The conditions required to establish natural gas infrastructures

Presentation by Mr. Robert Tessier, President and Chief Executive Officer

CAMPUT 2005

May 2, 2005

2

A tensely-balanced North American gas market

SUPPLY - CANADA

SUPPLY - U.S.

0

5

10

15

20

25

30

1985 1990 1995 2000

TCF

PRICE OF GAS, $/MMBTU

8

6

4

2

0

TOTAL DEMANDU.S. & CANADA

Past forecasts

$ U.S.

3

Liquefied natural gas: a diversification opportunity for the Northeast

Proposed terminals

Existing terminals

4

Two key development factors

Time Development periods of 5 to 7 years are necessary A sector where just in time is impracticable Better be too soon than too late

Capital New infrastructure requires major capital The number of players is limited An investment environment with the least uncertainty is

favoured

5

Leveraging our geographic advantage

Proposed terminals

Existing terminals

Near the coastNear the markets

6

Three issues at stake

Location of infrastructure

Regulatory framework

Long-term commitments

7

The location: concept phase

Harbor-indutrial zone

LévisLévis BeaumontBeaumont

OPTION 1

OPTION 2OPTION 3

OPTION 4

Options

8

Challenges of the preliminary consultation

The promoter must consult the public very early in the formulation of the project

The site studies are still in their infancy The information on the project is general The community’s questions quickly become specific The promoter can’t have the answers The public is unhappy and suspicious An environment conducive to disinformation The dangers of slip-ups are great

9

Location: when we have a chance to work

10

Two main conclusions

Governments and industry must raise public awareness about the crucial importance of energy infrastructure

A long-term effort The regulatory agencies must be involved from the very

beginning in the consultation process Objective third party to explain the entire regulatory review process

(environment, safety, etc.) Meetings with the public and the key entities

(e.g.: city council)

11

Regulatory framework

The inherent project development risks are known and accepted by the promoters

The multiplicity of overlapping government regulations generates additional uncertainty

Development harmonization solutions: Structuring of the regulatory procedures Smart regulation

Still to be done : simplify the regulatory framework Precise rules, known from the outset

12

Long-term commitments

Infrastructure = $$$ = Long-term horizon

The past 20 years: An increasingly efficient, open and deregulated industry Proliferation of players, reign of the spot market Increasingly complex financial market

Recent developments Collapse of Enron et al Limited number of players with acceptable credit ratings Entry of the banks: financial and physical markets

13

GNL: Long term integreted players

0,25 $ - 1,00 $0,50 $ - 1,00 $

0,25 $ - 0,50 $

Natural gas production

Liquefaction

Import Terminal

Shipping

Other LDCs and market players

14

Conclusion

Long term commitments from every players of the LNG chain, including LDCs, are a must.