said. Permit interests are Eni 55% and GDF Suez 45%. The joint venture is studying fast-track development through the Bontang LNG plant. (December 16, 2010)

VENEZUELA - Reserves. CNR49/22/51 Eni announced recently the successful results of the Perla 3 well, located in the Cardón IV Block, in the shallow water of the Gulf of Venezuela. This well upgrades current estimates of gas in place to over 14 Tcf. During the production test, the well flowed 68 million scf per day of gas and 1,350 barrels of condensate per day. The Cardón IV Block is currently licensed and operated by a Joint Operating Company named Cardón IV S.A. which is 50% owned by Eni and 50% by Repsol. PDVSA owns a 35% back-in right to be exercised in the development phase, and at that time Eni and Repsol will each hold a 32.5% interest in the project, which will then be jointly operated by the

three companies. Cardón IV plans to continue the drilling campaign with another well, Perla 4, which will follow Perla 3 to target additional potential reserves in the untested northern sector of the structure. Eni and Repsol have already begun, together with PDVSA, to evaluate options for fast track development Perla through an early production phase of 300 million scf per day, targeted to start-up in mid 2013. The early production phase could include utilization of the wells already successfully drilled and the installation of light offshore platforms linked, through a gas pipeline, to a Central Processing Facility located onshore. (November 15, 2010)

PROCESSING MEXICO – Planned Project – Gas Flaring. CNR49/22/52 A collaboration project between Pemex and Statoil for reducing gas flaring at the Tres Hermanos oil field in Mexico has been registered under the Clean Development Mechanism (CDM) in United Nations. This CDM-project is part of the Tres Hermanos oil field, situated in Mexico's Veracruz state, near the city of Poza Rica. Pemex has been producing oil for more than six decades. The associated gas separated from the oil is today not utilized. The aim of the CDM

project is to eliminate three of the gas flare batteries and to install a new gas processing and treatment plant. In addition, the plan is to build the necessary gas pipelines to bring the recovered gas to the local market. Pemex will now start the tendering process to sign the Engineering, Procurement and Construction (EPC) contract for this project on January 2011. (October 26, 2010)

UNITED STATES – Planned Project - Engineering. CNR49/22/53 Technip has been recently awarded an engineering, procurement and construction support lump sum contract by Valero Refining Company for two flare gas recovery units at its Port Arthur, Texas refinery. Each unit involves modification to the existing flare system, gas compression and gas treating to remove hydrogen sulfide. The recovered and treated gas will be returned to the refinery fuel gas system. The contract is scheduled to be completed in the third quarter of 2011. The scope of work includes basic engineering, project management, detailed engineering, procurement, construction support, precommissioning and start-up assistance. (November 16, 2010)

UNITED STATES – Planned Project - Approval. CNR49/22/54 North Dakota's Public Service Commission approved recently construction of a natural gas processing plant. Bear Paw Energy is building the plant in McKenzie County in western North Dakota. Commission Chairman Kevin Cramer said it will be handle 100 million cubic feet of gas daily. Construction should be finished in early 2012. A Bear Paw attorney said the plant will process gas from about 300 wells, and the company might announce plans to build another plant in 2011. (November 19, 2010)

12

Cedigaz News Report - Vol. 49, n°22 December 24, 2010

TRANSPORTATION-DISTRIBUTION ABU DHABI to FUJAIRAH – Import - Ongoing Project. CNR49/22/55 Dolphin Energy recently reached the third construction milestone on the Taweelah – Fujairah Pipeline (TFP) Project and finished building the pipeline. This means that sufficient capacity is now available – 1.6 billion scf of natural gas per day – to meet the requirements of Dolphin’s largest customer, the Abu Dhabi Water and Electricity Company (ADWEC). Built by Stroytransgaz (STG), the 244km TFP will deliver essential volume of natural gas to Fujairah where ADWEC has built two power stations to support industrial growth and development.(November 30, 2010)

AUSTRALIA – Planned Project - Approval. CNR49/22/56 Victorian Planning Minister Justin Madden gave recently approval to the Shaw River Power Station and gas pipeline development near Orford in southwest Victoria. Santos subsidiary Shaw River Power is proposing two development options, both of which involve three development stages, increasing the station’s total nominal capacity to 1,500 MW. Shaw River Power is proposing to construct a 100 km high-pressure gas pipeline for gas supply from the Victorian Gas Transmission system near the Iona and Otway gas plants at Port Campbell. A compressor station would be constructed off Smokey Point Road, approximately 7 km west of the Otway Gas Plant. The station is likely to be supplied with gas from Santos’ reserves in the Otway and Gippsland Basins. (November 4, 2010)

CHINA – Planned Project - Forecast. CNR49/22/57 China National Petroleum Corporation plans to complete 20.6 billion cubic meters of gas transmission up by 10% year on year through the number one line of the West-East Gas Pipeline. The informant estimates total capacity of the West-East Gas Pipeline will be 47 billion cubic meters to 50 billion cubic meters per year after the number two line is fully operational. Natural gas transmitted from Central Asia through the number two line will gradually increase to 22 million cubic meters to 23 million cubic meters per day from the current 10 million cubic meters rates to 13 million cubic meter rates. (November 28, 2010)

***EUROPE - Regulation. CNR49/22/58 The European Commission presented recently its energy infrastructure priorities for the next two decades, aimed at making networks fit for the 21st century. In the communication, the Commission defines EU priority corridors for the transport of electricity, gas and oil. This map of priorities will serve as a basis for future permit granting and financing decisions on concrete EU projects. The Communication defines a limited number of EU priority corridors for which urgent development is needed to deliver on European Union policy goals of competitiveness, sustainability and security of supply by connecting those member states which are almost isolated from other European energy markets, by massively strengthening existing cross-border interconnections and by integrating

renewable energy into the network. Based on these pre-defined corridors, concrete projects of "European interest" will be identified in 2012, which should benefit from EU financing and building permits, including a time limit for final decision while ensuring full respect of EU law, in particular environmental legislation and public participation. In the gas sector, three EU priority corridors are identified: Southern Corridor to deliver gas directly from the Caspian Sea to Europe to diversify gas sources. Baltic Energy Market Integration and connection to Central and South East Europe North-South corridor in Western Europe to remove internal bottlenecks and enable best use of possible external supplies. (November 17, 2010)

FRANCE to LUXEMBOURG – Planned Project - Open Season. CNR49/22/59 CREOS and GRTgaz launched recently a coordinated open season process to assess the level of demand for long-term transmission capacity from France to Luxembourg. As part of the open season process, the two operators are studying the interest of the market for this interconnection through two potential scenarios. The first scenario consists in developing new capacities up to 9 GWh/d, the second one would offer 40 GWh/d of new capacities to market actors. Both operators aim to commission these new capacities by 2015. During this non-binding phase of the open season process, companies interested in the project are invited to 13

Cedigaz News Report - Vol. 49, n°22 December 24, 2010 express in good faith their needs by 31 January 2011. Provided there is enough interest during this phase, CREOS and GRTgaz will continue the project by launching the binding phase in spring 2011. (December 7, 2010)

GERMANY to CZECH REPUBLIC – Ongoing Project - Ongoing Project. CNR49/22/60 The natural gas pipeline OPAL, which will transport natural gas from the Nord Stream Baltic Sea pipeline onwards to European customers, has now crossed the German-Czech border in the Ore Mountains near Olbernhau in Germany and Brandov in the Czech Republic. The 470-kmlong pipeline will be connected to the Czech natural gas transport system here. OPAL NEL

TRANSPORT GmbH, part of the WINGAS Group, will perform the tasks of network operator for OPAL (Ostsee-Pipeline-Anbindungs- Leitung – Baltic Sea Pipeline Link). With an annual transport capacity of 36 billion cubic meters and a diameter of 1.4 meters, OPAL is the largest natural gas pipeline to be laid in Europe. (November 16, 2010)

GREECE to BULGARIA – Export - Agreement. CNR49/22/61 Bulgarian President Georgi Parvanov and his Greek counterpart Karolos Papoulias called recently for speeding up energy and cross-border cooperation. Parvanov said that more active efforts would be given to work on the gas interconnector between Bulgaria and Greece. The two neighbors signed in March 2010 the documents to start building the 160-km-long pipeline that extends from Komotini in northern Greece to Stara Zagora of Bulgaria. (November 18, 2010)

INDIA – Planned Project - Approval. CNR49/22/62 The Gas Authority of India Limited proposed recently to lay a subsea pipeline from Kochi LNG terminal to NTPC Kayamkulam. This is to facilitate the transportation of regasified LNG to NTPC’s existing and proposed power plants. Mr Murli Deora minister for petroleum and natural gas said that the subsea pipeline will have the capacity of 11.5 million metric standard cubic meters per day. He said the feasibility study has been completed and the environment clearance is being sought. The minister said the sub sea pipeline is likely to be completed in 18 months from the date of project approval. (November 23, 2010)

INDIA – Planned project - Engineering. CNR49/22/63 The Petroleum and Natural Gas Regulatory Board (PNGRB) is expected to invite bids for the AsansolHowrah gas pipeline project. The 270-km pipeline will transport gas from coal bed methane blocks in Bengal. The Asansol-Howrah pipeline will connect the entire CBM producing zones in Jharkhand and Bengal to the consumption centres in the Calcutta region. An extension of the pipeline may reach Haldia, the proposed terminal point of the Kakinada-Haldia trunk pipeline of Reliance. (December 5, 2010)

ITALY – Planned Project - Agreement. CNR49/22/64 The European Investment Bank (EIB) signed recently a EUR 300 million finance contract with Eni for the benefit of Snam Rete Gas, a company 52.54%-owned by Eni. The EIB loan will cover nearly 50% of Snam Rete Gas’s investment cost in constructing two new gas pipelines: one in

Puglia between Massafra and Biccari; the other in Lombardy between Cremona and Sergnano. It will also serve to finance the transformation and upgrading of a compressor station in Melizzano, Campania. December 22, 2010)

LITHUANIA – Planned Project - Approval. CNR49/22/65 The Government approved recently the investment project of the Jurbarkas-Klaipeda main pipeline. According to the energy minister, the gas pipeline is to be completed before the launch of a liquefied natural gas terminal by 2014. (December 7, 2010)

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Cedigaz News Report - Vol. 49, n°22 December 24, 2010

RUSSIA to UKRAINE – Agreement - Transit. CNR49/22/66 Moscow and Kiev signed recently an agreement to guarantee gas transits through Ukrainian territory, Ukrainian Minister of Fuel and Energy Yuriy Boyko said. The deal upholds an earlier one between Gazprom and Naftogaz on the transfer of 112 billion cubic meters of gas annually over the next five years. (December 7, 2010)

***RUSSIA to POLAND – Export – Third Party Access. CNR49/22/67 Gaz-System, the new operator of the Polish stretch of Russia's Yamal- Europe gas pipeline plans to admit third parties access to the pipeline as soon as the second quarter of 2011. In November 2010, Russia and Poland signed a new gas supply and transit agreement, under which Russia will increase deliveries to 11 bcm in 2012-2022 from 9.7 bcm in 2010. The transit agreement runs until 2019 as in the previous contract, but the parties agreed that extension of delivery and transit contracts was possible. The new agreement said that EuRoPol

Gaz, a Russian-Polish joint venture operating the Polish sector of the Yamal-Europe pipeline, will pass technical operation of the pipeline's Polish stretch to Gaz-System Gaz-System CEO Jan Chadam said that the company was ready to offer free capacity in the Yamal-Europe pipeline to third parties. "Our plans depend on many factors, in particular, the pipeline should have free capacity. Now it is time for negotiations and we will be able to speak more specifically on the issue in six months," Chadam said. (December 6, 2010)

THAILAND – Ongoing project - Engineering. CNR49/22/68 Punj Lloyd has been recently awarded an engineering procurement, construction and commissioning contract for a 294 km onshore gas pipeline project in Thailand. The 42 inch diameter pipeline will transport gas from an LNG terminal at the Maptaphut Industrial Estate near Rayong to a tie-in station on the existing Wang Noi to Kaeng Khoi Pipeline, located in Saraburi Province. The project is expected to be completed by the end of 2013. (December 15, 2010)

***TURKMENISTAN

to AFGHANISTAN-PAKISTAN-INDIA – Planned Project Agreement. CNR49/22/69

Afghanistan, Pakistan, Turkmenistan and India signed recently an agreement on a gas pipeline project. Under the TurkmenistanAfghanistan-Pakistan-India (TAPI) pact, about 33 billion cubic meters of Turkmenistan's gas will be transferred to three energy-deficient countries. Afghanistan will buy 5.1 billion cubic meters of gas in addition to earning millions of dollars in transits fees. Stretching some 1,700 kilometers from gas-

rich Turkmenistan's Daulatabad field to the Indian township of Fazilka, India and Pakistan would each receive around 38 million cubic meters of gas out of the 90 million cubic meters shipped daily. Contracts for the purchase and sale of gas will be finalized until April 30, 2011. The pipeline is 1,800 kilometers long, with 917 kilometers passing through Afghanistan. (December 13 , 2010)

TURKMENISTAN – Planned Project - Regulation. CNR49/22/70 Turkmen President Gurbanguli Berdymuhammedov said recently that Turkmenistan firmly believes that pipeline projects under the Caspian seabed should be implemented only with the consent of those countries, through which sections of these pipelines will pass. He added that the implementation of such projects is possible on the condition that they "will strictly comply with the highest international environmental norms and standards". "The question of defining the legal status of the Caspian should be resolved solely on the basis of a consensus among the parties and the optimum balance of interests based on universally recognized norms of international law," said the president. (November 23, 2010)

UNITED KINGDOM – Planned Project - Engineering. CNR49/22/71 Jacobs Engineering Group Inc. announced recently that it received three framework contracts from National Grid to provide project services over a three-year period to support their investment programs in the areas of gas transmission/distribution, carbon capture and storage and property. Jacobs is 15

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Confront Challenges & Maximise Opportunties in the New European Gas Market Landscape

Philip Lowe Director General for Energy European Commission

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Andrea Stegher Vice President Gas Storage Europe (GSE)

Andrea Cirlicova Senior Advisor European Network for Transmission System Operators for Gas (ENTSOG)

• The New Age of Regulation: How the Third Energy Package, ACER and the Gas Regional Initiatives (GRI) are contributing to a single energy market and what that means for your business

The European Gas Market Summit 2011: A must-attend event for every business that is determined to thrive – whatever the future holds

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• Sourcing Supply: Outlook for indigenous production, the balance of pipeline imports / LNG and the role of unconventional gas in the European mix

With so many uncertainties - including the impact of tough new legislation on market share… uncertainties over future demand and supply... the current global gas glut... and the potential game-changer that is shale - it’s really tough to make sense of the ever-changing landscape, and assess its likely impact on your business.

• Pricing and Contracts: How we can expect prices in Europe to develop and the outlook for long term oil index based contracts • Infrastructure: The role of LNG in meeting European gas demand and the outlook for gas storage investment in Europe • Investment: The latest Incentives for infrastructure investment and development to facilitate competition

Happily, there is a beacon of light: The European Gas Market Summit 2011 is your road map to fully understanding what’s happening – and about to happen – in our industry. Our team of experts will navigate you through the key areas of change, and deliver authoritative assessments, predictions and knowledge that you can immediately use to advance the interests and future success of your own organisation

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Cedigaz News Report - Vol. 49, n°22 December 24, 2010 expected to provide a full range of project services including project management; project controls; cost management; field services; health, safety and environmental management; and specialist disciplines. The scope of the framework projects includes the new build and up-rating of gas pipeline and compressor projects resulting from changing patterns of supply and demand, new CO2 transportation networks, and the clean up and disposal of surplus non-operational properties owned by National Grid. The frameworks became effective in July 2010 and will run for an initial period of three years. (November 30, 2010)

SUPPLIES - IMPORTS – EXPORTS CHINA – Domestic Supply - Agreement. CNR49/22/72 China Natural Gas, Inc. announced recently that it signed a natural gas supply agreement with a subsidiary of China National Petroleum Corporation in Xi'an, China. The new supply agreement between CNPC Changqing Oil Field Branch Company and Jingbian LNG Company, a wholly-owned subsidiary of China Natural Gas, will provide the Company with a supply of natural gas for its LNG plant in Jingbian County, Shaanxi

Province. The Company expects to complete Phase I of the LNG Project by the end of 2010. Under the terms of the agreement, the Company has the option to purchase up to 500,000 cubic meters of natural gas per day, or 150 million cubic meters per year, of natural gas from CNPC Changqing at a purchase price of RMB 1.355 per cubic meter. The agreement is effective through December 31, 2011. (December 1, 2010)

***CHINA – Import - Forecast. CNR49/22/73 China Petroleum Planning and Engineering Institute predicted recently that China's demand for natural gas will reach 350 billion to 400 billion cubic meters by 2020, indicating that the domestic natural gas reserve should reach 70 billion to 100 billion cubic meters by then. (November 26, 2010)

CHINA – Demand - Forecast. CNR49/22/74 Yin Jianping, a professor at the School of Business Administration under the China University of Petroleum said recently that China's demand for natural gas will exceed its supply by 35 percent in 2011. Yin said that China's demand for natural gas will maintain rapid growth in the coming decade, and its annual consumption will exceed 150 billion cubic meters by 2015 and 200 billion cubic meters by 2018. The country's demand for natural gas has outstripped its supply since 2008. It is estimated that China's energy supply-demand gap will increase from 38 billion cubic meters in 2015 to 110 billion cubic meters in 2021, and the natural gas supply-demand gap will grow accordingly based on forecasts of the gas supply and demand. (November 22, 2010)

INDONESIA – Domestic supply - agreement. CNR49/22/75 Upstream oil and gas regulator BPMigas announced recently that seven gas sales contracts were signed. The total gas volume covered within the seven contracts reached 269.9 trillion British thermal units, BPMigas’ chairman R. Priyono said, adding that the gas utilization has been designated for the domestic market, including the power sector, manufacturers and fertilizer and petrochemical producers. Included in the seven contracts was a gas sales agreement between PT Pertamina EP and PT Pertamina Gas. Under the agreement Pertamina EP will supply 19.5 billion BTUs of gas per day (BBTUD) to Pertamina Gas’ LPG plant in Pondok Tengah, Bekasi, West Java. The contract will last four years starting from 2011. Pertamina EP will also supply 0.5 BBTUD of gas to PT Bumi Wiralodra, a company owned by the Indramayu regency administration. The agreement is for three years and will be effective starting in 2011. Domestic oil and gas company Lapindo Brantas also signed two gas sales agreements. The company will supply Sidoarjo regency administration companies Aneka Usaha and PT Petrogas Jatim Utama with two BBTUD of gas each. The first contract will be effective in 2011 for a period of 10 years, while the second contract is effective as of 2010 lasting for six years. Three other companies that secured gas agreements were Kodeco Energy CoM Ltd., Santos Sampang Pty., Ltd, and a consortium of Pearl Oil Sebuku, Total E&P Indonesie, and Inpex. Kodeco extended a contract to supply 6 BBTUD of gas to PT Petrokimia Gresik for three months starting November 2010. Santos signed a gas sales agreement with PT Indonesia Power, a subsidiary of state power firm PT PLN. Under the 16

Cedigaz News Report - Vol. 49, n°22 December 24, 2010 agreement, Santos will supply Indonesia Power with 30 BBTUD of gas for six years. The contract will be effective in 2011. The consortium of Pearl Oil Sebuku, Total E&P Indonesie and Inpex also signed a Head of Agreement (HoA) with fertilizer producer PT Pupuk Kaltim. In the HoA, the consortium will supply 80 BBTUD of gas to Pupuk Kaltim, effective 2012. The contract will last for 10 years. State gas distributor PT PGN estimated that the gas deficit for industry would reach 385 BBTUD in 2011, and will continue to increase, reaching an estimated 713 BBTUD in 2015. (November 27, 2010)

TURKMENISTAN to AFGHANISTAN – PAKISTAN – INDIA – Export - Agreement. CNR49/22/76 Turkmenistan proposed recently to charge different prices for supplying natural gas through the proposed 1,680 km pipeline that would deliver 90 million cubic metres a day to Afghanistan, Pakistan and India, officials said. The four nations have in-principle agreed to outsource execution and management of the $7.6 billion project to a global energy major, selected through a competitive bidding process. The decision to induct a private partner was taken after Afghanistan assured to secure the pipeline through the Taliban heartland and Pakistan in-

principle agreed to do so in its territory. Turkmenistan has agreed to supply 90 million standard cubic meters per day of gas to the three consumers. India is expected to get about 38 mmscmd gas, the same as Pakistan. The rest of the gas will go to Afghanistan. The pipeline will start from the Dauletabad gas field in southeast Turkmenistan and after 145 km stretch in the country enter Afghanistan. After traversing 735 km in Afghanistan and 800 km in Pakistan, the pipeline will cross into India. (December 6, 2010)

UKRAINE – Consumption - Forecast. CNR49/22/77 The European Bank for Reconstruction and Development (EBRD) launched recently in Ukraine an assistance program designed to promote the country's residential energy efficiency. "Once implemented, such investments may result in energy savings of over 60 million MWh per year - an equivalent of almost 10 billion cubic meters of imported natural gas or 25 percent of all Ukraine's natural gas imports," a statement said. The program will examine issues related to legal and regulatory framework, general awareness, capacity and low penetration of energy efficient technologies in the country, the bank said, adding "the program will also prepare legislation necessary for energy efficiency investments into the sector”. (November 30, 2010)

***VIETNAM – Demand - Forecast. CNR49/22/78 Tran Van Du, manager of Petrovietnam Gas Corp' technical department said that he expects Vietnam's domestic gas demand to more than double to 23 billion cubic meters per annum by 2020. Vietnam's current gas demand is around 9 bcmpa. PV Gas is currently able to meet 80 to 90 percent of domestic gas demand, that number would drop to about 50 percent in the next 10 years, he said. (November 25, 2010)

VIETNAM – Import - Forecast. CNR49/22/79 Deputy Minister Industry and Trade Hoang Quoc Vuong said recently that Vietnam will have to import up gas for domestic use annually after 2025 despite its sizeable reserves of natural gas. A World Bank report titled Viet Nam Gas Sector Development Framework said that the natural gas sector is set to triple in size over the next 15 years. "Development of the natural gas sector is a key component of Vietnam's overall economic policy and is prominent within the National Strategy for Energy Development," said Alain Barbu, Acting World Bank Country Director for Vietnam. The report recommends that from

now until 2025, Vietnam should apply various measures to address the uncertainty in the pricing methodology, the weaknesses in converting resources into reserves and to attract more investment in the sector. It stresses that Viet Nam needs to create a competitive gas pricing methodology, and eventually, a wholesale competitive gas market. Gas now meets over 15 percent of the country's primary energy demand and 88 percent of the gas is currently consumed by the power sector. Gas-fired generation accounts for 40 percent of total electricity supply. (November 15, 2010)

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Researched and produced by:

Cedigaz News Report - Vol. 49, n°22 December 24, 2010

STORAGE CANADA – Planned Project – Open Season. CNR49/22/80 Enbridge Gas Distribution Inc. announced recently that it is conducting a binding open season for firm natural gas storage service near Dawn, Ontario. Service will be provided at Enbridge's Tecumseh Gas Storage facility in Southwestern Ontario. The storage facility directly interconnects with Vector, Link Pipeline, TransCanada PipeLines, and Union Gas. Enbridge is expanding its existing storage system and is offering up to approximately 13 billion cubic feet of new storage capacity. This capacity will be phased-in over three years with 3 Bcf being added in 2011 and 5 Bcf being added in each of 2012 and 2013. Injections will start April 1 of each year. This firm, multi-cycle storage will have a maximum daily injection of 1.5 per cent and a maximum daily withdrawal capacity of 2 per cent of the contracted volume. (October 27, 2010)

CHINA – Ongoing Project. CNR49/22/81 The PetroChina-run Dagang underground gas storage facility started recently producing natural gas with planned output of five million cubic meters per day. The Dagang base has supplied a cumulative 1.85 billion cubic meters since beginning operations, accounting for 106 percent of the original plan. Meanwhile, the Huabei storage base in Hebei province has also been put into a trial run. These two underground gas storage bases are able to supply a total of 1.963 billion cubic meters—150 million cubic meters more than in 2009. (November 17, 2010)

CHINA – Planned project - Update. CNR49/22/82 China has recently decided to build a number of natural gas storage facilities in 11 areas, namely Pingdingshan and Wenliu in Henan Province, Changchun in Jilin Province, Liaohe in Liaoning Province, Daqing in Heilongjiang Province, Ordos in Inner Mongolia, Yanling in Hebei Province, Huai'an in Jiangsu Province, Qianjiang and Yingcheng in Hubei Province, and Anning in Yunnan Province. At present, China has altogether four gas storage projects that are newly built or still under construction, located in Tianjin, Beijing and Jiangsu, which are slated to start operation by 2012. (November 26, 2010)

NETHERLANDS – Ongoing project - Engineering. CNR49/22/83 Senergy has been recently awarded a significant contract by Abu Dhabi National Energy Company PJSC (TAQA) to work on an onshore underground natural gas storage project in the Netherlands. Senergy is to support TAQA on its pioneering Bergermeer Gas Storage project in the Alkmaar region of the Netherlands, which on completion will be Europe's largest third party access natural gas storage facility with an initial working volume of 4.1 billion cubic meters.

Bergermeer Gas Storage is currently being developed according to schedule and commercial operations are expected to start in 2013. The scope of Senergy's contract on the development, which involves drilling 14 new wells, is to undertake pre-operational work by providing front end engineering and design (FEED) verification and detailed design for managed pressure drilling (MPD) services. (November 9, 2010)

UNITED KINGDOM – Planned Project - Final Investment Decision. CNR49/22/84 Gateway Storage Company Ltd announces recently that Petrofac has acquired a 20% interest in the company. Petrofac will join Gateway as the technical project operator and will be jointly responsible for developing the project ahead of a Final Investment Decision in 2011. The front end engineering and design (FEED) phase

of the project is nearing completion and the focus of Gateway Storage will now turn to project execution and finalisation of the consortium of storage capacity holders and investors. Gateway Storage is targeting 2016 for the commencement of storage services to the UK energy market. (December 6, 2010)

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Cedigaz News Report - Vol. 49, n°22 December 24, 2010

***UNITED KINGDOM – Planned Project - Cancellation. CNR49/22/85 Scottish & Southern Energy recently put off the final decision on the Aldbrough II gas storage facility, a joint venture with Norway's Statoil, because of uncertainty over usage rules and the shrinking premium of winter gas prices over summer contracts, caused by increasing liquefied natural gas import capacity in Britain. "The market environment is not brilliant ... The winter summer differential is probably half what it was even three years ago," SSE chief executive Ian Marchant said. "Even if the market were looking good, we would be holding off, because we do not know what the intervention would be ... We're deferring that until all the regulations are settled on gas storage". (November 10, 2010)

UNITED STATES – Planned project - Approval. CNR49/22/86 Magnum Gas Storage, LLC, announced recently that the Federal Energy Regulatory Commission has accepted its application to construct and operate a high deliverability, multicycle salt cavern natural gas storage facility in central Utah under Section 7(c) of the Natural Gas Act. When completed, the facility will consist of four salt caverns with a combined total working gas storage capacity of 42 billion cubic feet. The project will be capable of injecting up to 0.3 Bcf of gas per day and withdrawing up to 0.5 Bcf per day and of cycling its inventory from nine to 12 times annually. The project also includes a 61.5-mile, 36inch header pipeline that will extend to points of interconnection with Kern River Gas Transmission Co. and Questar Pipeline Co. near Goshen, Utah. Magnum plans to initially develop two salt caverns at the site through solution mining, each with working gas capacity of approximately 10.5 billion cubic feet. The first salt cavern is expected to be available for natural gas storage service beginning in early 2012. (December 16, 2010)

UNITED STATES – Planned Project - Approval. CNR49/22/87 The Office of Energy Projects of the Federal Energy Regulatory Commission (FERC) issued recently its environmental assessment of Tricor Ten Section Hub's proposed natural gas storage project near Bakersfield, California. The Ten Section Natural Gas Storage project will have more than four billion cubic feet of interstate and intrastate pipeline capacity surrounding it. The Ten Section Hub facility is designed to hold 22.4bcf of working gas, with 10.1bcf of base gas, and will offer customers four-turn, high-speed deliverability. Ten Section Hub will offer 1bcf per day of withdrawal service and 0.8bcf per day of injection service. (December 3, 2010)

USE FOR POWER GENERATION SOUTH AFRICA – Planned Project - Engineering. CNR49/22/88 Foster Wheeler AG announced recently that its Global Engineering and Construction Group has received a contract from Sasol New Energy Holdings (Pty) Limited to perform a feasibility study for a gasfired power generation plant at Sasolburg, South Africa, using gas engines with an open cycle electrical output capacity of approximately 140MWe. Foster Wheeler’s scope will include the feasibility study and capital cost estimate for the overall plant, the evaluation of gas engine suppliers and the recommendation of a preferred gas engine supplier. The feasibility study is scheduled to be completed by December 2010. (November 22, 2010) These news are sourced from: Reuters, Bloomberg, AFP, Energy Business Review, Oil an Gas journal, Xinhua, Bernama, Scandinavian Oil & Gas, All Africa, Trends News Agency, Gas today, PRNewswire, Marketwire, RIA Novosti, Platts, Dow Jones, Novinite, Asia Pulse, Downstream Today, Oilvoice, Gas Today and press releases. Original copies can be supplied on demand as private copies.

CEDIGAZ NEWS REPORT is an internal publication of CEDIGAZ, edited by Thierry Rouaud with collaboration of Catherine Charlier. 1 et 4, avenue de Bois Préau, 92852 Rueil-Malmaison Cedex, France Tel. +33 1 47 52 60 12 - Fax +33 1 47 52 70 14 Website : http://www.cedigaz.org Contact : [email protected] 19