#1САХАЛИНСКАЯ • ЭНЕРГИЯ + + SAKHALIN ENERGY The Sakhalin-ll Project: The Strategic Energy Partnership with Japan for the 21st century. Andrew Seck General Manager: Commercial Olga Karaseva-Valyarevich Commercial Expert IEEJ Tokyo 13 December 2004#2SAKHAL APEC, Bangkok, October 2003 2004 CEO SUMMIT THAILAND "Russia is also prepared to make its contribution to creating a new energy configuration in the Asian and Pacific Region. For example, in 2007 it is planned to open a factory for liquifying natural gas on Sakhalin - one of the largest (LNG) factories in the world." President Vladimir Putin HEPTUR ENERGY Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 2#3CAVARUSH SAKHAL • • • Definition of Strategic Partnership (Oxford Dictionary) Strategic adjective [usually attributed to] 1 of strategy, forming part of a plan or scheme; strategic(al) decisions. 2 giving an advantage; right for a particular purpose; a strategic position, move... Partner noun a person who takes part in an activity with another or others, especially of one of several ownership of business... Partnership noun state of being a partner or partners, especially in business... "cooperation" "long-term' "mutual benefit" "risk sharing" "common goals" ТОНЕТИЯ ENERGY Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 3#4Our Strategic Partnership with Japan Japan is our Core Market ➤ Customers ➤ Crude and LNG SAKHAL 百 東京電力 TOHO GÁS SHEPHE ENERGY ➤ Shareholders include ➤ Mitsui and Mitsubishi エネルギー・フロンティア ■TOKYO GAS ➤ Contractors KYUSHU ELECTRIC POWER CO., INC. Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC ➤ Shipping ➤ Lenders ➤ Proximity and historical ties 4#5Barnaul Competing Concepts for Russian Resources RUSSIA ALTAY Ürümqi KINJITANG UYGUN AUTONOMOUS REGION Oil from Siberia TUYA REPUBLIC Kovykta Irkutsk Angarsk Daquing - QINGHAI Xining IBET BEANWHICHAR HEPTUS SAKHALIN ENERGY + GANSU - BURYATTA Angarsk Nakhodka KHABAROVSK Angarsk Ulaanbaatar Ulan Bator MONGOLIA CHITA Daquing Qiqihar HEILONGILANG Harbin Changchun INNER Jilin MONGOLIA Shenyang, Dekastri⚫ Sakh - I 420.000 bopd Khabarovsk Sakh - 2 Sapporo MOMORSKIY Nakhodka Vladivostok Chongjin 7 KORUS CHINA Baotou Anshan Tangshen NORTH KOREA Datong Beijing НЕНЕЇ Tianjin Tientsin Dalian Taiyuan SOUTH KOREA Lanzhou Zibo SHANKI Qingdao Handan Jinan D Kwangju SICHUAN Xi'an SHAANXI Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC Zhengzhou Huainan HENAR 回 Suchou Nanjing PAPAN Nigata Tokyo Nagoya Kyoto Taegu 5#6CAVARUSH SAKHAL ТОНЕТИЯ ENERGY Sakhalin II Project Overview Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC#7In Our Presentation | Shall Cover: • . . • Introduction - Sakhalin Island Sakhalin Energy and its Organization Sakhalin II Project: - Phase 1 - Oil Production - Four Landmark LNG Sales - Phase 2 - Integrated Oil and Gas Production - Progress in LNG Marketing - Sakhalin The Strategic Supply Source for Japan СТАЛИНСКИЙ HEPINS SAKHALIN ENERGY Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 7#8SAKHAL Okha Sakhalin at a Glance . Sakhalin Region formed 1947 • Nogliki . Alexandrovsk- • Sakhalinsky . Tymovsk Smirnykh • Uglegorsk . "Poronaisk ■ Makarov Tomari Dolinsk Kholmsk Yuzhno-Sakt Aniva Nevelsk Korsakov . Territory 87,100 Km2 - Population - 608,000 Capital Yuzhno-Sakhalinsk Sakhalin Regional "Oblast" Legislature is Sakhalin Duma Main industry is fishing, timber, and oil & gas export 2/3 of Sakhalin area is mountainous Large temperature differences -54 C Winter and +38C in Summer OREPINE ENERGY Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 8#9СТАЛИНСКИЙ SAKHALIN HEPTUS ENERGY Sakhalin Island Geography • Sakhalin Island stretches 948 km from north to south Maximum width is 160 km, minimum 30 km - • 2/3 of Sakhalin area is mountainous - - Highest mountain is Lopatin (1,609 m) Two mud volcanoes and more than 60,000 rivers /streams • Lakes number 16,000+. The largest is Nevskoye (178 km²) Large temperature difference between North & South Winter average varies between minus 6 & minus - 24°C, and in summer between plus 10 & plus 19°C (record: minus 54°C in Winter and plus 38°C in Summer) • Most productive areas of ocean in the world The Sakhalin coast and basin alongside Kuril Islands is Russia's largest fishing ground - Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 9#10Sakhalin Energy - PSA Structure Russian Federation Sakhalin Oblast Shell Petroleum NV 100% Shell Sakhalin Holdings B.V. Mitsui & Co. Ltd 100% Mitsubishi Corp. 100% Mitsui Sakhalin Diamond Gas Holdings B.V. Sakhalin B.V. 55% 25% 20% Supervisory Board CAVARUSH SAKHALI OREPINE ENERGY Production Sharing Agreement (1994) Shareholders Agreement Sakhalin Energy Investment Company Ltd. Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 10#11Sakhalin Energy Staffing Rijswijk (the Netherlands) We are a growing company OSCOW 116 86 PARKHCHAN SAKHALIN ENERGY KOHEPTUA Russian Staff 666 Non-Russian Staff 586 Total SE Staff 1,252 10 000 construction workers now on the Island Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC Molikpaq 164 Yuzhno- Sakhalinsk 723 Other locations 163 11#12Sakhalin Shelf: Hydrocarbons GAS-IN-PLACE (196 Tcf) 4% 10% In-Place IV Shmidovsky Brock Sakhalin 5 East-Shidovsky Blo Astrakhanaky Block V 20% 14% Sakhalin I 12% Sakhalin II Sakhalin III BOE In-Place (94,300 MMboe) Sakhalin IV 0.5% Sakhalin V 1% Sakhalin VI 2% 11.5% 6% Sakhalin VII Sakhalin VIII Sakhalin IX 40% OIL-IN-PLACE (60,500 MMbbls) 3% -0.5% 34% SAKHAL 7% SHEPIS ENERGY 8% 1.5% 13% 7% 26% 29% 10% Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC Russia " Sakhalin 1 Sakhalin Sakhalin 2 Ayashay Blo Verinsky El HII Sakhalin J 9% VII | Sakhalin Island Sakhalin Pogranichny Block 31% IX-> VII VI 12#13Sakhalin II Hydrocarbon Resources GULF OF SAKHALIN IN-PLACE (8,700 M Mboe) SAKHAL TATAR STRAIT Okha Sakhalin Island Sakhalin | Project Area Exxon/Sodeco Sakhalin II Project Area Sakhalin Energy Sakhalin III Award Areas Exxon Mobil/Texaco REPTUR + ENERGY Nogliki Lunskoye 0 Odoptu Chaivo D MILES 30 Piltun- Astokhskoye Arkutun Dagi 3 SEA OF OKHOTSK Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 37% 42% 10% 11% RECOVERABLE (4,900 MM boe) 58% □ PA Oil OPA Gas Lunskoye Oil/Cond Lunskoye gas 21% □ PA Oil PA Gas 13% Lunskoye Oil/Cond Lunskoye 8% gas 13#14Sakhalin II Project: Phase 1 Vityaz Complex: Molikpaq, SALM and FSO First offshore oil production in Russia Produces during six month ice free summer season 60-70,000 b/d oil production SAKHALI SHEPPAR ENERGY + Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC Oil Production 2000 12.4 million bbls 2001 15.1 million bbls 2002 10.8 million bbls 2003 10.3 million bbls 2004 11.69 million bbls. 14#15BARWACHAY SAKHALIN SHEPTE ENERGY + Supplying Crude Oil to Customers Since 1999 Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 15#16Sakhalin Vityaz Crude Oil Sales 1999 - 2004 ■ Japan Korea ☐ USA □ China 1999 0% 43% 14% 3% 2000 0% 0% Taiwan Philippines ☐ Thailand 2001 14% 62% 1.1 mln. bbls 12.4 mln. bbls 2002 2003 6% 7% 7% 32% 6% 83% 86% 15.0 mln. bbls 6% 0% 5% 3% 2004 6% 6% 55% SARAHCHAN SAKHALIN REPTE 10.8 mln. bbls 13% 12% 10.3 mln. bbls Acceleration of shift from Korea to Japan ENERGY Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 11.69 mln. bbls 80% 16#17CAVARUSH SAKHAL Our Crude Oil Customers in Japan Cosmo 東北電力 - Tohoku Electric Mitsubishi Corporation MITSUI & CO., LTD. ENEOS 新日本石油 Your Choice of Energy - Nippon Oil FUJI OIL CO.,LTD. Promoting delicious, healthful living through food product ingredients SHEPTUR ENERGY - Showa Shell Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC ExxonMobil 17#18Cargo Destinations 1999 - 2004 SHEPTHS SAKHALIN + ENERGY Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC Time of voyage from Vityaz Marine Terminal Japan 2-4 days Korea 4 - 5 days China 5-8 days Taiwan 6 - 7 days Philippines 7 - 8 days USA 7-15 days Thailand 12-13 days 18#19CAVARUSH SAKHAL CHEPENS ENERGY + Declaration of Development Date Announced - May 15, 2003 IN ENER 2003 5 15 . • . . . Sakhalin Energy and shareholders took Final Investment Decision on $10 billion+ Phase 2 project Declared Development Date for the Lunskoye Field First sale of Russian gas into the Asia-Pacific markets with Japanese customers Russian Government provided assurance on long term. PA/Lunskoye PSA license security Launched Phase 2 Project Financing Awarded major Phase 2 contracts Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 19#20СТАЛИНСКИЙ SAKHALIN CHEPEUR ENERGY + ***** * Sakhalin II Project: Phase 2 Botig P PA-A Lun-A Piltun -B Platform. Astokh Year Round Production. • Lunskoye A Platform. • . Onshore Processing Facility. 1870 km Oil and Gas Pipelines. LNG Plant & Oil Export Terminal. Infrastructure Upgrades. Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 20#21Линек SAKHALI Я ЭНЕРГИЯ + ENERGY yesure TATAR STRAIT Phase 2 Project: A Four Year Challenge SEA OF DKHOTSK OPF to DET 630 un SAKHALIN ISLAND Gas Compression Sention Ne 2 O Booster Station No. 2 SEA OF JAPAN PALA SEA OF OKHOTS! PACIFIC OCEAN Dine Line Detail I . • Piltun -B platform • Lunskoye-A platform Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 21#22CAVARUSH SAKHAL Offshore platforms Lunskoye 4 leg concrete gravity base. Topsides 22,000 tonnes. Gas production 1800 mmscf/d. 30 well slots. Possible oil rim production. Piltun 4 leg concrete gravity base. Topsides 28,000 tonnes. Oil production 70,000 b/d. Gas production 92 mmscf/d. 45 well slots. ТОНЕНИЯ ENERGY Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 1711 22#23Lunskoye / Piltun GBS Construction at Vostochniy in Summer СТАЛИНСКИЙ SAKHALIN SHEPTUR ENERGY GBS Concrete Base Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 3 23#24SAKHALIN SHEPTUR ENERGY + Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC Lunskoye GBS in October, 2004 First Shaft Completed 22nd October 2004 24#25SAKHALIN SHEPTUA ENERGY + Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC Lunskoye GBS 3 December, 2004 . • The Lunskoye concrete substructure has a total weight of 116,000 tonnes. The base is 105 metres by 88 metres and 13.5 metres high. The diameter of each leg. measures more than 20 metres and they are some 56 metres high. Total height of the entire structure is 69.5 metres. 25#26Tow to Offshore Location RUS TOWING ROUTE TO FIELD LUN-A Amur PA-B . LUN-A of Jtsk Towing distance . • Blagoveshchensk Khabarovsk · Birobidzhan Yuzhno-Sakhalinsk Qiqihar ☐ HEILONGJIANG Harbin ☐ Vostochny, JILIN angchun an Kanggye NORTH KOREA ☐ Jim Shenyang Casting Basin Vladivostok Chongjin Sea of Japan (East Sea) Sapporo yongyang Haeju ☐ 0 Wōnsan 10 O Seoul dao Taegu Kwangju Kyoto Nagoya Pusan SOUTH KOREA JAPAN anghai ☐ Tokyo 960 nm. Duration of tow ≈ 16 days. 3 Tugs, each of 150 Tonnes. 1 Tug to assist during tow. PA-B •Towing distance 1020 nm. Duration of tow 17 days. · · 3 Tugs, each of 150 Tonnes. 1 Tug to assist during tow. Milestone 5 LUN-A, install 15th July 2005. Milestone 6 PA-B, install 15th September 2005. BARWACHAN SAKHALIN SHEPTUR ENERGY + Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 26#27SAKHAL Я ЭНЕРГИЯ + ENERGY Lunskoye - Status Upper Deck Block UD30 Installed Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 27#28САХАЛИ SAKHAL SHEPTUR ENERGY Lunskoye - Status Installation of UD40 with underdeck outfitting in place Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 28#29СТАЛИНСКИЙ SAKHALIN SHEPTUR ENERGY Piltun - Status PAB Lower Deck Block LD 21 - Turn Over Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 29#30Линек SAKHALI Я ЭНЕРГИЯ + ENERGY yesure TATAR STRAIT Phase 2 Project: A Four Year Challenge SEA OF DKHOTSK OPF to DET 630 un SAKHALIN ISLAND Gas Compression Sention Ne 2 O Booster Station No. 2 SEA OF JAPAN PALA SEA OF OKHOTS! PACIFIC OCEA Dine Line Detail I Detail 2 Onshore Processing Facility Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 30#31СТАЛИНСКАЯ SAKHALIN SHEPTUR ENERGY + OPF - Plant View Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 31#32SAKHALIN HEPTE ENERGY + OPF - View Looking North Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 32#33Piperack Erection OPF - Status Gas/Liquid Exchanger onto Foundations PANARCHA HAR SHEPHE SAKHALIN ENERGY Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC Condensate Tank 33#34КАЛИНО SAKHAL HEPTUS ENERGY OPF - Status Parking Loop Vessel - Loaded onto Foundations Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 34#35Линек SAKHALI Я ЭНЕРГИЯ + ENERGY yesure TATAR STRAIT Phase 2 Project: A Four Year Challenge SEA OF DKHOTSK OPF to DET 630 un SAKHALIN ISLAND Gas Compression Sention Ne 2 O Booster Station No. 2 SEA OF JAPAN PALA SEA OF OKHOTS! PACIFIC OCEA Dine Line Detail I Detail 2 Pipelines Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 35#36КАЛИНО SAKHALI SHEPTUR ENERGY Offshore Pipelines - Status Cable Casing Pulled to Shore Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 36#37КАЛИНО SAKHALIN HEPTUS ENERGY Offshore Pipelines - Status Lunskoye Landfall - Cofferdam with Pull-heads Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 37#38SAKHALIN SHEPTHS ENERGY Onshore Pipelines - Status ROW preparation - Spread # 2 Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 38#39SAKHALIN HEPTUS ENERGY Onshore Pipelines - Status Welding at KP 336 Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 39#40SAKHALIN Onshore Pipelines - Status SHEPTUR ENERGY Pipelaying in Onor District Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 40#41SAKHALIN HEPTUS ENERGY Onshore Pipelines - Status Lowering at KP 589 Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 41#42CAVARUSH SAKHAL SHEPHE ENERGY Onshore Pipelines - Status S+ 563 PIPE BOO 5-50 4-14,53 Commencement of 1st weld on 48" pipeline (3rd November 2004) Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 42#43Линек SAKHALI Я ЭНЕРГИЯ + ENERGY yesure TATAR STRAIT Phase 2 Project: A Four Year Challenge Detail I SEA OF DKHOTSK OPF to DET 630 un SAKHALIN ISLAND Gas Compression Sention Ne 2 O Booster Station No. 2 SEA OF JAPAN PALA SEA OF PACIFIC OCEA OKHOTS! Dine Line Detail 3 UNG Tkm Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC Detail 2 Time Tauber LNG plant and export terminal 43#44. • . • Sakhalin II LNG Plant - Project Dimensions State-of-the-art LNG processing technology for maximum advantage of Sakhalin climate - more LNG in the winter • Feed gas supplied from dedicated Sakhalin Energy fields • Plant with two parallel LNG trains each producing 4.8 million tons LNG per annum - largest in the world LNG export terminal suitable for wide range of LNG carriers, operating 24 hours a day, 365 days a year Engineering completed, construction progressing MARWACHAN HEPTUR SAKHALIN ENERGY Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 44#45LNG EPC CONTRACT ORGANISATION CAVARUSH SAKHAL ТОНЕТИЯ ENERGY Chiyotec Yokohama Office O.A.O. NIPIgaspererabotka Russian Code / Standard Yokohama Design Office Narashino Design Office SEIC CTSD E.P.C. CONTRACTOR LNCETY . LNG TANKS Moscow Office Krasnodar Angarsk Office Office Yuzhno- Sakhalinsk Office Site Office C & E Corporation Detail Design for Process Area O.A.O. NIPIgaspererabotka Basic Engineering for Oil Export Terminal (OET) J.S.C. Trust KOKSOKHIMMONTAZH Crude Oil Tank & Cone Roof Tank E.C.Transstroy Coordination with Design Institute for Material Offloading Facility (MOF) Water Well Pipeline(WWPL) Camp O.A.O. NIPIgaspererabotka O.A.O. AUS 0.0.0. Company IKEM Detailed Engineering Non Industrial for Site Preparation Oil Export Terminal OET) * Non-Industrial Building (NIB) Bldg. Supervision Project Management Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 45#46ASWHICHAT SAKHALIN SHEPHE ENERGY + LNG/OET Plant Site Overview Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 46#47СТАЛИНСКИЙ SAKHALIN SHEPTUS ENERGY LNG Plant: Green Field to Construction Site (photographed by Tokyo Gas) 14 July 1998 16 September 2004 Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 47#48SARAHCHAT + CAVANITH SAKHALIN SHEPTUR ENERGY LNG/OET Status Sakhalin Energy LNG Process Area THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 48#49LNG - Process Train Foundations SAKHAL Process Train-1 PR-101 Base Concreting Block-1 Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC Process Train-1 C-1301 ABC Rebar Installation SHEPTE ENERGY 49#50LNG / Oil Export Terminal Status SAKHAL SHEPTUR ENERGY LNG Piperack PR-101 Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 50#51WHICH САХАЛИНЯ SAKHALIN ХАНИЯ ENERGY LNG / Oil Export Terminal Status LNG Tank T-3101 Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 51#52LNG Material Offloading Facility Status SAKHAL OREPINE ENERGY Installing first MOF insert Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC Installing fourth MOF cell 52#53MARKACHAN SAKHALIN ТОНЕРТИЯ ENERGY + Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 53#54Four Landmarks Japanese LNG Sales Agreements 12 May 2003 HoA signed with Tokyo Gas -1.1 million tonnes a year from 2007 for a period of 24 years. - 19 May 2003 HoA signed with Tokyo Electric 1.2 million tonnes a year from 2007 for a period of 22 years, 23 April 2004 TE declared increase of the long. term volumes to 1.5 million, and on 5 November full SPA was signed 24 July 2003 HOA signed with Kyushu Electric up to 0.5 million tonnes a year from 2009 for a period of 21 years, 9 June 2004 full SPA signed between Kyushu Electric & Sakhalin Energy. 12 March 2004 HOA signed with Toho Gas 0.3 million tonnes from 2010 for the period of 23 years Total Volume sold to-date to Japan is 3.4 million tonnes per annum СТАЛИНСКИЙ SAKHALIN SHEPHE ENERGY Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC Tokyo Gas HOA Signing Ceremony 54#55SAKHALIN HEPTHS ENERGY + 2004: Toho Gas HoA Signed; Additional Volume Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 55#56CAVARUSH SAKHAL ТОНЕТИЯ ENERGY 2004: Kyushu Electric SPA Signed; Additional Volume Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 56#57CAVARUSH SAKHAL SHEPIS ENERGY + 2004: Tokyo Electric SPA Signed; Additional Volume Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 57#58Sakhalin SPA with Shell Eastern Trading Signed To Supply America A Royal Dutch Shell-lod group b the world's largest liquefied nat plant on Salihan bland has in find supply deal in North Aron the groupsed Thursday. Satin Energy, wild Jo trading his Mi ubishi,dit would supply but yours to Mexico and Cal United States Sabun Energy, which open Sakhalin-2 project, sed the dial at least 56 billion LNG will purchased by She OIL & GAS (14 October 2004) Shell first to supply Russian gas to US By James Ball In Londen has reserves in the Hackies The Mexican LNG plant in Baja California is being built by Sampm, the US en truding op Shell, which was per E HEPTOPECPCH Royal Dutch Shell signed a deal to supply am lonnes of liquefied natural gas to Mexion and the 15 west coast, in what it cloent of Sakhalin 2 alongside H will be the first export of two Japanese partners, ta Jussian gas to north Amer essentially selling the gun on 508. to itself, under the suspices of the Shall ИЗДАЕТСЯ С 1 МАЯ 1925 ГОДА The gas, which will be up 10 ОКТЯБРЯ 2004 ГОДА, ВТОРНИК 4 в 187 (220) Америка закупила сахалинский газ на двадцать лет вперед Сообщаем подробности 15p 2004 63 "Сахалин-2" прорвался в Америку Parson Jen Гулобера мож CTV Cup jucniku m Hototapetai mom оператор ловно про- in shell m Perak cipy Hoy po CHAT OTEL, TH Это первый контрактн На Чернового в Актралин - либерская США, пакем мире И. Крайг потом продекрипеле, амаре по прогнон польше раста стре 25 mal reiset komp-p 20% A DOLGO an Позен с Перепелой формация First Russian Gas Exports to North America! СТАЛИНСКИЙ SAKHALIN SHEPHE ENERGY Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 58#59CAVARUSH SAKHAL Key Terms of Baja Agreement • Volume • • Duration Start Date • Delivery • Destination Take-or-Pay Price 37 mt 20 years 2007-2008 Delivered Ex-Ship Terminal developed at Costa Azul Yes Linked to gas price in USA. ТОНЕТИЯ ENERGY Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 59#60SAKHALIN HEPTE ENERGY + The Shipping Route Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC DES Sale 60#61CAVARUSH SAKHAL ТОНЕНИЯ ENERGY Shell and Sempra will Share Capacity of Sempra Terminal SDG&E San Diego SoCal Gas Co California North Baja Pipeline Ehrenberg El Paso Gas Co Otay Mesa Tijuana TGN INTERGEN Los Algodones Phoenix Spur Rosarito CFE ■ El Florido Mexicali " Arizona Spur line Sempra's TDM Gasoducto Bajanorte Proposed Shell/Sempra- Terminal Baja California Sonora Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 61#62Why has Sakhalin Energy Entered into this SPA? CAVARUSH SAKHAL Economics ТОНЕТИЯ ENERGY High operating load factors in startup years Russia-Mexico-USA Debt capacity Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 42 62#63Incheon Incheon Terminal Pyongtaek Terminal SAKHAL Mokpo SHEPTE ENERGY Ilsan Seoul Kogas :Chuncheon • Wonju Daejeon Daegu Cheonju. Pohang Ulsan Pusan Yosu Tongyong Terminal Kwangyang Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC • • . Sakhalin Energy has been shortlisted as Negotiation Invitee Currently negotiating with Kogas Selection date for Preferred Sellers postponed Power Generation Companies also permitted to import LNG; Term Sheets or HOAs to be agreed with potential Suppliers MOCIE will subsequently select Preferred Sellers from Kogas shortlist and GenCo offers Metropolitan Area Major City LNG Receiving Terminal 63 33#64CAVARUSH SAKHAL New Chinese LNG Terminals Forecasted increase of gas share in total energy balance from 3% in 2003 to 10% in 2010 Gas demand will be partially met by LNG import ТОНЕТИЯ ENERGY West-East Pipeline (NDRC Planned Projects) Kovykta Pipeline >2012 Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 7. Dalian LNG (2012) 3. Shandong LNG (2008) 6. Jiangsu LNG (2011) 4. Shanghai LNG (2009) 5. Zhejiang LNG (2010) 2. Fujian LNG (2007-08) 1. Guangdong LNG (2007) 64#65PHILIPPINES INDONESIA BEANWHICHAR SAKHALIN SHEPSMA ENERGY + KAZAKHSTAN Developing Our Success RUSSIA MON INA EA JAPAN Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC CANADA 65 UNITED STATES#66CAVARUSH SAKHAL We will sign More Contracts in Japan beyond Our Foundation Customers ТОНЕТИЯ ENERGY TOHO Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 東京電力 エネルギー・フロンティア TOKYO GAS KYUSHU ELECTRIC POWER CO., INC. 66#67CAVARUSH SAKHAL Our Strategic Partnership with Japan Our Aspired Market ТОНЕТИЯ ENERGY Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 67#68SAKHAL SHEPIS ENERGY + LNG Ship Signing Ceremony Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC EMI 68#69Two Japanese-Russian Shipping Consortia Nippon Yusen Kabushiki Kaisha - 60% SC Sovcom flot - 40% NYKLINE NIPPON YUSEN KABHA SOVCOMFLOT Mitsui O.S.K. Lines - 45% Mitsui O.S.K. Lines ** Kawasaki Kisen Kaisha - 30% K¨K LINE KAWASAKI KISEN KAISHA. LTD. Primorsk Shipping Corporation - 25%, PARKHCHAN SAKHALIN SHEPTE ENERGY Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC PRISCO 69#70· • • . Project Financing Agreement for Phase 1 financing of $348m singed in Dec 1997 Phase 1 loan repayment commenced in Oct 2000 PIM for Phase 2 financing launched in Jun 2003 Phase 2 financing Term Sheet negotiations with JBIC, EBRD, ECGD and USEXIM complete in Oct 2004 Commercial bank appointment process to start early next year and Financial Signing targeted for mid next year Phase 2 financing is: largest ever project financing on a limited recourse basis (roughly $5bn senior debt targeted); - - for the project of unprecedented size and complexity in Russia; and - flexibly structured to accommodate the expected build-up of LNG sales. commitments. SAKHAL SHEPHE ENERGY Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 70#71СТАЛИНСКИЙ SAKHALIN SHEPTAS ENERGY + Sustainable Development Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 71#72• CAVARUSH Sakhalin II Project is on Track (Current Status Highlights) • 6 th season Oil production completed with 11.69 million barrels in 2004 • Phase 2 construction 45% completed • More than 50% LNG capacity sold SAKHAL 2 trains capacity expected to be sold by mid 2005 Two contracts for three LNG ships were signed Financial close expected mid 2005 SHEPTUA ENERGY Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 72#73CAVARUSH SAKHAL ТОНЕТИЯ ENERGY Why Gas from Sakhalin? Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC#74• Sakhalin Energy is the Strategic Supply Source of Gas to Japan Earliest available gas from Russia . Closest source of LNG to Japan . . . · • Established LNG infrastructure in Japan Unrivalled shareholder track record in LNG projects worldwide (45% MC and MBK) Diversification of energy supply from the North. Competitive pricing Winter seasonality of production • Robust Production Sharing Framework • • Strong Russian Federal and Oblast support Plentiful high quality reserves of both oil and gas from the whole of Sakhalin Island SAKHALI SHEPHE ENERGY Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 74#75With the development of the Sakhalin projects, Russia is now establishing itself as a reliable supplier of oil and gas in Japan and "...creating a new energy configuration in the Asian and Pacific Region". Sakhalin LNG provides an immediate opportunity for customers to experience the energy proposition offered by Russia CAVARUSH SAKHAL ТОНЕНИЯ ENERGY Sakhalin Energy THE NEW ENERGY SOURCE FOR THE ASIA PACIFIC 75