Rana Samaha, Middle East R&A Director at Energy Intelligence, presented at the 10th Gas Arabia Summit, Dubai, January 13, 2015. These slides include content on: 1.) US Shale gas developments: Key success factors 2.) GCC gas imbalances; role of unconventional gas developments 3.) GCC NOC's different approaches; Saudi Aramco's mandate

1. Unconventional Gas Developments in
the Gulf
Rana Samaha – Middle East R&A Director at Energy Intelligence
Gas Arabia Summit - Dubai - January 13, 2015

2. EIG Organisational Design
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Content
1. US Shale gas developments: Key success factors
2. GCC gas imbalances; role of unconventional gas developments
3. GCC NOC’s different approaches; Saudi Armco's mandate

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US shale gas production is some 38 Bcf/d which accounts for
roughly 50% of total US dry production
Source: EIA Natural Gas Monthly Data Through November, STEO through July and Drilling Info

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Key drivers of the US unconventional boom: Property rights, competition,
capacity and market
Land rights regime encourages development
Highly competitive E&P landscape led by independents
Attractive fiscal and tax regime, positive regulatory climate
Open access to data provides full geologic picture
Large and burgeoning service sector capacity
Extensive and liberalized pipeline access
Deep and easily-accessed capital markets for funding

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Extending the US shale boom; is a large resource base enough?
Source: EIA 2013. Data in parentheses is per estimates by the ARI
1115
802
774
681 (1161)
485
396 388
290
231 226
0
350
700
1050
1400
China
Argentina
Algeria
US
Canada
Mexico
Australia
SouthAfrica
Russia
Brazil
Top Technically Recoverable Global Shale Gas Resources (tcf)
• As the US boom continues,
companies and countries are taking
steps to assess and develop shale
gas and tight oil potential globally.
• The global resource potential is
immense, with early recoverable
resource estimates for shale gas
showing several countries on par or
exceeding US resources.
• However despite large resources,
such as in China or Algeria; we see
little developments there for a
number of above ground reasons
including:
• Demand drivers are not strong
enough
• Fiscal terms are still unattractive
such as in Algeria
• Infrastructure and mandate is not
conducive

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GCC natural gas developments; large reserves unmatched by
developments
Source: BP statistical review of world energy
Rest of the
world
57%
Iran
18.2%
Iraq
1.9%
Kuwait
1.0%
Bahrain
0.1%
Oman
0.5%
Qatar
13.3%
KSA
4.4%
UAE
3.3%
Yemen
0.3%
:GCC, 22.6% of total world reserves
:Iran and Iraq, 20.1% of total world reserves
Rest of the
world
83.6%
Iran
4.9%
Iraq
0.02%
Kuwait
0.5%
Bahrain
0.5%
Oman
0.9% Qatar
4.7%
KSA
3% UAE
1.7%
Yemen
0.3%
:GCC 11.5%of total world production
:Iran and Iraq, 4.9% of total world production
Although accounting for more than 43% of the world reserves of natural gas, the GCC countries coupled with Iran and Iraq
contribute less than 17% of the world total production
2013 World Natural Gas Reserves: 186 Tcm 2013 Natural Gas Production:3391 Bcm

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GCC gas balances are being affected by the big shift in new
sources of indigenous gas, and the Price Disconnect
Source: * $/MMBtu; World Gas Intelligence, EI
Big shift in new sources of indigenous gas
for future consumption
• Historically associated gas that had to be
removed anyways
• New production (estimated at least at
$5/MMBtu when and if on line)
– Technologically challenging – sour/tight
– Costly to extract
– Fewer liquids associated to it
Price Disconnect
• Dolphin 20 Bcm/yr at $1.25/MMbtu does
not match international prices ($4-
$11/MMbtu)
• New supplies are in the range of
$10/MMbtu ( Kuwait /Dubai)
• Average regional prices historically low at
$1.22/MMBTU (average end of users)
Historic
Cost of
Production
(inc.
Associated.
Gas)*
State
Offtake
Terms*
Incremental
Cost of
Production*
Highest
Current
Price Paid for
Non
associated Gas*
Abu Dhabi 0.30-0.50 1.00-1.50 4.00-6.00 1.00+
Bahrain 0.40-0.60 -- -- ?
Kuwait 0.20-0.50 NA 2.50-4.00 NA
Oman 0.30-0.70 0.90+ 3.00-5.00 3.50
Qatar 0.20-1.00 1+ 3.00-7.00* 4.00+
Saudi
Arabia
0.20-0.50 0.75 5.50 0.75
Average 0.65 1.65 4.40 3.00
Power
Residential
($KwH)
Power Industrial
($KwH)
UAE 0.096 0.144
Bahrain 0.025 0.042
Kuwait 0.034 0.0034
Oman 0.052 0.052
Qatar 0.025 0.019
KSA 0.045 0.04
Average 0.046 0.05

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Regional efforts to increase production. Demand Drivers very strong
with little room for rationalisation (1/2)
5%
13%
-1%
9%
4%
7%
4%
2%
4%
-2%
8%
4%
8%
4%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
2007 2008 2009 2010 2011 2012 2013
Total Consumption Total Production
0
50
100
150
200
250
2006 2007 2008 2009 2010 2011 2012 2013
Total Consumption
Total Production
Natural gas consumption is increasing rapidly
Natural gas consumption at par with production
Demand drivers
• Urbanization – growing at an
average of 4% annually in the past
5 years /Infrastructure
• Population is growing at an average
of 3% annually compared to 1.2%
average world – Air conditioning /
cities / malls
Source: BP statistical review of world energy and OPEC

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Regional efforts to increase production. Demand Drivers very strong
with little room for rationalisation (2/2)
Natural gas consumption is increasing rapidly
Investments in the energy sector across all Reviews
Demand drivers
• Re-injection; over 25% of gas
produced in the UAE
• Measures are already in place to
use alternatives EOR
• Industrialisation & Desalination
Rationalising gas for some
industries
• GCC has 50% of global desalination
capacity – invested around$60
billion 2002 – 2015 in water
infrastructure
Source: BP statistical review of world energy , OPEC
0
20
40
60
80
100
120
Kuwait Qatar KSA UAE Other ME
Energy Mix 2013
Renew- ables
Hydro electric
Coal
Natural Gas
Oil
0
50
100
150
200
250
300$ billion
2005 - 2009
2006 - 2010
2007 - 2011
2008 - 2012
2009 - 2013
2010 - 2014
2011 - 2015
2012 - 2016
2013 - 2017
2014 - 2018
Source: Apicorp
Research

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For Abu Dhabi and Kuwait unconventional gas developments focus
on scale and liquids to match costs of LNG imports
Source: World Gas Intelligence, Energy Intelligence
Historic
Price
Off. Pr.
Production
Cost
Price
Paid
Project Details
Other
Non-associated
Gas Projects
Abu
Dhabi
0.30-
0.50
1.00-
1.50
4.00-6.00 1.00+
Bab: 1 Bcf/d wellhead,
500 MMcf/d sales gas,
12,000 tons/d of sulphur
Investor Shell ; Start date: 2020
$1/MMBtu (Oxy), end-2014
Shah: 1 Bcf/d wellhead gas,
550 MMcf/d sales gas,
33,000 b/d condensate;
32,000 b/d NGLs; 10,000
tons/d sulfur
Kuwait
0.20-
0.50
NA 2.50-4.00 NA
Jurassic: Phase 1,150
MMcf/d, 50,000 b/d;
Phase 2, 600 MMcf/d,
200,000 b/d; Phase 3.1
Bcf/d, 350,000 b/d light oil; KPC
and Shell; Phase 2: 2019;
Phase 3: 2020+
--
• Projects scale; High liquid volumes and attractive when looking at LNG imports
• Key driver of current unconventional gas projects is future natural gas demand projections despite
existing and future planned LNG imports
• Projects commerciality is at par with LNG price imports and partner are able to join in due to the scale
and access to liquid output

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Oman and Saudi Arabia unconventional gas developments are
necessary to match natural gas demand growth
Historic
Price
Off.
Pr.
Production
Cost
Price
Paid
Project Details
Other
Non-associated
Gas Projects
Oman
0.30-0.70
0.90
+
3.00-5.00 3.50
Khazzan: 1 Bcf/d wellhead
gas, 25,000 b/d condensate; BP;
2017
(Oxy) Habiba, 2015
Saudi Arabia 0.20-0.50 0.75 5.50 0.75
Arabiyah/Hasbah: 2.5
Bcf/dwellhead, 1.7 Bcf/d sales gas,
4,200 tons/d
sulfur (actual breakeven
cost over $5.50/MM Btu);
10+(Shell) 1 Bcf/d , Kidan;
Aramco; 2014
$0.75/MMBtu (Aramco),
2012 Karan: 1.8 Bcf/d (actual
breakeven cost $3.50/MMBtu);
10+ (Shell) 1Bcf/d, Kidan
• Key driver of current unconventional gas projects in Oman and Saudi Arabia is the critical need for
natural gas
• Oman is looking at reviewing domestic gas prices to reflect its higher production cost
• Saudi Arabia has no choice but to develop the natural gas fields it can alone for power
• The ‘easy unconventional plays’ and the existing infrastructure and knowhow allowed the current projects
to kick off
Source: World Gas Intelligence, Energy Intelligence

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The composition of natural gas demand will drive the
unconventional push in KSA
Source: BP Statistical Review, EIA
• Natural gas demand for power and
industrial consumption; the deficit is
increasing with gas consumption
almost at par with oil production;
begging the question of the ability of
the Kingdom to truly increase it’s
export capacity
• Socio –economic drivers; more power
is key to increasing the industrial
base of the Kingdom and create more
jobs
• The disconnect between NG prices to
consumers and industries and the
cost of production by Aramco is not
stopping the development of higher
cost projects because of the larger
objective of the Kingdom
KSA Oil Production vs Gas Consumption
KSA Gas Consumption of Key Sectors vs Production

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Saudi Aramco is mandated to explore and develop unconventional
gas resources
Source: Business Competitive Intelligence, Energy Intelligence
Saudi Aramco
Social Development
Upstream
Crude oil Conventional
and Unconventional
gas Downstream
Refineries
Petrochemicals
Chemicals
Utilities
Power
Water
National
Industrial
Clusters
Development
Program
(NICDP)
Infrastructure
Development
Entrepreneurshi
p Center (
Saudi Aramco
Energy Ventures
• Saudi Arabia has distinguished itself from
other GCC by making the development of
unconventional natural gas resources a co
re area of focus of its NOC
• The successes of Saudi Aramco in project
managing the energy sector have put it as
the prime candidate to lead other ‘critical’
mega projects in the Kingdom associated
with socio-economic development and
ecomic diversification
• Natural gas efforts remain a core focus,
with exploration efforts to add to reserves
underway in the South Ghawar and Rub
Al-Khali areas, as well as in the Red Sea
and the northwestern provinces of the
Kingdom.
• Saudi Aramco is planning to establish an
unconventional unit to fully exploit its vast
unconventional resources, as it anticipates
rising domestic demand that will double
electricity demand by 2030

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Progress in unconventional projects is very slow but on-going in
KSA
Saudi Aramco’s Unconventional Gas Target
Source: Saudi Aramco
• Saudi Aramco is targeting four
unconventional resource plays:
North Arabia, South Ghawar, Jafura and
the Rub al-Khali desert
• Aramco drilled 29 unconventional gas
wells last year as part of the largest
exploration program in the state-owned
giant's history.
• The $3 billion unconventional program
is part of the Unconventional
Gas Resources Development Program,
which leverages skills from three major
service companies that operate in
North America to equip upstream
professionals to exploit shale.
• So far, it has announced only one shale
project, which will support a 1,000 meg
awatt power plant in the northern region

15. Thank you