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1. Shiro KONISHI General Manager Asia Pacific Energy Research Centre (APERC) 11 APEC EGCFE Workshop 2005 Taipei, Chinese Taipei 21 – 23 March 2005

2. Natural gas supply/demand outlook Gas market reform in the APEC region Key factors affecting the gas market Notable development in APEC Summary Outline of Presentation

3. Russia Canada Northeast Asia Japan China USA Korea North America Hong Kong, China Chinese Taipei Mexico Viet Nam Philippines Thailand Singapore Brunei Darussalam Malaysia Southeast Asia Peru Papua New Guinea Indonesia Latin America Oceania Australia Chile New Zealand APEC Regional Grouping

4. Gas Trade Flows in APEC Region LNG Gas Consumer Russia Canada LNG Gas Consumer Japan USA China Korea Hong Kong, China Chinese Taipei Mexico Viet Nam Philippines Thailand Singapore Brunei Darussalam Malaysia Southeast Asia Peru Papua New Guinea Indonesia Pipeline Gas Consumer Australia Chile New Zealand

5. Natural Gas Demand in APEC Region • Gas Demand to increase at AAGR of 2.6% (1999-2020) Russia 2.0 % China 8.3 % Oceania 2.6 % SE Asia 3.9% NE Asia 3.3% Latin America 6.3% North America 1.8 %

6. China 8.3 L America 6.3 SE Asia NE Asia 3.9 3.3 2.6 1.8 Natural Gas Demand in APEC Region • China to command the highest AAGR at 8.3% (2000-2020) Source: APERC

7. Contribution to Incremental Gas Demand (1999-2020) • Emerging demand from China and North America • Increasing demand mainly driven by Power Sector Source: APERC

8. Primary Energy Supply in APEC Region • TPES to increase at AAGR of 2.1% between 1999-2020 NRE 1.1 % Nuclear 1.7 % Hydro 2.7 % Gas 2.6 % Oil 2.1 % Coal 2.1 % 1951 Gas Oil 1135 Coal Source: APERC

9. Drivers for Power Generation • Technology • CCGT(Combined-Cycle gas turbine): thermal efficiency of over 50% • Environmental Issue: • Kyoto Protocol / Climate Change • Power Generation • A fastest growth rate of 4.1% than coal • Increasing share of gas used for power • N.Z.(31.7-66.9%),China(18.4%-46.8%),C.T.(51-71%) • Increasing share of electricity from Gas-fired plant Singapore(23-52%), Mexico(17.4-48.3%),Philippine(0.5-26.6%)

10. Primary Fuel for Power Generation • Total energy supply for power generation • to increase at AAGR of 2.5% (1999-2020) NRE 2.9 % Hydro 2.7 % Nuclear 1.7 % Gas 4.1 % Coal 2.5 % Gas Source: APERC

11. Share of Gas in Power Generation Mix • Singapore to post the highest increase in gas use • followed closely by Mexico and the Philippines Singapore Mexico Philippines Source: APERC

12. Share of Gas for Power Generation Use • Increasing gas demand mainly for power generation C.T. N.Z Mexico Chile China Australia U.S.A Indonesia

13. Key Factors Affecting the Gas Market • Gas Market reform • Future LNG Consumers • Nuclear Policy in Power Generation • Notable Energy Developments in APEC Region • Future Climate Change Iniatives: Kyoto Protocol • Global interaction of markets • New cross-border pipeline infrastructure

14. Mature exporters with vertically integrated monopolies Major exporters to other APEC economies Ex: Brunei Darussalam, Indonesia, Malaysia Recent Gas Developerswith vertically integrated monopolies Largely self-sufficient in gas supply Ex: PNG, Peru, Philippines, Viet Nam Gas Markets in the APEC Region

15. Competition at the edge Economies allow competing gas suppliers Ex: HK, Mexico, NZ Dominant Supplier with long distance pipelines Price regulation may make it difficult to invest Ex: China, Russia Gas Markets in the APEC Region

16. Importer with Wholesale Competition and Single Buyer Heavy reliance on gas imports Ex: Japan, Korea, Chinese Taipei, Thailand Evolving Retail Competition with Customer Choice End-use customer have choice of gas supplier Ex: Australia, Canada, Chile, United States Gas Markets in the APEC Region

17. Existing LNG Customer Potential LNG Customer Japan USA China Korea Chinese Taipei Mexico Philippines Thailand Singapore Indonesia Chile New Zealand Future LNG Consumers in APEC Region Russia Canada Hong Kong, China Viet Nam Brunei Darussalam Malaysia Peru Papua New Guinea Australia Source: Strategies Consulting Ltd

18. Notable Energy Developments in APEC Region • New & Facility Capacity Expansion • Australia: Greater Sunrise & Gorgon LNG project • Brunei Darussalam: LNG 6th train expansion project • Indonesia: third Tangguh LNG Project • Malaysia: Tiga Project • Russia: Sakhalin-1,2 Projects • Potential Cross-border Pipeline Infrastructure • USA-Canada: Arctic-Canada-US Project • Japan-Russia: Sakhalin-1 Project • South Korea-Russia: Kovykta Project • China-Russia: Sakhalin or Irkutsk Project • Malaysia-Thailand: Pipeline linked to Gas-fired plant

19. Notable Energy Developments in APEC Region • New Potential Gas Supplier • Peru: a proposal to export gas from Camisea Field • New LNG Receiving Terminal Plan • USA/Mexico: New LNG terminal in U.S. Atlantic, Pacific Coast and Gulf of Mexico • Chile: New LNG terminal project • Chinese Taipei: Second Taichung harbor LNG terminal • China: Guangdong, Fujian LNG terminal • Korea: Posco, Gwangyang LNG terminal • New Zealand: developing LNG terminal • Non-Nuclear Homeland Policy • Chinese Taipei

20. Summary • Growing Gas Demand • Increasing demand mainly driven by Power Generation • Environmental Issue: Climate change/Kyoto Protocol • Emerging Gas Market: China, India, north America • CNG(compressed natural gas ) vehicles • Increasing Competitiveness on Gas market • Deregulation/regulatory reform in Gas and Power Market • Flexible in trade • Security of Gas Supply • Integrated activity and cooperation in the region • Cross-border pipeline infrastructure • Mid to long term contract with flexibility

21. THANK YOU