LNG as transport fuel the need for speed

LNG as transport fuel – the need for speed in Europe GAZPROM Germania Gmb. H Tobias Jacobs 24 November 2015

GAS FOR TRANSPORT NATURAL GAS – THE FUEL AGAINST AIR POLLUTION 2 GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015

GAS FOR TRANSPORT EU-TARGETS FOR 2020 OF 95 GCO 2/KM WILL ONLY BE REALIZED, IF THE NUMBER OF NGVS WILL BE SIGNIFICANTLY INCREASED. 2020 Oil Vehicle Market Share = 89% CNG Vehicle Market Share = 8% EU-targets for CO 2 emissions in road transportation 2010 Oil Vehicle Market Share > 98% CNG Vehicle Market Share < 1% 3 GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015

GAS FOR TRANSPORT OUTLOOK OF FREIGHT TRANSPORT § By end of 2015 the volumes of freight transport in Germany for example will rise by 70% § This will lead to significant raise of GHG and air pollutions emissions Ø Environmental, economical and safe solutions in transport are needed! Source: Energie Agentur NRW 4 GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015

GAS FOR TRANSPORT COMPARISON CNG VS. LNG + § § + § Accessible and proven technology Choice of vehicles available with new models § being added by the automotive industry Generally able to meet EU 6 standards § “Zero” or reduced excise duty in many European countries, expected to last until 2030 § § – Higher energy density than CNG resulting in smaller tanks, less weight and higher mileage Lower weight of vehicles resulting in higher utilization of fuel efficiency For buses: lower centre of gravity due to lighter and internal fuel tank with higher driving comfort Reduced excise duty with high chances of sustainability until 2030 (no alternative for HDV)* Independency of pipeline infrastructure Extra weight of gas cylinders decreases fuel – efficiency and driving performance § New and well tested technology, but refueling infrastructure yet to be developed § For buses: sometimes height restrictions for low bridges due to mounting of storage on the § More complex supply chain than for CNG roof reliable partners + differently refueling *as requires for CNG, but in some countries CNG andfor LNGsupply are treated § Lower energy density than conventional fuels § Choice of OEM vehicles still limited 5 GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015 or LNG §

GAS FOR TRANSPORT SOME PRACTICAL REMARKS TO THE MARKET SITUATION FOR THE NATURAL GAS FOR TRANSPORT § Currently low oil/Diesel pricing delays investment decision and challenge a change BUSINESS towards LNG But, … - very volatile oil/Diesel pricing have recovered and are assumed to increase again within next years - investors keep investing into refueling stations (subsidies with deadlines, lead time) - investment cost “Premium“ for NGV and refueling stations (especially for LNG) is expected to decrease § Gas for transport infrastructure is slightly growing but still limited across Europe (especially for LNG) But, … - CNG station network development extended by LCNG station (for off-grid areas/customers) - Increasing SSLNG applications at LNG import terminals enlarges LNG for transport availability. - EU and regional programs for clean mobility are in place (e. g. Clean Package for Transport, Ten-T, LNG Blue Corridors, …) and facilitate the infrastructure development by financial support, regulation and standardization § 6 Even with an increased awareness for NGV prejudices and wrong information block the change GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015 But, …

GAS FOR TRANSPORT GAZPROM‘S MARKET POSITION TODAY – FROM REGIONAL MARKET DEVELOPMENT TOWARDS A GLOBAL STRATEGY 7 • GAZPROM Germania (100% owned by Gazprom export): 28 CNG stations, 3 in construction, 9 planned • GAZPROM Germania: 7 CNG stations, 2 in construction, 6 planned • VEMEX (50% owned by GAZPROM Germania): 5 CNG stations + gas supply to third party stations • GAZPROM Germania: 1 LNG station + 1 LNG station in construction, 5 CNG stations planned • VEMEX: gas supply to one third party CNG station • JV between Gazprom and Petrovietnam: development of NGV-infrastructure and gas supply to gas filling stations GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015

GAS FOR TRANSPORT LAUNCH OF LNG CITY BUSES IN THE POLISH CITIES OF OLSZTYN AND WARSAW October 2013: launch of Europe’s first LNG city buses in the Polish city of Olsztyn § 11 x 12 m solo LNG buses up to later 50 LNG buses by 2016/2017 § Operations 7 days per week / 65. 000 km per bus p. a. § Since Oct 2013: refueling by GPG’s mobile LNG station § Implementation and operation of fixed skidded station in Q 4/2014 January 2015: launch of 35 LNG city buses in Warsaw and construction of the first LCNG station in Poland § 35 x 18 m articulated LNG buses up to later 200 LNG buses by 2016/2017 as well as LCNG-add-on for 30 CNG buses § Operations 7 days per week / 80. 000 km per bus p. a. § From Q 1/2015: refueling by mobile LNG station Implementation of fixed in“LNG Q 3/2015 8§ GAZPROM GERMANIA GMBH / IBCstation Workshop in Road Transport” / November 2015

GAS FOR TRANSPORT EXPLORE NEW MARKETS FOR LNG-FUELLED BUSES IN 4 SLOVAKIAN CITIES TOGETHER WITH SOLBUS § Inform potential clients (e. g. local bus operators) about the great potentials of natural gas as fuel § Solbus Solcity LNG bus will be in operation on regular lines of public transport in 1. 2. 3. 4. 09. 02. - 22. 02. 2015 Dunajská Streda 22. 02. - 01. 03. 2015 Trnava 01. 03. - 08. 03. 2015 Prievidza 08. 03. - 22. 03. 2015 Zvolen Trnav a Bratisla va Dunajská Streda 9 Prievid za Zvole n GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015

GAS FOR TRANSPORT GAZPROM GOES MARITIME: DEVELOPMENT SSLNG HUB AT BALTIC SEA § Assessment of the feasibility of a LNG Hub in the port of Rostock § Planned LNG storage capacity of 3, 000 to 5, 000 m³ and an annual quantity of up to 100. 000 mtpa (= 0, 13 bcm) by 2025* § Potential for loading and unloading of bunkering ships, tank wagons, trailer and containers § Potential customers are in the marine, road and off-grid sector § Potential of modular Expansion § Expected start of operation: 2018 *subject to positive FID 10 GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015

GAS FOR TRANSPORT LNG LESSONS LEARNED (TECHNIQUE) 1 2 3 4 5 6 11 n Different LNG qualities (mixing of cold and warm LNG) causes challenges for the operation n Boil off is unavoidable during normal operation (especially heat input from vehicles) n Mobile stations enable fast realization of LNG projects and are necessary as backup solutions for the initiating phase n Combination of LNG and CNG demand increases project profitability and stabilize operations n LNG clients (buses and trucks) are very sensitive to outages/failures of the LNG station (no refueling alternatives, delicate load, time pressure, etc. ) n Base load demand conservative expectations on fleet size growth and additional clients define initial station size GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015 One source of LNG preferable Consideration of Boil off handling from beginning Flexible utilization of mobile station is crucial LCNG station solution is favorable Redundancies at all components are crucial Modular setup & short connection lines are crucial

GAS FOR TRANSPORT LNG LESSONS LEARNED (MARKET) 1 2 3 4 5 6 12 n Main interest for potential LNG clients (buses and trucks) are cheaper but also more projectable TCO costs n Financing of LNG vehicles as bottleneck for LNG projects due to a low/non-existing risk appetite of banks with respect to uncertainties about resale values n Differences in national and local permitting and operational requirements (e. g. safety standards) hinder a predictable commissioning of LNG stations (especially without mobile stations) n Fuel savings are not the only decision criteria for fleet owners; noise (city traffic at night/morning hours) and operational improvements like faster refueling or no fuel losses/theft become more important n The reliability and profitability of LNG station projects strongly depends on the availability of small scale LNG volumes (e. g. reasonable distances, qualified logistics) n Currently to less LNG vehicle manufacturer available which results in lower competition (higher price mark ups and inferior after sales service) GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015 LNG pricing crucial with expected fix Diesel discounts Support for 2 nd market for LNG vehicles needed Skilled application crucial & need for EU harmonization Customer oriented project approach needed Additional SSLNG sources in Europe are needed Additional LNG manufacturer & Eco. of sales crucial

GAS FOR TRANSPORT LET’S DRIVE THE FUTURE TOGETHER WITH NATURAL GAS AS FUEL Natural gas is clean, abundant and affordable Vehicles and refuelling technology are proven, safe and reliable Market potential for natural gas as fuel for road transport and marine fuel is significant CNG and LNG are complimentary fuels covering almost all transport sectors As market is still developing, policy measures are required to motivate investors and end users to switch to natural gas as fuel Gazprom is ready to contribute to market development by providing reliable supplies of natural gas 13 GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015

THANK YOU FOR YOUR ATTENTION! Tobias Jacobs GAZPROM Germania Gmb. H +49 -30 -20195 -201 tobias. jacobs@gazprom-germania. de Powered by Natural Gas!

GAS FOR TRANSPORT LNG STATION IN WARSAW – GAZPROM DELIVERS 15 GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015

GAS FOR TRANSPORT LNG STATION IN WARSAW – GAZPROM DELIVERS 16 GAZPROM GERMANIA GMBH / IBC Workshop “LNG in Road Transport” / November 2015