Bringing Caspian Gas to Europe Improving diversity and security of supply Ankara, 9 April 2014 Michael Hoffmann, External Affairs Director Opening the Southern Gas Corridor 13.03.2014 TAP's Corporate Presentation Southern Gas Corridor and TAP Diversity and security of energy supply for Europe • • • • TAP supports the EU’s initiative to enhance Europe’s energy security by connecting to new sources of natural gas from the Caspian Sea TAP will be part of a c. 4,000km value chain to open the Southern Gas Corridor 10 bcm/a will be transported through TAP from Shah Deniz II – enough to supply approximately seven million households in South Eastern and Western Europe Bringing major foreign direct investment and employment - supporting economic recovery in the Eurozone TAP's key features Aligned with EU’s energy policy objectives • • • • • • • 870km pipeline 48” onshore and 36” offshore Designed to expand from 10 to 20 bcm (plus) per year Built-in physical reverse flow Connecting directly to TANAP on the Turkish-Greek border and SNAM Rete Gas in Italy Interconnection with various existing and proposed pipelines in South Eastern Europe Providing Bulgaria with a new source of gas through IGB or Kula-Sidirokastro Interconnector Delivering gas and interconnecting to multiple markets in Western and Central Europe ? ? ? 3 Aligned development of projects Complete Value Chain - investment of approx. USD 45 bln 8 6 7 4 5 3 1 2 1. Drilling of wells 2. Offshore production 3. Onshore processing Sangachal Terminal 4. SCP 5. TANAP 6. TAP 7. Expansion of Italian network (SRG) 8. Further transport to western Europe 4 Key Milestones Excellent SGC progress over the past years    Selection of Southern and Northern export options (Feb & June 2012 )  Final & Binding Decision Support Package to SDC – 30 April  2013  Shah Deniz selection of European export route in June 2013  New TAP shareholders take up equity option in July 2013  1. Submission of Request For Proposals (RFP) to Shah Deniz Consortium (SDC) 1 Oct 2011 Commerciality 2. Financial Deliverability 3. 4. 5. 6. SDC signs 25year, $100bn worth of gas sales in Sept 2013 7. TAP takes Resolution to Construct (RTC) in Nov 2013 8. Shah Deniz Final Investment Decision (FID) in Dec 2013 9. Construction of TAP to start 2015 10.Ready to receive first gas from Shah Deniz 2019 Project Deliverability Engineering Design Alignment & Transparency Operabiltiy Scalability Public Policy Considerations Cooperation along the SGC Italy AL Greece Turkey Georgia Azerbaijan SDC Cooperation Agreement (June 2012) Funding Agreement (August 2012) and Shareholder Agreement (July 2013) TANAP MOUC signed in November 2012. TAP- TANAP Joint Working Groups in place. DESFA & IGB DESFA Cooperation Agreement (July 2013) on M&O of TAP’s GR section plus interconnection points – IGB MOU signed Jan 2014. SRG Regular meetings with SRG to align on technical and commercial issues. 6 Connection to Bulgaria TAP can provide Bulgaria with a new source of gas through existing and planned infrastructure. Reverse flow on Kula/Sidirokastro IGB Interconnection point exporting Russian gas from Bulgaria into Greece. IGB – is designed to connect Greece (Komotini) to Bulgaria (Stara Zagora). MoU with IGB signed in January 2014. Existing capacity (Bulgaria-to-Greece direction): 4.3 bcm/y at a minimum pressure at Sidirokastro MS of 47,74 barg. Reverse Flow capacity: up to 4.3 bcm/y Planned Capacity: up to 3 bcm/y (option for capacity increase to 5 bcm/y) 7 Cooperation in SEE Delivering supplies to the region Cooperation with IAP MOUCs in place. TAP-IAP Joint Working Group meetings. Activities in Albania Support the Albanian Government in the Development of a domestic gas market. * PECI process – Energy Community TAP is in the draft list of PECI, to be approved at the Ministerial Council in October 2013. Bulgaria • Reverse flow on the Kula-Sidirokastro Line (KS line). Market test performed in early 2013. • Interconnector Greece Bulgaria (IGB). Market test performed in mid 2013. • MoU signed with developers of Interconnector Greece Bulgaria (IGB) in January 2014 * This designation is without prejudice to positions on status, and is in line with UNSCR 1244 and the ICJ Opinion on the Kosovo declaration of independence ** WBIF/COWI IPF Consortium is the Technical Assistance Contractor contracted by the EU to implement the EU funded Western Balkans Investment Framework (WBIF) Infrastructure Projects' Facility (IPF) TAP can connect Caspian gas to multiple European markets TAP will connect to the Italian natural gas grid to provide firm capacity at the Italian virtual trading point (PSV), from which all Italian gas exit points can be reached TAP can reach Austria via TAG pipeline to have similar transportation capacity as other planned pipelines, e.g.: • 6 bcm/a reverse technical capacity • 25 bcm/a average swap potential (2011) TAP can reach Germany and France via Transitgas pipeline through Switzerland, e.g.: • virtual backhaul of approx 10 bcm/a • planned physical backhaul of 15 bcm/a TAP’s routing and facilities 14.04.2014 TAP's Corporate Presentation 10 Shah Deniz is just the start…. Azerbaijan: a supplier of gas to Europe • Azerbaijan’s role as a stable supplier of gas contributing to Europe’s energy security will continue to grow in the next decades • Production from gas fields in the Caspian could increase Azerbaijan’s natural gas production to c.40 bcm/a by 2030 • The giant Caspian gas and condensate field Shah Deniz – 1.2 tcm • SOCAR’s current exploration of the Umid field and Babek along with Total’s exploration of Absheron, • Other fields including ACG Deep, Nakhchivan, Shafag-Asiman, and ZafarMashal resulting in overall proven reserves of approximately 2.5tcm • TANAP IGAs and HGAs signed and ratified by Azerbaijani and Turkish parliaments represents a clear export route to the border with the EU 11 Thank you! Find out more about TAP at: www.trans-adriatic-pipeline.com 13.03.2014 TAP's Corporate Presentation 12