affordable energy*profitable export*Valdez LNG*Alaskan LNG*alternative sources*LNG*North Slope gas export*The Alaska Gasline Project*international export

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Alaska LNG in the Market Context
Valdez, Alaska
13 September 2012
Radoslav Shipkoff
Director
Greengate LLC

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I. Introduction to Greengate LLC

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Who We Are
 Independent financial advisory services firm
 Specializing in complex project and infrastructure debt
financings
 Our clients:
 Sponsors and developers
 Financing institutions
 Government entities
 Institutional investors
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Our Sector Experience
Sectors LNG Experience
Oil & Gas and Refining
Petrochemicals, Chemicals and
Industrial
Multiple Closed
Project Finance
Pipelines Transactions:
Conventional Power
45+ MMTA
Renewable Energy Aggregate Volume
Nuclear Energy
$60 Billion
Satellites and Telecom Aggregate Project cost
Infrastructure / PPP
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Greengate Deal Map
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League Tables: Project Finance International
2011 PFI League Tables 2010 PFI League Tables
Americas Americas
Advisory Mandates Won in 2011 Advisory Mandates Won in 2010
1. Ernst & Young 1. PWC
2. HSBC 2. Greengate
3. PWC 3. BNP Paribas
4. Greengate 4. KPMG
5. Taylor de Jongh 5. HSBC
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The Financing Timeline: Our Role
Financial
Development Period
Close
Pre-Financing Activities Project Financing
 Advise on equity purchase agreements  Advise on implementation of overall
 Advise on JV and shareholder agreements financing strategy
 Assist in EPC contractor bid evaluation  Prepare and evaluate financing term sheets
 Advise on project commercial agreements  Prepare information memoranda and
related materials for financing institutions
 Develop and maintain financial models
and advise on key assumptions  Financial model: Base case and sensitivities
 Advise on financial structuring issues:  Interact and manage work performed by
Capital structure, leverage ratios, lease independent consultants: technical and
structures, credit counterparty issues, etc. environmental, market, insurance, shipping
 Develop and evaluate financing plan  Advise on selection of lead arrangers where
options: sources of funding, amounts, applicable
pricing, tenor, etc.  Assist in negotiating financing terms
 Identify, analyze and develop solutions for  Advise on financing documentation
mitigating project risks  Assist in financial closing activities 8

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II. Project Finance for LNG: Issues and Challenges

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Project Finance for LNG: Issues and Challenges
 LNG Projects: Highly capital intensive, large capital
requirements:
 Liquefaction/Storage/Marine Facilities: At 1,200 per ton capital
cost, $12 billion for each 10 MMTA LNG capacity; some projects’
costs are higher
 Upstream: If upstream development required, significant
additional capital cost; can exceed cost of liquefaction
 field development and production
 gas processing
 pipeline transportation
 Commercial Structure: Vertically Integrated / Non-Integrated
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Project Finance for LNG: Issues and Challenges
 Potential Funding Sources:
 Commercial Banks
 in current environment, liquidity/funding cost challenges, higher
pricing
 market may recover in coming years
 Export Credit Agencies (OECD / Non-OECD)
 option for direct loan or guarantees, depending on program
 “tied” and “untied” loans
 long tenors generally available
 Project Bonds (144A, Private Placement)
 project rating: completion risk and mitigation, offtaker rating,
coverage ratios, etc.
 availability predicated on general market conditions
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III. Alaska LNG in Context

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Case Study A: PNG LNG
 Location: Papua New Guinea
 Initial Capacity: 6.6 MTPA (2 trains)
 Unincorporated Joint Venture:
 ExxonMobil 33.2%
 Oil Search Limited 29.0%
 Santos Limited 13.5%
 Project Cost: $16 billion  Nippon Oil 4.7%
 Government of PNG 16.8%
 Project finance loan agreements signed:
 PNG Landowners 2.8%
December 2009
 Financial Close: March 2010  LNG Offtake:
 TEPCO 1.8 MTPA
 Largest ever project financing in the  Osaka Gas 1.5 MTPA
energy sector  CPC (Taiwan) 1.2 MTPA
 Sinopec: 2.0 MTPA
 PFI 2009 Asia Pacific Deal of the Year
 First LNG Cargo: 2014
 Project Finance 2009 Asia Pacific Oil & Gas
Deal of the Year
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Case Study A: PNG LNG (cont’d)
Non-associated and associated
gas sourced from multiple fields
700 km new onshore and
offshore gas pipeline and new
120 km condensates pipeline
6.6 MTPA, 2 train LNG plant,
storage and marine facilities
near Port Moresby
 Vertically integrated commercial structure: Upstream Production, Processing
Facilities, Pipelines and LNG Plant
 Large financing requirements (70/30 leverage). Multi-source financing:
 Six ECAs (US Ex-Im Bank, JBIC, NEXI, China Ex-Im, SACE and EFIC): $ 8.30 billion
 Commercial Banks: $ 1.95 billion
 ExxonMobil Co-Loans: $ 3.75 billion
 Total : $14.00 billion
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Case Study B: Australia Pacific LNG
 Location: Queensland, Australia
 Initial Capacity: 9 MTPA (2 trains)
 Joint Venture between:
 ConocoPhillips 37.5%
 Origin Energy 37.5%
 Sinopec 25.0%
 LNG Offtake:
 Sinopec 7.6 MTPA
 Kansai Electric 1.0 MTPA
 First project financing for
a coal seam gas (CSG) to  Project Cost: $20+ billion
LNG project  First LNG Cargo: 2015
 Financing commitments for downstream
portion secured in May 2012: $8.5 billion
 China Ex-Im Bank
 US Ex-Im Bank
 Commercial Banks
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Case Study B: Australia Pacific LNG (cont’d)
9 MTPA, 2 train LNG plant,
storage and marine facilities at
Curtis Island, near Gladstone
Multiple LNG projects located at
Curtis Island
530 km gas transmission pipeline
Upstream CSG development in
Surat and Bowen basins:
• hundreds of wells per year
• gas gathering lines
• gas processing facilities
• water treatment facilities
 Non-integrated structure: Downstream
(LNG plant, storage and marine facilities)
financed separately
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Alaska LNG: Challenges and Advantages
 Some of Alaska’s challenges are not
unique; many of its advantages are
 Extensive existing infrastructure on
the North Slope
 Competitive with USGC and other
LNG export projects:
 cost of 800-mile pipeline, but…
 lower gas acquisition costs relative to
US Gulf Coast export projects
 lower shipping cost to Asian markets
 lower unit liquefaction costs in
comparison with some other projects
(high pressure feed gas from
pipeline, ambient conditions)
 Deep water port in Valdez allows
use of large LNG tankers
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Alaska LNG: Commercial/Development Considerations
 Non-integrated development:
 Pipeline developed and financed as a separate
entity
 Smaller capital requirements for the LNG
component as a standalone project
 More focused development, simpler “story”
to market
 Allows for tolling or similar structure
 LNG buyers could contract with
producers/state for supply, or purchase from
LNG project
 Strong interest from Asian market in procuring
North American LNG
 Significant development work ahead is required
for Alaska LNG to succeed
 Alaska should not miss its “window of
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Questions / Discussion

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Contact Information
Radoslav Shipkoff
Director
Greengate LLC
1752 N Street, NW
8th Floor
Washington, DC 20036
Phone: +1.202.887.6122
Email: rshipkoff@greengatellc.com
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