Novatek · RUS:NVTK
Novatek — Non-Deal Roadshow (May 2021)
50 slides from Novatek's roadshow presentation, May 2021
Slide 1: Unlocking Our Arctic Resources: Decarbonizing Our Footprint
Unlocking Our Arctic Resources: Decarbonizing Our Footprint Think Green. Think Natural Gas. Energy Affordability, Security & Sustainability Investor Meetings May 2021
Slide 2: NOVATEK at a Glance 2020
NOVATEK at a Glance 2020 №3 №7 1P Gas Reserves Natural Gas Production Industry lowest Global Position Global Position Finding & Development costs 700 MLN BOE 608 MLN BOE 66.7 BCM Total Proved Hydrocarbon Hydrocarbon Natural gas sales Addition (SEC) production in Russia 16.4 BLN BOE 11.0 % 18.6 MMT S
Slide 3: 1Q 2021 Operational and Financial Highlights
1Q 2021 Operational and Financial Highlights Macroeconomic Brent USD/bbl 61.1 11.0 RUB/USD average exchange rate 74.3 8.0 Financial (in millions of Russian roubles) Total revenues 244,583 60,021 Total operating expenses -178,819 32,284 Normalized EBITDA 143,836 43,168 PP&E, net 760,992 165,059 Total
Slide 4: Monetizing Our Resource Base (1Q21)
Monetizing Our Resource Base (1Q21) Yamal LNG (nameplate capacity – 17,4 mmtpa) PRODUCING FIELDS Natural gas LNG Yamal Trade Natural gas by pipeline Cryogas-Vysotsk (nameplate capacity – 660 mtpa) Separation and Unstable gas NOVATEK Gas & Power treatment condensate by Asia pipeline LNG Crude oil by
Slide 5: Our LNG Development
NOVATEK Our LNG Development BS NOVATEK
Slide 6: NOVATEK's LNG Production Platform
NOVATEK’s LNG Production Platform YAMAL LNG PROSPECTIVE PROJECT CAPACITY - 19+ mtpa NORTH-OBSKIY LA CAPACITY - 6.6 mtpa +? NORTH-TASIYSKIY LA 2017-18 2030 SHTORMOVOY LA OBSKIY LNG / SOUTH- GAS CHEMISTRY PROJECT TAMBEYSKOYE UTRENNEYE FIELD ARCTIC LNG 2 FIELD (AMMONIA / HYDROGEN / METHANOL) CAPACITY -
Slide 7: NOVATEK's LNG Production Timeline
NOVATEK’s LNG Production Timeline 18.6 19.6 19.6 26 38 44 57-70 mmt mmt mmt mmt mmt mmt mmt 2019 2021 2022 2023 2024-2025 2026 2027-2030 Start of works at Start-up of Start-up of Start-up of Start-up of Start-up of Start-up of LNG Construction Center Yamal LNG Train 4 the LNG transshipment Arctic LN
Slide 8: Yamal LNG - the Fastest Project Globally to Offload Cargoes
Yamal LNG - the Fastest Project Globally to Offload 500 Cargoes Yamal LNG ramp-up ahead of schedule and on budget Train 1 completed on schedule 5.5 mmtpa Train 2 completed 6 months 5.5 mmtpa ahead of schedule Train 3 completed >12 months 5.5 mmtpa ahead of schedule Train 4 first drop of LNG in 2020
Slide 9: Ship-to-ship transshipment operations near Murmansk
Ship-to-ship transshipment operations near Murmansk 9 9
Slide 10: Arctic LNG 2
Arctic LNG 2 Natural gas production at Utrenneye field, bcm 35 30 25 20 15 10 5 0 2023 2024 2025 2026 2027 2028 2029 2030 Gas condensate production at Utrenneye field, mmt 2.0 1.5 1.0 0.5 0.0 2023 2024 2025 2026 2027 2028 2029 2030 FID made in September 2019 60% CAPEX is estimated at US$21.3 bln
Slide 11: Arctic LNG 2 Current Progress
Arctic LNG 2 Current Progress* 39% Project’s Overall Progress 53% Train 1 Overall Progress The Progress of Casting Concrete 80% for GBS-1 Platform The Progress of Casting Concrete 49% for GBS-2 Platform 39% Capital Program Financed by the Shareholders Arctic LNG 2 Ice-class Tanker Fleet Formation 10
Slide 12: 12
12 12
Slide 13: Development of Northern Sea Route infrastructure and ice-breakers fleet
Development of Northern Sea Route infrastructure and ice-breakers fleet Murmansk transshipment complex Phase 1 — December 2022 Phase 2 — 2025-2026 Phase 1 — February 2023 GOAL: TO ENSURE YEAR-ROUND NAVIGATION AT COMMERCIAL SPEEDS Phase 2 — 2025-2026 - Ice-breaking fleet is being renewed - New icebre
Slide 14: LNG Logistics to Asia
LNG Logistics to Asia Northern Sea Route FOB RUSSIA Kamchatka Transshipment Complex 15 days 2.2 $/MMBtu 14 days 0.86 $/MMBtu USA CHINA 36 days QATAR 2.8 $/MMBtu 27 days 1.76 $/MMBtu 10 days 0.72 $/MMBtu 16 days 0.72 $/MMBtu PAPUA NEW GUINEA 10 days 0.64 $/MMBtu AUSTRALIA Source: NOVATEK’s interpreta
Slide 15: Marginal cost comparison - Yamal LNG vs US LNG projects
Marginal cost comparison - Yamal LNG vs US LNG projects 10 $/mmbtu $ 10.1 9 $ 9.5 8 7 6 5 $ 5.2 4 $ 4.2 3 $ 2.3 2 1 $ 1.1 0 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 TTF US marginal cost to Europe US marginal cost to Asia Yamal LNG marginal cost to Europe Yamal LNG margin
Slide 16: LNG Small-scale Network in Europe
LNG Small-scale Network in Europe Tornio Regasification stations: Operating Expected FINLAND LNG fueling stations: Pori Sweden Vysotsk Operating Expected Nynashamn ESTONIA Russian Lysekil Federation Visby LATVIA 22 active regasification facilities Klaipeda Russian Federation LITHUANIA 13 operati
Slide 17: Global LNG Market
NOVATEK Global LNG Market BS NOVATEK
Slide 18: Global LNG Production Centers
Global LNG Production Centers 99 * 28 35 0 2020 2040 2020 2040 Russia Canada 149 65 25 17 124 2020 2040 77 USA 2020 2040 Algeria 2020 2040 22 30 Qatar 31 32 2020 2040 Nigeria 27 23 15 2020 2040 7 54 Malaysia 2020 2040 2020 2040 0 Papua New Indonesia 2020 2040 Guinea Mozambique Australia LNG Producti
Slide 19: Global LNG Demand – Stronger than Expected
Global LNG Demand – Stronger than Expected 314 137% >740 800 mmtpa 700 600 Europe 500 400 300 Asia- Pacific 200 100 0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Asia Pacific Europe Middle East North America South America Africa
Slide 20: Asia Region LNG Demand Growth of 12%
Asia Region LNG Demand Growth of 12% Import volumes increase/decrease in 4M 2021 vs 4M 2020, mmt 2.3 1.5 1.1 1.0 0.2 -0.8 -0.9 -1.1 -1.3 -1.3 6.3 -1.5 +7% +137% +2% -36% -30% +10% -21% -21% +9% -19% -35% +31% 128 +3.8% 133 Increase Y-o-Y, mmt,% Decrease Y-o-Y, mmt,% Jan-Apr China Japan Other S.Korea
Slide 21: Key Gas Consumption Regions in China
Key Gas Consumption Regions in China 70%+ of gas in China is consumed in five coastal provinces being the key importers of LNG GAS-FIRED POWER PLANTS IN CHINA Jing-Jin-Ji area Beij ing T ianj in LNG imports CAGR: Yangtze River Delta 5% Shanghai 15% 8% 2019 2030 Largest LNG reserve base to Share of n
Slide 22: China LNG Imports to Hit New Record
China LNG Imports to Hit New Record CHINA LNG IMPORTS (seasonally) CHINA LNG IMPORTS mmt mmt % change , Y-o-Y 10.0 9.0 2020 70 2020 13% 8.0 2019 62 7.0 2019 13% 6.0 2018 55 5.0 2018 41% 4.0 2017 39 3.0 2017 44% 2016 27 2.0 1.0 2016 37% 2015 20 0.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0.0
Slide 23: India LNG and natural gas pipeline infrastructure
India LNG and natural gas pipeline infrastructure Regas nameplate capacity is to double from 35.5 mmtpa in 2019 to 69 mmtpa by 2025 Share of natural gas in India primary energy consumption 25% 15% New Delhi 6% 2019 previous new 2030 2030 target target as of November 2020 Mundra Jafrabad Dahej Kolkat
Slide 24: Expected Global Liquefaction Capacity Additions
Expected Global Liquefaction Capacity Additions Less than 15 mmtpa in new FIDs 0 10 800 through end-2024 10 28 7 20 700 5 1 178 Delayed 2 600 37 65 14 Canceled 63 Possible 500 32 mmt 3 71 400 21 3 8 300 20 Operational / 503 Under Construction 200 100 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 20
Slide 25: Trend of FID Decisions Made and Volume of Contract Signings
Trend of FID Decisions Made and Volume of Contract Signings mmt FID made, mmt (lhs) 8 Total contract signings, mmt (rhs) 140 80 72 120 70 60 100 56 53 49 50 80 47 46 42 71 40 60 32 30 27 40 24 30 32 20 27 29 23 21 20 20 11 10 8 3 3 0 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Fewer lon
Slide 26: LNG growth in every net carbon zero scenario
LNG growth in every net carbon zero scenario New LNG supply by 2060, mmtpa +74% 800 700 +44% 600 +12% 500 400 ~750 MMTPA ~620 300 MMTPA 430 ~480 200 MMTPA MMTPA 100 0 2020 Existing Supply 2060 Business as 2060 Net Zero 2060 Net Zero (all) Capacity usual (OECD + China) Source: NOVATEK’s interpretatio
Slide 27: US LNG full FOB costs vs. spot LNG benchmarks
US LNG full FOB costs vs. spot LNG benchmarks 12.0 $ 10.1 10.0 $ 9.5 8.0 6.0 $ 5.9 $/MMBtu 4.0 $ 3.0 2.0 $ 0.5 0.0 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 TTF JKM HH 115% + Liquefaction fee (assumed $2.5/ mmbtu) Henry Hub Yamal LNG Sabetta FOB Source: Bloomberg, as of 14 May 2
Slide 28: Global and US LNG Capacity Utilization Volatility
Global and US LNG Capacity Utilization Volatility 140% 100 90 120% >110% 80 2021 YTD 100% Average -70 98% 2021 YTD 60 80% Average - 91% 2020 Average - 86% 50 60% 45 2020 Average - 76% 44 40 40 30 40% 26 20 20% 10 10 10 5 2 2 0 0 0 0 5 0 0 0% 0 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20
Slide 29: Natural Gas Market
NOVATEK Natural Gas Market BS NOVATEK
Slide 30: Natural gas energy demand growth in every scenario
Natural gas energy demand growth in every scenario 6000 bcm Natural Gas Global Primary Energy Demand Scenarios +48% 26% 5000 +27% 24% 4000 +24% 24% 3000 % change % share in 2050 vs 2020 primary energy mix 2000 1000 IHS Rivalry IHS Autonomy IHS Discord IEA Stated Policies Scenario IEA Sustainable Dev
Slide 31: Natural Gas as an increasing share in region primary energy mix
Natural Gas as an increasing share in region primary energy mix 80% % of coal in primary energy mix China 2020 70% 60% 50% China 2030 Potential increase of 40% combined LNG volumes India 2020 of up to 350 MMTPA 30% India 2030 20% US 2020 Europe 10% 2020 Europe US circle size – total region energy de
Slide 32: Natural Gas Key Driving Sectors
Natural Gas Key Driving Sectors Natural Gas Consumption in main sectors, bcm Global Gas Demand 2030 2020-2030 Natural Gas Demand CAGR: 2% +18% Transport +48% Residential and Commercial +17% Industry +16% Power and heat +17% Global Gas Demand 2020 3200 3400 3600 3800 4000 4200 4400 4600 Source: NOVAT
Slide 33: Industrial Gas Demand Growth is Largest in Emerging Market to 2030
Industrial Gas Demand Growth is Largest in Emerging Market to 2030 Change in natural gas demand (bcm) in industry by key driver in the IEA Stated Policies Scenario, 2019-2030 China India Economic growth activity Other developing Asia Efficiency Fuel switching Middle East Other bcm -10 0 10 20 30 40
Slide 34: Reduction in GHG emissions by natural gas use
Reduction in GHG emissions by natural gas use Reductions in GHG emissions attributable to changes in natural gas supply and use in the IEA Stated Policies Scenario, 2019-2040 Other Methane Reduced emissions intensity of natural gas supply Oil Coal Switching to gas from more polluting fuels Hydrogen
Slide 35: Coal-to-gas substitution positive effect on global emissions
Coal-to-gas substitution positive effect on global emissions Change in power sector emissions by effect, mt CO2 1000 800 600 400 200 0 -200 -400 -600 -800 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Coal-to-gas Electricity demand Renewables Nuclear Source: IEA data Coal-to-gas substitutio
Slide 36: ESG Approach
NOVATEK ESG Approach BS NOVATEK
Slide 37: Environmental and Climate Change Targets
Environmental and Climate Change Targets Think Green. Think Natural Gas. 37
Slide 38: Sustainable and Low Carbon Focus Already in 2017 Strategy
Sustainable and Low Carbon Focus Already in 2017 Strategy Energy Security Supply the Global Markets with Energy Affordability Low Cost and Low Carbon Natural Gas Energy Sustainability Commitment to Reduce GHG Emissions and Sustainable Development Framework Mitigate the Risk of Climate Change Sustain
Slide 39: Our Cooperation on Decarbonization
Our Cooperation on Decarbonization Agreement with Nuovo Pignone on Converting gas turbines (LNG train compressor CO2 Emissions Reduction turbines) to hydrogen-based fuel gas mix Agreement with Siemens Energy to Replacing fuel natural gas used in the Decarbonize LNG Production production of electrici
Slide 40: CO2 reduction options – LNG and Hydrogen
CO2 reduction options – LNG and Hydrogen RESOURCE BASE Reduce CO2 emissions PARTNERS FINANCE RAISED SUPPLY 62 INFRA- >170 LNG production CONTRACTS MMT STRUCTURE MMT of СО2 2030 LOW-COST ECONOMICS Reduce CO2 emissions POLICY SUPPORT - A KEY DRIVER FOR HYDROGEN H2 (only ~50% of 100-500 Global Hydrogen
Slide 41: Commitment to Developing Sustainable Value
Commitment to Developing Sustainable Value NOVATEK's position in ESG ratings Other Analytical and Score Rank # 21 out of 172 companies Rating agencies 34.2 among O&G industry in 2021 Rating NOVATEK is a constituent of the 3.7/5 FTSE4Good Emerging Index Rating NOVATEK - First and only “A” in A Russia
Slide 42: One of the Lowest GHG Emissions in O&G Universe
One of the Lowest GHG Emissions in O&G Universe International and domestic peers: Suncor, Husky, Petrobras, Lukoil, Rosneft, Canadian Natural, Marathon Oil, Chevron, Occidental, Hess, Murphy Oil, BP, ExxonMobil, ConocoPhillips, Total, Eni, Apache, Equinor, Devon, OMV, Shell, BHP Billiton, Repsol, En
Slide 43: The first Russian O&G company with methane emissions long-term goal by 2030
The first Russian O&G company with methane emissions long-term goal by 2030 Source: Annual Reports, Sustainability Reports, Companies data International and domestic peers: ExxonMobil, Chevron, BP, RDShell, Rosneft, Total, Lukoil, Eni, Equinor, Gazprom Think Green. Think Natural Gas. 43
Slide 44: Yamal LNG best in-class GHG performance
Yamal LNG best in-class GHG performance Global LNG projects: Snohvit LNG, Oman LNG, Sakhalin LNG, Karratha Gas Plant, Nigeria LNG, Gorgon LNG, Pluto LNG, Wheatstone LNG, Atlantic LNG, RasGas, Qatargas T1-2, Darwin LNG, Glastone CSG LNG, Ichthys LNG, Prelude FLNG Source: Companies data Think Green. T
Slide 45: Regular Cryological Monitoring
Regular Cryological Monitoring Think Green. Think Natural Gas. 45
Slide 46: Proactive measures in the Arctic zone
Proactive measures in the Arctic zone Think Green. Think Natural Gas. 46
Slide 47: Appendix
r NOVATEK Appendix BS NOVATEK
Slide 48: Cumulative Total Shareholder Return, %
Cumulative Total Shareholder Return, % 1750 1550 1404% 1350 1150 950 NOVATEK Russian O&G Majors 750 US E&P LNG peers 550 350 286% 150 147% 85% 75% -50 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Russian O&G: Gazprom, Rosneft, Lukoil, Tatneft, Gazprom Neft Majors:
Slide 49: New Dividend Policy of Minimum 50% of the Adjusted Net Profit
New Dividend Policy of Minimum 50% of the Adjusted Net Profit DIVIDEND PAYOUT, RR per ordinary share Absolute growth: 40x 32.33 35.56 CAGR: 28% 32.33 26.06 14.95 13.50 13.90 10.30 7.89 6.86 6.00 4.00 0.9 1.65 2.35 2.52 2.75 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2
Slide 50: Disclaimer – Forward Looking Statement
Disclaimer – Forward Looking Statement Matters discussed in this presentation may constitute forward-looking statements. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which