71

Questions can be submitted through the Questions

pane

Submitting Questions

71

Caution regarding forward-looking statements

We may make forward-looking statements in this Webinar, or in the 2020 World LNG Report, and in other communications. Forward-looking statements in this webinar include, but are not limited to, statements relating to the development of the Global LNG Market and potential trends in investments, price or general market developments goals, regulatory or Government policy decisions.. Forward-looking statements are typically identified by words such as “believe”, “expect”, “foresee”, “forecast”, “anticipate”, “intend”, “estimate”, “goal”, “plan” and “project” and similar expressions of future or conditional verbs such as “will”, “may”, “should”, “could” or “would”.

The forward-looking statements made in the webinar entitled “IGU 2020 World LNG Report Press Conference”, are made as of 27 April 2020 and, accordingly, are subject to change after such date. Except as may be required by applicable securities laws, we do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements, by their very nature, are subject to inherent risks and uncertainties and are based on several assumptions, both general and specific, which give rise to the possibility that actual results could differ materially from our expectations expressed in, or implied by, such forward-looking statements and that market development outlooks, objectives, plans and strategic priorities may not be achieved. As a result, we cannot guarantee that any forward-looking statement will materialize and we caution you against relying on any of these forward-looking statements.

Menelaos (Mel) Ydreos

International Gas Union

71

Welcome Remarks

Keynote

Marco Alverà, CEO Snam Joe M Kang, President, IGU

Nobuo Tanaka, IGU Wise Person

Role of Hydrogen2020-9-26 IGU Nobuo TANAKA

IGU Wise Person

Global Energy Review 2020

Dr. Fatih Birol, Executive Director of the International Energy Agency (IEA), said that COVID19 made for a historic “Black April” for the oil

markets.

April’s oil demand declined by 29 million barrels per day; almost 30 % of global demand collapsed due to the lockdowns. 6

7

The 20-year switch

When consumers needed more energy in the past, they traditionally turned to oil

Change in global oil and electricity consumption in the Stated Policies Scenario, 2018 - 2040

200

400

600

800

1 000

1 200

Oil Electricity

Mtoe

In the future, they turn first to electricity – even more so in the Sustainable Development Scenario

WEO2019

8

Saudi Aramco worries if Peak Oil Demand happens much earlier than expected.But it may have happened by COVID19.

The Stone Age didn’t end because we ran out of stones.

WEO2017

9

Energy systems would shift towards structurally cleaner ones

The plan would make 2019 the definitive peak in global emissions, reducing GHG emissions by 4.5 billion tonnes and putting them on a path towards achieving long-term climate goals, including the Paris Agreement.

Energy-sector GHG emissions

Without a sustainable recovery

With a sustainable recovery

Gt CO2-eq

30

32

34

36

38

40

2005 2010 2015 2020 2023

A plan for a Sustainable Recovery post Covid-19

10

Natural gas was also hit by COVID19 but less than oil

11

Over-Capacity of LNG facility may continue

12

TCFD; Financial Driver for Energy Transformation

• More than 1353organizations are supporting the TCFD as of August 2020.

• 276 Japanese organizations support TCFD.

• They include ANA, ASKUL, Asset Management One, DaiNippon Printing, Dai-ichi Life H, Daiwa House, Daiwa Securities,DENSO, DBJ, FSA, Fujifilm, Fujitsu, GPIF, Hitachi, Japan Post, JXG, Kao, Keidanren, Kirin H, Komatsu, Konica Minolta, Lion, LIXIL, MARUI G, METI, Meiji Yasuda Life Insurance, MOE, Mitsubishi Corp, Mitsubishi Chemical, MHI, MUFJ, Mitsui & Co., Mizuho Fin G, Mitsui Chemical, NEC, Nikko Asset M, Nikon, Nomura Asset M, Nippon Life Ins, Nissay Asset M, Nomura H, NYK Line, OMRON, Resona H, Ricoh, Sekisui House, Shin-Etsu Chem, Shiseido, Sojitz Corp, Sompo H, Sophia Univ, Sumitomo Corp, SMFG, Sumitomo Chem, Teijin, Tokio Marine, TEPCO, Tohoku Electric Power, Toshiba, TOTO, Toyota Motor, Yokokawa Elec, Chiyoda Engineering, the Sasakawa Peace Foundation,,,,

The Task Force on Climate-related Financial Disclosures (TCFD) will develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to investors, lenders, insurers, and other stakeholders.

13

Demand side driven energy transformation: RE100 Corporations

Finance: Swiss Re Group, alstria, Amalgamated Bank, Aviva, AXA, Bank of America, Bankia, BBVA, British Land, CaixaBank, Canary Wharf Group, Capital One, Citi, Commerzbank, Credit Agricole, Danske Bank, DBS Bank Ltd, DNB, Equinix, Fifth Third Bancorp, Fuyo General Lease Co., Ltd., Goldman Sachs, Helvetia, HSBC, ING Group, Iron Mountain Incorporated, Johnan Shinkin Bank JPMorgan Chase & Co., Jupiter Asset Management, Land Securities, Mace, Morgan Stanley, Nordea, Prudential plc, RBS group, Schroders, TD Bank, UBS, Voya Financial, Wells Fargo, Asset Management One, Nomura Research Inst, Daiichi Life, Durable Goods and Services :IKEA Group, AEON Co., Ltd, BMW, Burberry, Coop Sapporo, Crown Estate, Daiwa House Group, Decathlon, Dentsu Aegis Network, Etsy, FIA Formula E, General Motors, Gürmen Group, H&M, Interface, Kingspan, LEGO Group, Mahindra Holidays & Resorts India, Marks & Spencer, Marui Group, Nike, Inc., Pearson, PVH, Sekisui House, Signify, Sky, Starbucks, Tata Motors Limited, Vail Resorts, VF Corporation, Watami Co., Ltd., YOOX Group, Takashimaya, Asahikasei Homes, Non-Durables and Services : Anheuser-Busch InBev, Califia Farms, Carlsberg Group, Clif Bar & Company, Coca-Cola Enterprises, Colruyt Group, Danone, Diageo, Estée Lauder Companies, Grupo Bimbo, Hatsun Agro Products Ltd, International Flavors and Fragrances Inc., Kellogg, L'OCCITANE Group, Mars, Incorporated, Nestle, Organic Valley, Procter & Gamble, Reckitt Benckiser (RB), TCI Co., Ltd, Tesco, TRIDL, Unilever, Walmart, OnoyakuhinTechnology: Adobe, Apple, Autodesk, eBay, Facebook, Fujitsu, Fujifilm Holdings Corp ,Google, Hewlett Packard Enterprise, HP, Inc., Infosys, Lyft, Microsoft, Rackspace, RICOH Company, Ltd., Salesforce, SAP, Sony Corporation , Visa, VMWare, WeWork, Workday, Konica-Minolta, Panasonic, Advantest, NipponUnisys, Fujikura, Other Services; ASKUL Corporation, Bloomberg, BROAD Group, ENVIPRO HOLDINGS Inc., Gatwick Airport Limited, Heathrow Airport, IHS Markit, La Poste, McKinsey & Company, PwC, RELX Group, SAVE S.p.A Group, Schneider Electric, SGS, Steelcase, Swiss Post, Vaisala, Tokyu Land Corp, Daito Trust Construction Co Ltd, Toda corp, SumitomoRingyo, Mitsui Fudosan, Mitsubishi Jisho, AndoHazama, Rakuten, Lixil, Tokyu Group, Material: AkzoNobel, Corbion, Dalmia Cement, Elion Resources Group, Elopak, Givaudan, Royal DSM, Tetra Pak , Asahikasei,

AjinomotoTelecom Services: BT Group, KPN, Proximus, Telefonica S.A., T-Mobile US, Inc., Vodafone GroupHealth care: AstraZeneca, Biogen, Johnson & Johnson, Novo Nordisk, Royal PhilipsEnergy: VestasOthers; etc etc

250 RE100 companies (38 Japanese) have made a commitment to go '100% renewable'.

14

IEA’s “Sustainable Recovery Plan” calls for four technologies to accelerate decarbonization

• boost innovation in crucial technology areas including hydrogen, batteries, carbon capture utilisation and storage(CCUS), and small modular nuclear reactors.

• The plan would make 2019 the definitive peak in global emissions, putting them on a path towards achieving long-term climate goals, including the Paris Agreement.

15

Hydrogen – A common element of our energy future ?

• Momentum currently behind hydrogen is unprecedented, with more and more policies, projects and plans by governments & companies in all parts of the world

• Hydrogen can help overcome many difficult energy challenges

Ø Integrate more renewables, including by enhancing storage options & tapping their full potential (Green H2)

Ø Help Oil, Coal and Gas exporters by providing clean alternatives with CCS (Blue H2)

Ø Decarbonize hard-to-abate sectors – steel, chemicals, trucks, ships & planes

Ø Enhance energy security by diversifying the fuel mix & providing flexibility to balance grids

• But there are challenges: costs need to fall; infrastructureneeds to be developed; cleaner hydrogen is needed; and regulatory barriers persist

16

Potential Supplies of Blue and Green Ammonia

Canada

AustraliaWestern, South, Queensland

Renewables (Green)

Natural Gas (Blue)

Oman

Saudi Arabia

USA

Japan and Asia

17

A hydrogen strategy for a climate-neutral Europe

Phase Target

2020-2024

install at least 6 GW of renewable hydrogen electrolysers and the production of up to 1 million tonnes of re-hydrogen

2025-2030

install at least 40 GW of renewable hydrogen electrolysers by 2030 and the production of up to 10 million tonnes of re-hydrogen

2030-2050

renewable hydrogen technologies should reach maturity and be deployed at large scale to reach all hard-to-decarbonise sectors

Brussels, 8.7.2020 COM(2020) 301 final

Japan’s Basic hydrogen strategy (2017) plans to scale up commercial hydrogen supply chain to 300K tons in 2030 and aims 10 million+ tons of clean hydrogen in the future

18

Europe and China are the leaders of Hydrogen Economy

19

20

“Bending down the emissions trajectory by Innovation, Green Finance and Women”

Climate Lens Investment should work hand in hand with Gender Lens Investment. DISCLOSURE is the key for success.

20

Ashish Sethia

Global Head of Commodities

BloombergNEF

Global Gas Market: Post Pandemic Recovery & Role in Energy Transition Global Gas Report 2020

Ashish Sethia, asethia5@bloomberg.netMeredith Annex, mannex1@bloomberg.netSeptember 16, 2020

2019 Recap

Source: BloombergNEF, BP, Cedigaz Note: * average of Henry Hub, TTF, and Japan Korea Marker (JKM) for 2019 vs 2018

A year of gains

24.2%Gas share in primary energy mix in 2019

+2.3%Gas demand growth in 2019

+3.5%Gas production growth in 2019

-37%Change in gas prices at key global hubs*

+13%Growth in LNG trade in 2019

+2.9%Growth in gas trade in 2019

Share in global primary energy mix Yearly change in global power generation, 2019

Global power generation by fuel type, 2019

Gas growing across the energy sector

Source: BP Statistical Review of World Energy, June 2020.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2001 2004 2007 2010 2013 2016 2019

-400

-200

0

200

400

Coa

l

Gas

Hyd

ro

Ren

ewab

les

Nuc

lear Oil

Oth

ers

TWh

27,005TWh36.4%

23.3%

15.6%

10.4%

10.4%

3.1% 0.9%

27,005TWh

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

%

Oil Gas Coal Nuclear Hydro Renewables

Source: BloombergNEF, IGU World LNG Report 2020. Note: Pacific includes Papua New Guinea, Malaysia and Indonesia. Africa includes Cameroon, Mozambique, Mauritania/Senegal. Equity offtake figures are rounded.

LNG liquefaction project FIDs

Supply rising in most regions

0

10

20

30

40

50

60

70

80

90

100

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Billion cubic meters per annum

Pacific RussiaAfricaU.S. CanadaAustralia

Source: Cedigaz. Note: C.I.S. is Commonwealth of Independent States.

Global gas supply

960 1,058 1,138

592 613 648

842 885

901

250 234

218 637

666 687

167 164

162 231

244 247 3,678

3,865 4,001

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2017 2018 2019

Billion cubic meters

Africa

Latin America

Middle East

Europe

C.I.S.

Asia Pacific

North America

Gas prices in key region EU carbon price allowance Fuel-switching potential in 2020 in South Korea

Prompting low prices and fuel switching

Source: BloombergNEF Source: BloombergNEFSource: BloombergNEF, Korea Power Exchange, KEPCO

0

2

4

6

8

10

12

14

16

Aug

14D

ec 1

4Ap

r 15

Aug

15D

ec 1

5Ap

r 16

Aug

16D

ec 1

6Ap

r 17

Aug

17D

ec 1

7Ap

r 18

Aug

18D

ec 1

8Ap

r 19

Aug

19D

ec 1

9Ap

r 20

$ per MMBtu

Asia, Japan Korea Marker

U.K. NBP

U.S. Henry Hub

0

10

20

30

40

50

60

2014 2015 2016 2017 2018 2019 2020

EUR/t

EU carbon price

Required average carbon price for coal-gas switching

0

5

10

15

20

25

30

35

40

Jan-

19M

ar-1

9M

ay-1

9Ju

l-19

Sep-

19N

ov-1

9Ja

n-20

Mar

-20

May

-20

Jul-2

0Se

p-20

Nov

-20

TWh

Fuel switchingpotential

LNG

Coal

Yearly change in LNG exports, 2019

Demand, supply and geopolitics shaping trade flows

Source: BloombergNEF Note: LNG exports based on 2019 departure year, imports based on 2019 arrival.

-5 0 5 10 15 20 25

U.S.Russia

AustraliaEgypt

AlgeriaMalaysia

P.N.G.Trin idadNigeriaOman

CameroonU.A.E.Angola

PeruBrunei

ArgentinaNorway

QatarEq. Guinea

Indonesia

Yearly change in LNG imports, 2019

-10 -5 0 5 10 15

U.K.China

FranceSpain

NetherlandsItaly

BangladeshBelgium

IndiaPortugal

ColombiaMexicoTaiwan

ChileU.S.

JordanArgentina

EgyptSouth Korea

Japan

Yearly change in pipeline exports, 2019

Source: Cedigaz

Yearly change in pipeline imports, 2019

-30 -20 -10 0 10

North America

Latin America

Europe

C.I.S.

Africa

Middle East

Asia Pacific

Billion cubic meters

-30 -20 -10 0 10

North America

Latin America

Europe

C.I.S.

Africa

Middle East

Asia Pacific

Billion cubic meters

Daily industrial gas demand in Italy Daily power demand in Spain Weekly LNG imports

Market recovering from Covid-19 shock

Source: ENTSO-E, TERNA, Snam, Enagas, BloombergNEF Note: ‘No impact’ demand forecasts are based on historical data, temperatures, cyclical factors, and take into consideration weekends and national public holidays, but not the impact of Covid-19. The solid blue series represents a 70% confidence interval, the light blue is 95%. Source: BloombergNEF

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1-Ja

n

15-J

an

29-J

an

12-F

eb

26-F

eb

11-M

ar

25-M

ar

8-Ap

r

22-A

pr

6-M

ay

20-M

ay

3-Ju

n

Billion cubic meters

Europe

China

India

0

5

10

15

20

25

30

35

40

45

50

Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20

mcm/d

Actual value

No impact forecast

0

5

10

15

20

25

30

35

Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20

GW

Actual value

No impact forecast

Extreme lockdownforecast

Looking Ahead

Covid-19 to impact demand near-term; new supply needed longer-term

Source: BloombergNEF. Note: single-wave pandemic assumes economic recovery is under way in 4Q 2020, multi-wave assumes 2Q 2021 and enduring pandemic assumes 4Q 2021.

LNG demand varies under Covid-19 scenarios

400

420

440

460

480

500

520

2018

2019

2020

2021

2022

2023

2024

2025

Billion cubic meters

Enduring pandemic

Multi-wave pandemic

Single-wave pandemic

Source: BloombergNEF

New LNG supply needed next decade

0

100

200

300

400

500

600

700

800

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

Billion cubic meters

U.S.

Atlantic Basin

East Africa

West Africa

Russia

Other MENA

Qatar

Australia

Pacific Basin

Demand

Source: BloombergNEF Note: HSFO is high sulphur fuel oil.Source: BloombergNEF. Note: *TTF is the Dutch gas price, the benchmark price for northwest Europe.

Northwest Europe lignite/coal-to-gas fuel switching range Marine bunker demand outlook, 2019-25

Cost competitiveness and environmental policies support growth

0

1

2

3

4

5

6

2019 2020 2021 2022 2023 2024 2025

Million barrels per day

Other

LNG

0.1% or 0.5% Fuel oil

0.1% Marine gas oil

Scrubbers

Non-compliant

3.5% High sulfur fuel oil

HSFO

0

5

10

15

20

25

30

Oct

-15

Oct

-16

Oct

-17

Oct

-18

Oct

-19

Oct

-20

Oct

-21

Oct

-22

Oct

-23

Gas-lignite range

Gas-coal average fuelswitching

TTF*

Euro/MWhHistorical prices Forward prices

Bottom of the lignite to gas switching range

Source: IEA (World Energy Outlook 2019, Stated Policies Scenario), BloombergNEF analysis.

Share of natural gas in power generation Share of natural gas in industrial energy

Gas to continue playing key role in the energy sector

24%

23%22%

2018 2030 2040

Percent share

Other renewables Bioenergy

Hydro Nuclear

Natural gas Oil

Coal

22%26% 28%

2018 2030 2040

Percent share

Other renewables Bioenergy

Heat Electricity

Natural gas Oil

Coal

Source: BloombergNEF

China gas demand forecast, by sector

Demand to double in key markets by 2040

0

160

320

480

640

2015 2020 2025 2030 2035 2040

Billion cubic meters

Loss

Chemical

Transport

Electricity

Residential &commercial

Industry

Forecast

Source: BloombergNEF. Note: ‘Internal use, loss’ includes gas used by producers, flaring and transmission losses.

India gas demand forecast, by sector

0

40

80

120

160

2015 2020 2025 2030 2035 2040

Billion cubic meters

Internal use, loss

Power

City gas

Industry

Forecast

Source: Indian Gas ExchangeSource: ICE, CME, LEBA, BloombergNEF. Note: The charts show the futures contracts traded volume as a TWh gas equivalent for comparison.

Traded volumes on Asian gas benchmarks rise India initiates gas trading hubs

Higher liquidity in benchmarks and deregulation helping

0

50

100

150

200

250

300

350

400

Jan-

14

Nov

-14

Sep

-15

Jul-1

6

May

-17

Mar

-18

Jan-

19

Nov

-19

TWh

Germany NCG French hubs JKM (ICE & CME)

Meredith Annex

Head of Heating & Cooling Analysis

BloombergNEF

Decarbonization opportunities for gasFocus on hydrogen

Source: BloombergNEF

The development of decarbonized gas is a crucial next step for climate goals to be reached

per ton of hot rolled coil(Using coking coal: $495-651)

Steel Cement Aluminum recycling

Ammonia Methanol Oil refining

Hydrogen is a promising emissions reduction pathway for the hard-to-abate industry sectorsCost of manufacturing goods or essential inputs, using $1/kg hydrogen

$582 per gigajoule of heat(Using coal: $1.40-4.30)

$7 per gigajoule of heat(Using natural gas: $1.90-11.40)

$7

per ton of ammonia(Using natural gas: $244-574)

$368 per ton of methanol(Using coal: $145-435)

$447 per kilogram of hydrogen(Using natural gas: $0.86-2.59/kg)

$1

Source: BloombergNEF. Note: cost of producing goods using fossil fuels assuming prices of $60-310/t for coking coal, $2-12/MMBtu for natural gas and $40-120/t for thermal coal.

Up to 37% of global emissions could be abated using hydrogen – 22% for less than $100/tCO2Marginal abatement cost curve of using $1/kg hydrogen for emission reductions versus low-cost fossil fuels, 2050

0

20

40

60

80

100

120

140

160

180

0 1 2 3 4 5 6 7 8 9 10 11 12

Carbon price ($/tCO2)

GtCO2/year

Zero-cost abatement

MethanolGas power generation

Space and water heating

Shipping

GlassAluminum

AmmoniaCement

Steel

Cars Buses Trucks

Oil refining

Source: BloombergNEF. Note: sectoral emissions based on 2018 figures, abatement costs for the use of renewable hydrogen (delivered at $1/kg to large users, $4/kg to road vehicles) as a substitute for the lowest-cost fossil fuels in use today globally. Actual abatement costs will vary by country, depending primarily on prevailing fossil fuel prices.

Source: BloombergNEF. Note: Aluminum demand is for alumina production and aluminum recycling only. Cement demand is for process heat only. Oil refining demand is for hydrogen use only. Road transport and heating demand that is unlikely to be met by electrification only: assumed to be 50% of space and water heating, 25% of light-duty vehicles, 50% of medium-duty trucks, 30% of buses and 75% of heavy-duty trucks.

Hydrogen could meet up to 24% of the world's energy needs by 2050Potential demand for hydrogen in different scenarios, 2050

Theoretical max Strong Policy Weak Policy

6MMT

Light trucksBuses

Heavy trucks

Ships

Industry515MMT

Power439MMT

Buildings106MMT

Ammonia

Oil refiningAluminum

SteelCement

Peaking power

Space and water heating

Total energy: 195EJTotal H2 demand: 1370MMT

99EJ696MMT

27EJ187MMT

53MMT

219MMT

123MMT

301MMT21MMT37MMT123MMT

Glass

Cars

Methanol

Transport524MMT

Source: BloombergNEF. Note: renewable hydrogen costs based on large projects with optimistic projections for capex. Natural gas prices range from $1.1-10.3/MMBtu, coal from $30-116/t.

The cost of producing renewable hydrogen could fall to nearly $5/MMBtuForecast global range of levelized cost of hydrogen production from large projects

0.0

7.4

14.9

22.3

29.8

37.2

0.0

1.0

2.0

3.0

4.0

5.0

RE Coal Gas RE Coal Gas RE Coal Gas

2019 2030 2050

2019$/kg $/MMBtu

Source: BloombergNEF. Note: 1 Benchmark levelized cost of storage (LCOS) at the highest reasonable cycling rate (see detailed research for details). LOHC – liquid organic hydrogen carrier.

Storing hydrogen is challenging, but several options existHydrogen storage options

Gaseous state Liquid state Solid state

Salt caverns Depleted gas fields Rock caverns Pressurized

containersLiquid

hydrogen Ammonia LOHCs Metal hydrides

Main usage (volume and cycling)

Large volumes, months-weeks

Large volumes, seasonal

Medium volumes,

months-weeks

Small volumes, daily

Small - medium volumes, days-

weeks

Large volumes, months-weeks

Large volumes, months-weeks

Small volumes, days-weeks

Working capacity (t-H2)

300-10,000t per cavern

300-100,000t per field

300-2,500t per cavern

5-1,100kg per container

0.2-200t per tank

1-10,000tper tank

0.18-4,500t per tank 0.1-20kg

Benchmark LCOS ($/kg)1 $0.23 $1.90 $0.71 $0.19 $4.57 $2.83 $4.50 Not evaluated

Possible future LCOS1 $0.11 $1.07 $0.23 $0.17 $0.95 $0.87 $1.86 Not evaluated

Geographical availability Limited Limited Limited Not limited Not limited Not limited Not limited Not limited

Source: BloombergNEF

Low density makes pipelines the best transport option

0

1

10

100

1,000

1 10 100 1,000 10,000

Distance (km)

Volume (tons/day)

Local Urban Inter-city Inter-continental

Large

Mid

Small

Very small

0.06 0.22 1.82

0.05 0.10 0.58

0.76 1.73

3+Ships

3.87

Unviable

Unviable

Transmission pipelines

Distribution pipelines

Trucks

CGH2 LOHCCGH2

NH3

H2 transport costs based on distance and volume ($/kg) 2019

2030 2050

A scaled-up industry could deliver H2 for a benchmark cost of $2/kg in 2030 and $1/kg in 2050

Australia PV $21/MWh

China wind $28/MWh

Japan wind $47/MWhSalt cavern

Rock cavern

Rock cavern

1.48

1.97

2.85

0.0

3.7

7.4

11.2

14.9

18.6

22.3

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Low Mid High

$/MMBtu$/kg

Australia PV $12/MWh

China wind $17/MWh

Japan wind $33/MWh

0.841.01

1.74

0.0

3.7

7.4

11.2

14.9

18.6

22.3

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Low Mid High

$/MMBtu$/kg

Source: BloombergNEF. Note: Power costs depicted are the LCOE used for electrolysis. Production costs are based on a large-scale alkaline electrolyzer with capex of $135/kW in 2030 and $98/kW in 2050. Storage costs assume 50% of total hydrogen demand passes through storage. Transport costs are for a 50km transmission pipeline movement. Compression and conversion costs are included in storage. Low estimate assumes a salt cavern, mid and high estimate a rock cavern for both 2030 and 2050

Estimated delivered hydrogen costs to large-scale industrial users

StorageTransport

Production

Source: BloombergNEF. Note: Based on a levelized cost of electricity from a standalone PV generator of $16/MWh in Algeria and Spain, $26/MWh from onshore wind and $41/MWh from offshore wind in Germany, natural gas price of $1.5/MMbtu in Russia, $8.7/MMbtu in Germany, coal price of $40/t in Germany, pipeline distance of 2,800km from Algeria to Germany, 2,000km from Spain to Germany and 4,000kms from Russia to Germany.

Hydrogen imports via long-distance pipeline are likely to be a cost-effective optionPotential magnitude of resource and landed cost of hydrogen in Germany, 2050

0.76

0.99

0.85

1.311.48

1.41

2.312.54

0.84

0.22 0.16

0.30

2.41

$0.98/kg 1.01

1.71

3.25

Imports from Algeria(pipeline)

Onshore wind inGermany

Imports from Spain(pipeline)

PV in Germany Offshore wind inGermany

Imports from Russia(pipeline)

Coal with CCS inGermany

Gas with CCS inGermany

Imports from SaudiArabia (LH2 ship)

Transport

Renewable production

Coal production with CCS

Gas production with CCS

1,000s TWhs of potential resource

100s 10s 100s 1,000s 1,000s 1,000s 1,000s10s

Source: BloombergNEF

Today:

• There is growing government policy in place to increase the use of hydrogen

• Germany is leading the way, announcing $10 billion of funding to install 5GWs of electrolyzers by 2030.

• The European Commission has announced a 10MMT renewable hydrogen target, and plan to build 40GW of electrolyzers, which would require $500 billion of investment

• Numerous governments have developed national hydrogen strategies, but most are yet to introduce investment mechanisms. With Germany and the EU now leading the way, this could soon change

• Outside the EU policy measures are generally too focused on cars, which are a less promising application

The signs that hydrogen is scaling-up have now emerged

We estimate scaling-up to 2030 requires:

$150 billionOf cumulative subsidies

$300 billionOf investment

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Camilla Palladino

EVP Corporate Strategy &Investor Relations

Snam

Integrated presence along the value chain

TRANSPORTAND DISPATCHING STORAGE REGASIFICATION

BIOMETHANECNG/LNG STATIONS SMALL SCALE LNG

With a market capitalization of € ~15* bn and revenues of € ~2.2 bn, Snam is one of Europe’s main energy players

~41,600 km ~20** bcm/y capacity

~20 bcmcapacity

+100 CNG/LCNG contracted stations

Targeting 3in Italy

Developing biomethaneinstallations in Italy via

* Market Capitalization: BBG 05/06/2020 **Total regasification capacity: Panigaglia (100% Snam); Rovigo Adriatic LNG (7.3% Snam); Revithoussa (DESFA) e OLT (49.07% Snam)

Snam - Europe’s largest natural gas utility

SOURCE: Snam analysis

Ideal renewable production areas in Europe include: • North Africa for solar and wind power • North Sea for wind power

Key benefits of locating some renewables offshore include: • Lower LCOEs due to Greater solar irradiation/wind speed• Lower seasonality in production • Land use/scalability are much greater

H2 can be transported via existing pipelines at low cost, both vs electricity and vs other H2 transport options

High solar availability in the south of

Europe/North Africa

Potential to import from North Africa

Hydrogen transport: Italy at the centre of the North African opportunity

High offshore wind availability from the

North Sea

Snam as an Enabler; Hydrogen BU created

• Pipelines: network is largely hydrogen ready, key reason to underpin replacement

• Components: gas chromatographs and other minor instruments would need replacing

• Gas compressor units: testing the impact of a 5-10% blend.

• Geological storage sites: ongoing analysis and research

• Ongoing assessment of use of membranes to separate NG and H2 out of NGH2 blend

• Evaluating potential opportunities/pilot projects to scale up clean H2 production and use

• Potential partnership with other operators of the value chain

• Scouting for promising technologies

• Long-term scenarios: Expected key role of hydrogen in the energy mix

• Grid evolution: Development of pathway analyses with increasing share of green gasses

• Technical standards: involvement in focus groups to develop common rules on H2 in Italy and Europe

Negligible investment to reach5-10% NGH2 readiness

Ongoing investment in the grid«Hy-ready»

Ongoing workto support

long-term grid planning

Scouting the marketfor investment opportunities and

partnership

Asset Readiness2.System design1. Value chain development3.

Snam hydrogen strategy

H2NG

75 bar 5 bar

L ≈ 700m

R.C. 818End User 1

Pasta Factory

End User 2Mineral Water Bottling

Plant

The Contursi Terme trial

Blending• 10% H2NG carried out at Contursi Terme• Ongoing test for compressors at 10% blend • Ongoing analysis and testing on geological storage• Membranes for gas separation are a key area of focus

New “Hy-Ready” procurement standard • based on ASME B31.12 ‘’Hydrogen Piping and Pipeline’• Suitable for blends up to 100%

Hydrogen audit on existing pipelines• H2 readiness assessment (based on ASME B 31.12)• 70% of our 34 000km of pipeline is hydrogen ready

Snam: ensuring the network is “hydrogen ready”

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Report is available for download @

www.igu.org