BG Group Natural gas a globalising industry Martin Houston - EVP & MD, North America, Caribbean and Global LNG Lehman Brothers CEO Energy/Power conference, September 2007
BG Group Overview BG Group overview Global LNG market Portfolio for growth 3
Strategy Integrated Gas Major Integrated Gas Major Connect gas to Secure low cost high value markets resources Build & access markets Equity reserves Serve customers Contracted resources Skills to succeed across the gas…
Strategy Business model E&P LNG Power Transmission Distribution E&P Resources Enabling Markets Skills and opportunities across the gas chain 5
Strategy Countries of current operation Norway Canada UK Kazakhstan Italy Israel / PA USA Oman India Tunisia China Algeria Thailand Libya Philippines Trinidad & Tobago Malaysia Egypt Nigeria Bolivia Brazil Singapore Chile…
Strategy Total operating profit m 3500 CAGR 39% 1997-2006 3,103 3000 2500 2,389 2000 1,520 1500 1,287 1000 833 888 688 500 330 160 229 0 1997 2000 2003 2006 E&P T&D, LNG, Power & Other Continuing operations excluding…
Global LNG market
Global LNG market A globalising industry What do we mean by a global gas market How far have we come Challenges Implications for BG Group 10
Global LNG market Global gas trade the recent past Algeria Middle East Trinidad W. Africa S.E. Asia Australia Markets LNG Pipe Source: BG Group Regionalised gas markets 11
Global LNG market Market evolution towards what Market evolution A transparent & efficient market y Market is equitable & balanced y Maximum growth for gas International Price Trade International Trade y Energy security trade…
Global LNG market Changing industry focus LNG trade (mtpa) 200 North America 180 Europe 160 140 Asia Pacific 120 100 80 60 40 20 0 Atlantic Pacific Atlantic Pacific Atlantic Pacific Basin Basin Basin Basin Basin…
Global LNG market US LNG market a global sink / source Atlantic Basin Pacific Basin Deep, liquid market Strong seasonal pull Strong seasonal pull Deep, liquid market Spot sink / source Spot at premium prices Spot at premium prices…
Global LNG market US LNG imports 2004 June 2007 100 Lake Charles 90 Elba Island, GA Cove Pt + Everett + Energy Bridge 80 70 60 Bcf 50 40 30 20 10 0 July July July Nov Nov Nov June June…
Global LNG market BG Group Supply & Optimisation 2006 Norway UK Belgium France S. Korea USA Italy Spain Japan India Taiwan Mexico Egypt Trinidad Nigeria Equity positions 3rd Party Existing import capacity Markets…
Global LNG market Industry inter-basin trade 2006 Asian imports from Atlantic Basin sources cargoes (2006) Other BG Supplier (company) Market 20 25 15 20 15 cargoes 10 10 5 5 0 0 Taiwan Japan India…
Global LNG market Market evolution a recap Market evolution A transparent & efficient market y Market is equitable & balanced y Maximum growth for gas International Price Trade International Trade y Energy security trade…
Global LNG market Challenges Access to resources Access to some markets Capabilities Existing agreements Business models Costs Challenges and obstacles remain 19
Global LNG market Global gas trade evolution Norway / Russia Sakhalin Middle East N.Africa Egypt W. Africa Trin / Ven S.E. Asia S. America Australia Markets LNG Existing & proposed Primary (20 mtpa) Pipe LNG trade…
Global LNG market LNG importing countries 2007 Holland Germany UK Denmark Ireland Poland Canada Belgium Croatia France Ukraine S. Korea Portugal Turkey Italy Japan US Canary Is. (Sp) Spain Jamaica Greece Dubai Pakistan…
Global LNG market Long-term LNG volumes under contract 25 2008 2004 20 15 mtpa 10 5 - Tokyo Gas Gas Natural & KOGAS Osaka Gas Gaz de BG France CPC Electric Electric Tokyo Chubu…
Global LNG market Global LNG: A unique competitive position Flexible LNG Multiple markets Long term supply with destination Delivery to 12 countries in 2006 flexibility Flexible US backstop People and skills Proven delivery…
Global LNG market Differentiated market characteristics Liquid markets Traditional markets Integrated chains Bilateral trades Short-term Long-term contracts diversions Oil price indexation Market index Limited market liquidity…
Global LNG market Conclusion dimensioning global markets LNG market connectivity & trade flexibility increasing US has emerged as the balancing market Flexibility has increased significantly liquidity has not International gas…
Long-term growth
Long term growth Global LNG: Supply BG supply (mtpa) CAGR 16-20% 2005-12 20 Supply subject to SPA* NLNG T7 CAGR 21-24% 2005-09 Brass LNG OKLNG equity lifting 10 Other opportunities Supply subject to SPA Spot (potential…
Long term growth E&P: Reserves and resources CAGR 10% mmboe 2006 Reserves/ 8,017 Production* 8000 7,071 6,595 2,713 37 years 6000 2,440 2,109 1,772 24 years 4000 869 1,211 1,470 1,236 1,383 16 years 2000 2,147 2,184 2,149 10…
Long term growth E&P asset base BG net production (000s boepd) of assets on stream at end 2006 only 700 600 500 400 Assets in production in 2006 only 300 200 100 0 2006A 2009 2012 2015 At 2007 reference conditions (see…
Long term growth E&P: Production BG net production 000s boepd CAGR 6-10% 2005-12 1000 800 CAGR 5-7% 2006-09 612 600 Medium term 2007-09 Long term 2010-12 Key projects: Key opportunities: 400 Buzzard Karachaganak Gaza Marine…
Long term growth Key opportunities beyond 2012 Alaska exploration UK exploration Norway exploration Canada exploration Egypt exploration Karachaganak Libya exploration full potential Algeria ELNG T3 Elba Island expansion…
Legal Notice Cautionary Note to US investors The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by…
Appendix Key assumptions REFERENCE CONDITIONS Brent Oil price US40/bbl US Henry Hub 6/mmBtu US/UK exchange rates of 1.80:1 UKCS upstream tax 40% 2003-05; 50% 2006 forward Prepared under International Financial Reporting Standards…
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