Small Scale to Large Market Strategies & Technologies for the Mediterranean Area

LNG for off-grid areas

Ing. Massimiliano Naso

Sales manager Italia Grandi Clienti

SUMMARY

Introduction to Liquigas Focus on the Liquid Natural Gas distributed by Liquigas

1° case study: the experience of Mario Costa SpA

2° case study: LNG supply through a civil network

19 participating companies More than 50 official suppliers 100 commercial operators Around 350,000 customers Turnover of 489 Mio €

253 k tonnes by volume

2 port-side terminals (joint venture) 1 railway terminal (joint venture) 27 deposits and facilities Over 200 tankers 5,000 GPL (cylinders) retailers.

Present in the Italian market since 1936, Liquigas supply LPG in tanks to over 350,000 clients, a large number of whom are domestic customers, plus LPG sold in cylinders via a network of 5,000 retailers.

Liquigas also design, build and operate networks for the distribution of LPG to all the major urban centers and small towns not served by the natural gas system.

Liquigas design and build industrial plants for LPG and LNG storage and distribution.

All figures valid as of 31.12.2016

A tradition of energy

Liquigas is a joint venture between the Italian firm Brixia and the Dutch company SHV.

SHV Energy is one of the main operating groups involved in the commercialization of LPG and LNG, and is part of SHV Holdings, a Dutch company that operates in 27 countries across three continents.

Independent at organizational and commercial levels, Liquigas has the backing of a major global energy supplier.

A joint venture between two great companies

A combined centralised and local structure with strong local brands

The Netherlands Belgium

Turkey

United Kingdom

Plus 11 other brands throughout Europe

Who we are

Import vessel Import terminal or

Inland supply

Distribution Storage and / or

satellite plant

CNG

Our LNG value chain

I/C

Estimated heating - heavy oil

demand (mT LPGeq) 830.000*

Estimated large bulk LPG

demand (MT LPGeq) 130.000*

Mechanical (12%) and Agri-food (7%) sectors

can be considered the main sectors for the

LNG supply.

Estimated accessible market for

LNG (mT LPGeq) 180.000**

*Source: Ref-e research in 2016 – “La filiera degli usi finali del GNL in Italia (2016)”. **This study identifies mechanical and food&bev industries as the most accessible markets, weighting approx 20% of the whole market size.

Automotive*

Overall LNG annual demand for

heavy transport sector

(MT LPGeq)

2.5 x 106

Overall CNG annual demand for

transport sector

(MT LPGeq)

1 x 106

Refueling Stations with LNG

dispensing systems 800

Refueling Stations with CNG

dispensing systems 1.900

Avg drop per 1 LNG refueling

station (MT LPGeq) 3.000

Avg drop per 1 CNG refueling

station (MT LPGeq) 550

LNG fueled trucks 30.000

CNG fueled vehicles 2.3 milions

*Source: National Strategic Framework

Civil Networks

Off-grid methane annual

demand

(MT LPGeq)

600.000*

Tons

Municipalities within No

methane areas 1.300

People equivalent with NO

access to methane 4 milions

*Source: Elaborazioni ConferenzaGNL

Market Overwiew

PERFORMANCE

TECNOLOGY

SUSTANABILITY

It offers very high energetic performance. More energy, less space and less re-fuelling.

Ideal for advanced energy technologies. Co-generation and cold recovery even in places not served by the standard gas network.

Ecologically friendly, LNG is an ethical choice. It respects the environment since it eliminates the emission of the principal greenhouse gases.

*Fonte: elaborazioni EY su dati Innovhub-SSI 2016 e ENEA 2015.

Oil industrial emission

LNG industrial emission

CO2 540 412

PM10 27 2

Drivers

1

4

3

2

5

7 6

8 9

10

1. Nestlé Levissima (beverage)

2. Nestlé Panna (beverage)

3. Fiat Chrysler Automobiles

4. Vis Jam (food)

5. Mario Costa (food)

6. Ferrero (animal feed)

7. Lederplast (textiles)

8. Rivoira (food)

9. Speziali (cereals)

10. Bonomi (food)

11. Norda (beverage)

12. Craver (inert materials)

13. Pucci Gomme (automotive)

14. Calizzano (beverage)

15. Pizzaferri (automotive)

16. Oilgest (automotive)

17. B-Petrol (automotive)

-4.300 T CO2

Reduction estimated

13

14

*SourceRefe - La filiera degli usi finali del GNL in Italia ‐ 2016

LNG customers in Italy at a glance

15

11

16

17 12

A case study: LNG civil network

Potential end-users 1,000 1,500

Capex (€ m) 1,500 2,500

Expected redemption rate 60% 70%

No. Heating Oil consumers 1.500 1.300 Savings

Public administration -20% -25%

Domestic users -10% -10%

Industrial & commercial -15% -25%

Sustainability

Reduction in CO2 -25% -25%

Reduction in PM10 -90% -90%

Case study1 Case study2

A case study: LNG civil network

PM10 produced by 10,000 Km 477

drivers

545

drivers

CO2 absorbed by 38 trees 41 trees

Case study1 Case study2

Meetings with stakeholders (local authorities, network owners)

• Energy needs

• Environmental impact

• Technical and

economic aspects

• Private agreement

• Public tender

• Pipeline

• Satellite LNG storage

• LNG distribution

• Maintenance

• Customer service • Invoicing

Best practice: LNG pipeline

•Marketing & communication •Sales

Scouting Analysis Project Contract Construction Acquisition Operation

Thanks for your attention

See you on stand n.20 – Entrance area (in front of EOLIE Room)

What does it mean in reality?

15

The savings in CO2 arising from a shift to LNG from traditional fuels for the areas involved equals the total that can be absorbed in one year by around 38,000 and 41,000 trees in one year, respectively

CO2 ABSORBED by

Area 1 38,000 trees

41,000 trees

IN ONE YEAR

PM10 PRODUCED BY

477 DRIVERS

The savings in PM10 arising from a shift to LNG from traditional fuels for the areas involved equals the total emissions of 477 and 545 drivers who travel 10,000 km in one year.

10,000 km TRAVELLED BY

545 DRIVERS

Area 2

Area 1

Area 2

From words to deeds

To fully understand the real impact of using LNG in our country, we undertook a project to analyse and quantify the environmental benefits of this energy source compared to traditional fuels.

We created simulations in two real councils in the province of Trento, hypothetising the impact of installing high-efficiency LNG plants if used by users currently using LPG or diesel.

16

Area 2 Area 1

Some methodological notes

17

Data-gathering and analysis of the actual 2014 consumption of traditional energy sources (diesel and LPG) for central heating

1

Calculation of this consumption divided by user

2

Estimation of predicted LNG consumption needed to produce the equivalent amounts of energy for central heating

3

Calculation of the environmental impact of each energy source (both traditional and LNG)

4

Calculation of the environmental benefits of using LNG compared to traditional energy sources.

5

This methodology does not consider other possible impacts (positive or negative), such as:

The end-of-life phase of diesel/LPG plants (recycling or decommissioning etc)

Impact of LNG storage (i.e. notable energy consumption related to cryogenic tanks)

Impact of conversion of existing energy distribution systems, and installation of new LNG distribution infrastructures

LE FASI DI LAVORO METHODOLOGICAL STEPS POINTS TO NOTE

Località 1

Assumptions of the study

18

Area 1 Area 2

Source: Liquigas calculations based on Carbontrust data 2013

(*) excludes outlying areas

EXISTING CONSUMPTION OF DIESEL AND LPG

Total: 10,324,132 KWh

Gasolio 83%

GPL 17%

Gasolio 99%

GPL 1%

Total: 9,871,644 KWh

NUMBER OF USERS PREDICTED TO SWITCH TO LNG

around 200 including

1 spa

Hospitality/ health-care

Businesses

Households

80% of town centre users*

around 900 including

Council

Schools

Hospitality/

health-care

Households

80% of town centre users*

LNG industrial market overview

Market size: estimated

Heating / Heavy oil usage

in I/C segment (mT of LPG

equivalent)

Market size: estimated

large bulk / I/C LPG usage

(MT)

Market size: estimated

accessible market

potential for LNG (mT LPG

equivalent)

834* 128* 182.78**

The mechanical (12%) and agri-food (7%) sectors, whose

consumption of petroleum products is likely to be brought back to the energy needs of manufacturing enterprises not connected to the natural gas network,

can be considered the main sectors concerning LNG supply.

*Source: Ref-e research in 2016 – “La filiera degli usi finali del GNL in Italia (2016)”.

**This study identifies mechanical and food & beverage sectors as the most accessible markets, comprising about 20% of

the whole market