Filed by: Gaz de France
pursuant to Rule 165 and Rule 425(a)
under the Securities Act of 1933, as amended
Subject Company: SUEZ
Exchange Act File Number: 001-15232
Date: April 21, 2008
On April 16, 2008, Gaz de France presented the following information at its Investor Day held in Paris, France.
Important Information
This communication does not constitute an offer to purchase, sell, or exchange or the solicitation of an offer to sell, purchase, or exchange any securities of Suez, Suez Environment (or any company holding the Suez Environment Shares) or Gaz de France, nor shall there be any offer, solicitation, purchase, sale or exchange of securities in any jurisdiction (including the United States, Germany, Italy and Japan) in which such offer, solicitation, purchase, sale or exchange would be unlawful prior to the registration or qualification under the laws of such jurisdiction. The distribution of this communication may, in some countries, be restricted by law or regulation. Accordingly, persons who come into possession of this document should inform themselves of and observe these restrictions. To the fullest extent permitted by applicable law, Gaz de France and Suez disclaim any responsibility or liability for the violation of such restrictions by any person.
The Gaz de France ordinary shares which would be issued in connection with the proposed business combination to holders of Suez ordinary shares (including Suez ordinary shares represented by Suez American Depositary Shares) may not be offered or sold in the United States except pursuant to an effective registration statement under the United States Securities Act of 1933, as amended, or pursuant to a valid exemption from registration.
In connection with the proposed transactions, the required information document will be filed with theAutorité des marchés financiers(“AMF”) and, to the extent Gaz de France is required or otherwise decides to register the Gaz de France ordinary shares to be issued in connection with the business combination in the United States, Gaz de France may file with the United States Securities and Exchange Commission (“SEC”), a registration statement on Form F-4, which will include a prospectus.Investors are strongly advised to read the information document filed with the AMF, the registration statement and the prospectus, if and when available, and any other relevant documents filed with the SEC and/or the AMF, as well as any amendments and supplements to those documents, because they will contain important information.If and when filed, investors may obtain free copies of the registration statement, the prospectus as well as other relevant documents filed with the SEC, at the SEC’s web site atwww.sec.gov and will receive information at an appropriate time on how to obtain these transaction-related documents for free from Gaz de France or its duly designated agent. Investors and holders of Suez securities may obtain free copies of documents filed with the AMF at the AMF’s website atwww.amf-france.org or directly from Gaz de France on its web site atwww.gazdefrance.com or directly from Suez on its website atwww.suez.com, as the case may be.
Forward-Looking Statements
This communication contains forward-looking information and statements about Gaz de France, Suez, Suez Environment and their combined businesses after completion of the proposed transactions. Forward-looking statements are statements that are not historical facts. These statements include financial projections, synergies, cost-savings and estimates and their underlying assumptions, statements regarding plans, objectives, savings, expectations and benefits from the transaction and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements are generally identified by the words “expect,” “anticipates,” “believes,” “intends,” “estimates” and similar expressions. Although the managements of Gaz de France and Suez believe that the expectations reflected in such forward-looking statements are reasonable, investors and holders of Gaz de France and Suez ordinary shares are cautioned that forward-looking information and statements are not guarantees of future performances and are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Gaz de France and Suez, that could cause actual results, developments, synergies, savings and benefits from the proposed transactions to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the public filings with theAutorité des marchés financiers(“AMF”) made by Gaz de France and Suez, including those listed under “Facteurs de Risques” in theDocument de Référencefiled by Gaz de France with the AMF on April 27, 2007 (under no: R.07-046) and any update thereto and in theDocument de Référencefiled by Suez on March 18, 2008 and any update thereto, as well as documents filed by Suez with the SEC, including those listed under “Risk
Factors” in the Annual Report on Form 20-F for 2006 that Suez filed with the SEC on June 29, 2007. Except as required by applicable law, neither Gaz de France nor Suez undertakes any obligation to update any forward-looking information or statements.
* * * *
2
Gaz de France
Purchase & Sale of Natural Gas
A global player with key competitive advantages in changing energy markets
Gaz de France Investor Day
Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Disclaimer
The objectives summarised above are based on data, assumptions and estimates deemed reasonable by Gaz de France. The said data, assumptions and estimates may evolve or be changed as a result of uncertainties due in particular to the economic, financial, competitive, regulatory or weather conditions. In addition, the materialisation of certain risks factors described in Chapter 4 of the Document de Référence filed with the Autorité des marchés financiers (“AMF”) under Number R07-046 on 27 April 2007 (hereinafter referred to as the “Document de Référence”) could have an impact on the group’s operations and its ability to achieve its objectives. In addition, achieving those objectives is dependent on the success of the commercial strategy described in Chapter 6.1.2 of the Document de Référence. Gaz de France consequently disclaims any undertaking and gives no representation as to the fact that it will achieve its objectives and does not undertake to publish or issue possible revisions or updates of such forward-looking statements or information, beyond what is required by the laws and regulations with which it must comply.
This communication does not constitute an offer to purchase or exchange or the solicitation of an offer to sell or exchange any securities of Suez or an offer to sell or exchange or the solicitation of an offer to buy or exchange any securities of Gaz de France, nor shall there be any sale or exchange of securities in any jurisdiction (including the United States, Germany, Italy and Japan) in which such offer, solicitation or sale or exchange would be unlawful prior to the registration or qualification under the laws of such jurisdiction. The distribution of this communication may, in some countries, be restricted by law or regulation. Accordingly, persons who come into possession of this document should inform themselves of and observe these restrictions. To the fullest extent permitted by applicable law, Gaz de France and Suez disclaim any responsibility or liability for the violation of such restrictions by any person.
The Gaz de France ordinary shares to be issued in connection with the proposed business combination to holders of Suez ordinary shares (including Suez ordinary shares represented by Suez American Depositary Shares) may not be offered or sold in the United States except pursuant to an effective registration statement under the United States Securities Act of 1933, as amended, or pursuant to a valid exemption from registration.
In connection with the proposed business combination, the required information document will be filed with the AMF and, to the extent Gaz de France is required or otherwise decides to register the Gaz de France ordinary shares to be issued in connection with the business combination in the United States, Gaz de France may file with the United States Securities and Exchange Commission (“SEC”), a registration statement on Form F-4, which will include a prospectus. Investors are strongly advised to read the information document filed with the AMF, the registration statement and the prospectus, if and when available, and any other relevant documents filed with the SEC and/or the AMF, as well as any amendments and supplements to those documents, because they will contain important information. If and when filed, investors may obtain free copies of the registration statement, the prospectus as well as other relevant documents filed with the SEC, at the SEC’s website at www.sec.gov and will receive information at an appropriate time on how to obtain these transaction-related documents for free from Gaz de France or its duly designated agent. Investors and holders of Gaz de France and Suez securities may obtain free copies of documents filed with the AMF at the AMF’s website at www.amf-france.org or directly from Gaz de France on its website at: www.gazdefrance.com or directly from Suez on its website at: www.suez.com, as the case may be.
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Agenda
8:30am Introduction, organisation, facts and figures
8:45am Fundamentals and trends in global natural gas market
9:05am Key competitive advantages
10:15am Q&A
10:45am Coffee break
11:15am Business model
11:45am Outlook and strategic directions
12:00pm Q&A
12:30pm Lunch
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
1 Introduction organisation, facts & figures
2 Fundamentals and trends in global natural gas market
3 Key competitive advantages
4 Business Model
5 Outlook & strategic directions
Jean-Marie Dauger
Chief Operating Officer
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Purchase & Sale of Energy
Gaz de France Group
Division
Energy Supply and Services
Infrastructures
Financial segment
Exploration - Production
Purchase and Sale of Energy
Services
Transmission and Storage - France
Distribution - France
Transmission and Distribution - International
Branch Organisation
\Global Gas & LNG Branch
Energy France Branch
Retail sales, Electricity and Services to retail customers
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Investor Day – Presentation scope
Global Gas and LNG Branch
Designed to meet gas market challenges
Jean-Marie Dauger, COO
Jean-Claude Depail, Executive Vice-President
Support and steering functions 155 people
UPSTREAM
Exploration and Production Didier Holleaux
1,120 people (including 155 in France)
MIDSTREAM
Supply Edouard Sauvage
125 people
LNG Jean-Luc Colonna
180 people (including 150 in shipping subsidiaries)
Gaselys* Thierry Daubignard
180 people (including 40 IT contractors)
Key Account Sales Jean-Pierre Roncato
220 people (including 140 in France)
Investor Day Scope
* subsidiary of Gaz de France (51%) and Société Générale (49%)
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Purchase & Sale of Energy
Financial performance and business scope
In million euros % Group 2007 2006
Revenues 66%* 20,041 20,455 -2%
EBITDA 19% 1,075 529 +103%
Operating income 24% 940 443 +112%
3 main activities:
1. Gas is core business
Natural Gas Purchase & Sale to wide range of customers (retail to major European Key Accounts)
Portfolio management & Trading
2. Electricity
Electricity generation (in France and Europe) & sales
3. Services to retail customers
Boiler maintenance: Savelys
Financial solutions: Solfea
Contribution to Purchase & Sale 2007 EBITDA
10%
90%
Electricity & Services
Investor Day scope
* Contribution to Group revenues
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
1 Introduction organisation, facts & figures
2 Fundamentals and trends in global natural gas market
3 Key competitive advantages
4 Business model
5 Outlook & strategic directions
Jean-Marie Dauger
Chief Operating Officer
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Our vision of European Energy Markets
Increase in natural gas demand
Decline in European production
Need for new resources, in particular, LNG
Growing interconnection of markets
Long-term contracts to play a pivotal role
Market and oil-indexed prices to remain correlated
Development of price engineering and risk management
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Our vision of European Energy Markets
Increase in natural gas demand
Total World primary energy demand
In Mtoe
+ 1.8%
11,429
13%
6%
21%
35%
25%
2005
-14,361
12%
6%
21%
33%
28%
2015
17,721
13%
5%
22%
32%
28%
2030
Hydro and renewables
Nuclear
Natural gas
Oil
Coal
+ 2.1%
Source: World Energy Outlook 2007, Reference Scenario, International Energy Agency
Total E.U primary energy demand
In Mtoe
+ 0.4%
1,814
8%
14%
24%
37%
17%
2005
1,910
10%
13%
27%
35%
15%
2015
2,006
15%
8%
30%
33%
14%
2030
Hydro and renewables
Nuclear
Natural gas
Oil
Coal
+ 1.3%
Mid-term growth expected for global gas demand
Uncertain growth pace
Increased competition for new resources
Mid-term growth expected for gas share of European energy demand
To be primarily driven by gas-fired power generation
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Our vision of European Energy Markets
Decline in European production
Continuous decline of Europe’s domestic gas production: 1% p.a.
Natural Gas production in OECD Europe
In Bcm
315
292
251
2005 2015 2030
Source: World Energy Outlook 2007, Reference Scenario, IEA
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Our vision of European Energy Markets
Need for new resources
Europe’s increasing dependency on imports
Net imports of Natural Gas in OECD Europe
% share of imports in primary demand
43%
54%
67%
2005 2015 2030
Source: World Energy Outlook 2007, Reference Scenario, IEA
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Our vision of European Energy Markets
LNG to play crucial role
Additional resources increasingly remote from Europe
Increasing contribution of LNG
To balance supply & demand
To exploit market opportunities
Growth of global gas production
In Bcm
6 000
5 000
4 000
3 000
2 000
1 000
0
+ 6 %
+ 2 %
2000 2010 2020 2030
Global production of liquefied gas
Global production of pipe gas
Source: World Energy Outlook 2006, IEA
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Our vision of European Energy Markets
Growing interconnection of markets
LNG trade to drive market globalisation
Net gas trading flows by 2030
In Bcm
59
85
97
17
104
202
160
244
27
25
13
8
60
10
52
OECD North America
Latin America
OECD Europe
Transition economies
Africa
Middle East
China
South Asia
OECD Pacific
East Asia
Source: World Energy Outlook 2006, IEA
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Our vision of European Energy Markets
Long-term contracts to play pivotal role
Long-term contracts
Long-term contracts to provide bulk of European natural gas supply
Long-term contracts essential to secure supply and sales development
Long-term contracts - including price review clauses and other adjustment mechanisms - to remain competitive
Energy Market Places
Hub exchanges developing in continental Europe
Market places providing flexibility and short-term supply/demand balancing
Limited depth and liquidity
Continental markets
In TWh
75
Physical Volume TTF
95
Physical volume Zeebrugge
2,200
Area* gas Consumption
UK markets
In TWh
600
Physical Volume NBP
1,000
UK gas consumption
Source: Transport System Operators, Eurogas in 2006
* Belgium, France, Germany, Netherlands
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Our vision of European Energy Markets
Market and oil-indexed prices to remain correlated
Gas sector characterized by supply/demand and price cycles
Typical short-term market and long-term contract prices
NBP Month Ahead (UK market)
Typical Long Term Price
historical forward
janv-00 janv-01 janv-02 janv-03 janv-04 janv-05 janv-06 janv-07 janv-08 janv-09
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Our vision of European Energy Markets
Development of price engineering and risk management
To meet large customers’ requirements
To hedge margins and secure profits in a volatile market
To extract value from supply portfolio
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Global Gas and LNG Branch
Organisation’s 4 main missions
Develop and produce natural gas and oil reserves
Dedicated Investor Day 22 May 2007
Supply competitive gas to other sales divisions within Group
Global Gas and LNG Branch
Monetise portfolio of proprietary assets
Sell energy and services to large industrial European customers
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Global Gas and LNG Branch
Organisation’s 4 major challenges
Regroup upstream and mid-stream activities
Build on global player position
Prepare merger with Suez
Ready to implement synergies
Prepare to upscale supply capacity
Global Gas and LNG Branch
Consolidate Group’s position as global leader in LNG industry
Creation of dedicated LNG Business Unit
Develop new profit drivers
Increase Gaselys integration with other Business Units in Global Gas and LNG Branch
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Global Gas and LNG business model
Disclaimer : for illustration purpose only. there is no “typical” breakdown of the EBITDA between the activities : it depends on the weather and market conditions
Revenues
Equity oil & gas sales
Structured deals
LNG mid-term deals and shipping
Non-regulated sales
Regulated tariffs sales
Costs
Production costs
Infrastructure costs
Forecast supply costs*
Sales margin at time of signature (hedged)
* not including the cost of gas withdrawn
At time of signature
E&P financial segment
Storage cycles impact
Trading
Geographical spread arbitrage (incl. LNG)
Time spread arbitrage
Portfolio optimisation
EBITDA
At time of off-take
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Video presentation
Supply
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
1 Introduction organisation, facts & figures
2 Fundamentals and trends of the global gas market
3 Key competitive advantages
Supply portfolio
LNG supply
4 Business model
Key account management
Energy trading
5 Outlook & strategic directions
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
1 Introduction organisation, facts & figures
2 Fundamentals and trends of the global gas market
3 Key competitive advantages
Supply portfolio
LNG supply
4 Business model
Key account management
Energy trading
5 Outlook & strategic directions
Édouard Sauvage
Senior Vice-President Gas Supply
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
One of Europe’s most valuable portfolio
Competitive gas supply contracts
Access to market places
Supply portfolio
Committed capacity in infrastructure
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
One of Europe’s most diversified portfolio
Supply portfolio
Real off-take
2004
15% 1% 5% 14% 17% 21% 27%
2007 13% 1% 1% 3% 4% 9% 17% 15% 16% 21%
Norway
Russia
Netherlands
Algeria
Egypt
UK
Lybia
Nigeria
Germany
Others
On-going diversification process
Form 2004: Germany, Libya
From 2005: Egyptian LNG
As of 2008: Norwegian LNG
In 2007
Long-term supply > 80% of portfolio with 19 suppliers
Own resources = 6% (long-term supply)
LNG = 31.5% (long-term supply)
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Secured long-term supply portfolio
Supply portfolio
Evolution of long-term supply portfolio
Average contractual annual volume of long-term portfolio
Standard yearly quantity (TWh)
600
500
400
300
200
100
LNG
Pipe gas
Years 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028
Average residual life 15.7 years
2006: Russian gas supply contracts extended to 2030
2007: Algerian gas supply contracts extended to 2019
Volumes contracted with existing long-term agreements:
Represent 15.7 years of current average contractual annual volume
Secure supply up to 2019
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Long-term contracts
Strong partnerships between producers and buyers
Supply portfolio
Development of natural gas industry in Europe and Asia is based on long-term relationships between producers and buyers
1st LNG commercial deliveries from Algeria in 1965
1st pipe-gas from the Netherlands in 1967
1st pipe-gas from Russia in 1975
1st pipe-gas from Norway in 1977
1st LNG commercial deliveries from Nigeria in 1998
1st pipe-gas from E&P in 2000
1st pipe-gas from Libya in 2004
1st LNG commercial deliveries from Egypt in 2005
New opportunities resulting from market deregulation to allow higher value creation
Upstream investment opportunities (LNG plants, E&P) can emerge from strong relationship between midstreamers and upstreamers
Impact of disruption (technical, political…) to be limited as a result of operational expertise
Importance of relationship building at operational and managerial levels
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Video presentation
30-year anniversary of Gaz de France-Gazprom Partnership
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Typical structure of long-term contracts
Supply portfolio
Shared risks between sellers and buyers
Volume risk
Buyer
Duration of contracts (10 to 30 years)
Off-take obligation (Take-Or-Pay clause)
Guarantee of steady cash-flow
Enables infrastructure financing
Price risk
Seller
Guarantee gas competitiveness
Enables development of end user market
Initial price levels secure gas competitiveness vs competing energies
Price Formulae maintain gas competitiveness by indexing on competing energies prices
Regular price reviews preserve contractual initial economic balance
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Typical structure of long-term contracts
Price formulae
Supply portfolio
Indexation on competing energies prices
Typical gas pricing formula
P = Po + A x (G-Go) + B x (F-Fo) with
P, Po : monthly price of natural gas (Po = price at the initial date of implementation of the contract)
G, F : average price on 3, 6 or 9 months of domestic fuel oil (G) or heavy fuel oil (F). Moving averages smooth variations of oil products prices
Indexation on competing energy prices
Price formulae of long-term contracts can also include partial or total indexation on market prices, depending on market supplied
On short/medium term, such indexation “mechanically” maintains competitiveness of natural gas on buyer end-user market
Moreover, long-term contracts include Price Review provisions providing regular opportunities (+/- every 2 to 4 years) to adjust price to longer-term evolutions in gas economic value
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Typical structure of long-term contracts
Price review clauses
Supply portfolio
“If the circumstances beyond the control of the Parties change significantly compared to the underlying assumptions in the prevailing price provisions, each Party is entitled to an adjustment of the price provisions reflecting such changes. The price provisions shall in any case allow the gas to be economically marketed based on sound marketing operation.”
Source: Putting a price on energy - Energy charter secretariat, 2007
Ensure price adaptability to market conditions
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Typical price review procedure
Supply portfolio
Both parties have the right to initiate price reviews at regular dates during contract period
Negotiation rounds take place to review value of natural gas
Marketing analysis of buyer end-user market
Benchmark analysis with other contracts
Price review provisions usually include a time limit for negotiation rounds, extendable by mutual agreement
If no agreement is reached, both parties may resort to arbitration
Contracts may also provide exceptional rights to trigger immediate price reviews in case of radical changes in economic environment and/or hardship
Given the nature of long-term partnerships, price reviews are also opportunities to hold commercial negotiations covering other contractual aspects (volumes, delivery points, flexibility, etc.) to agree win-win deals
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Off-take flexibility
Valuable option in long-term contracts
Supply portfolio
Daily flexibility
Possibility to off-take a daily quantity higher or lower than the Daily Contractual Quantity (DCQ), within agreed limits
Annual flexibility
Possibility to off-take an overall annual quantity higher or lower than the Annual Contractual Quantity (ACQ), within agreed limits
Pluri-annual flexibility
“Make-up” (means, under certain conditions, possible to off-take in year N+1 - or later - volumes paid for year N according to TOP* threshold)
“Carry forward” (volumes off-taken in year N above TOP* clause can be taken into account in year N+1 to reduce TOP* obligations)
Typical daily flexibility of long-term contracts: ~ 50 % => 105 %
Typical annual flexibility of long-term contracts: ~ 90 % => 105 %
TOP : Take Or Pay
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Diversified access points to European markets
More options and valuable positions
Supply portfolio
St Fergus* (*from 2010)
Ulthuizen
Hilvarenbeek
Emden
Lehringen
Mosonmagyarovar
Baumgarten
Zeebrugge
TTF
Waidhaus
s’Gravenvoeren
Berlin
NBP
Barrow
Theddlethorphe
Bacton
Velke Kapusamy
Isle of Grain* (*frome oct 08)
Dunkerque
Blaregnies
Beregdanoc
Montoir-de-Bretagne
Fos-sur-mer
Isaccea
Carthagene
Gela
Huelva
Beni-Saf* (*from oct 2009)
Pipe Gas delivery points Booked capacity in LNG terminals
Source: internal research
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
To conclude on long-term contracts
Supply portfolio
Long-term secured
Diversification
Partnerships with producers
Shared risks between sellers and buyers
Long-term contracts
Adaptable to market conditions
Off-take flexibility
Multiple delivery points
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Committed infrastructure capacity
Access to best valued markets
Supply portfolio
Committed transmission
Committed Interconnection
Committed Underground storage
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Market places provide additional flexibility
Supply portfolio
IRL
NBP
UK
PT
ES
CDG
FR
PEGs
Zeebrugge
BE
TTF
NL
Bunde Oude
E.ON zones
PSV
IT
DE
BEB zone
Emden
DK
NO
SE
FI
CZ
PL
CEGH Baumgarten
AT
SK
Gas Hub without Gas Exchange
Gas Hub with Gas Exchange
Notional Gas Hub
Hub’s home country or main or main delivery destination
Delivery destination
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Video presentation
LNG
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
1 Introduction organisation, facts & figures
2 Fundamentals and trends in global natural gas market
3 Key competitive advantages
Supply portfolio
LNG supply
4 Business model
Key account management
Energy trading
5 Outlook & strategic directions
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
LNG flexibility to increase supply portfolio value
Gaz de France LNG strategy and leadership
Strong global positions
LNG supply
LNG Large and diversified LNG supply portfolio
Large renewed LNG fleet
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Gaz de France LNG development strategy
LNG supply
A clear positioning as integrated mid-streamer with an LNG business
Based on long-term relationship with producers
Focused on supplying our 14.5 million European customers
Able to seize global arbitrage opportunities thanks to a large and diversified portfolio
Balanced between:
Supply/trading activities
Investments in infrastructures all along the LNG chain
A track record of technical and commercial innovations
Liquefaction process, safety models, floating facilities (flexible hoses)
Partnerships with suppliers and banks, LNG/pipe gas swaps, regasification capacity swaps
LNG: 31.5% of Gaz de France long-term supply portfolio
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Gaz de France leadership in Europe
LNG supply
Involvement in first LNG chain in 1965 in Algeria
3rd global LNG importer in 2006
1st European LNG importer in 2006
LNG import in 2006
30,3 KOGAS
25.2 TEPCO
13,5 GAZ DE FRANCE
12,6 CHUBU
10,9 GAS NATURAL
9,7 CPC
9,1 TOKYO GAS
8,9 OSAKA GAS
8,1 SUEZ
7,6 BG
6,7 PETRONET
6 KANSAI
4,7 BOTAS
3,8 TOHOKU
3,4 TOHO
3,3 BP
3,2 KYUSHU
Source: GIIGNL 2006/Gaz de France
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Large and diversified LNG supply portfolio
LNG supply
2007 contractual volumes
Norway: 0.5 mtpa 12% Snohvit Train 1
Nigeria 3%
Norway 4%
Egypt 30%
Algeria: 63%
Algeria: 7.7 mtpa Arzew, Bethioua & Skikda
Egypt: 3.6 mtpa
100% Idku Train 1
Nigeria:0.4 mtpa
Train 1 and Train 2
12.2 mtpa contracted in 2007 under long-term agreements
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Large renewed LNG fleet
LNG supply
Fleet balanced between owner and charterer position
5 LNG carriers owned (from 40,000 to 154,500 cm LNG)
7 to 10 carriers chartered (with short-,medium-, and long-term agreements)
Fleet structure is adapted to efficiently manage long-term supply and short-term deals
Pioneer order in 2002 of 1st Dual-Fuel Diesel-Electric (DFDE) LNG carrier
50 other orders were recorded since 2002
To sustain growing trade activity
Fleet shipping capacity of 1.5 Mcm LNG early 2008
5% of global capacity
7% of LNG global trade
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Strong global positions
LNG supply
Snøhvit (Norway)
First liquefaction plant in Europe
First Gaz de France cargo off taken in march 2008
LNG Production Capacity: 4.2 mtpa
Gaz de France has a 12% stake
Rabaska (Quebec)
Regasification unit project in partnership between Gaz de France, Gaz Metro and Enbridge Ltd.
Regasification capacity of 4 mtpa
Isle of Grain (UK)
Owned by National Grid
Gaz de France has booked 2,4 mtpa capacity from 2008
Triton (Italy)
Project of a floating regasification unit
Regasification capacity between 4 and 8 mtpa
Rabaska (project)
LNG tankers
Gaz de France operates a fleet of 13 LNG tankers
Isle of Grain
Montoir-de-Bretagne
Carthagène
Fos-sur-Mer
Triton (Project)
Skikda
Arzew
Bethioua
Algeria
Egypt
Idku
Nigeria
Dahej
Kochi (project)
Idku (Egypt)
3.6 mtpa LNG
Gaz de France has a 5% stake
Sabine Pass (US)
Gaz de France entered into an agreement with Cheniere Energy to deliver 12 shipments of LNG per year, over a period of 15 years
The terminal is under construction (start-up planned in 2008)
Cartagena / Huelva (Spain)
1.2 mtpa booked at Cartagena
0.4 mtpa booked at Hueva
Montoir-de-Bretagne
Owned by Gaz de France
Regasification capacity of 8 mtpa
Fos Tonkin
Owned by Gaz de France
Regasification capacity of 5,6 mtpa
Fos Cavaou
Ownership: 70% Gaz de France; 30% Total
Regasification capacity of 6,6 mtpa
Under construction until H2 2008
Petronet LNG (India)
Gaz de France has a 10% stake in Petronet LNG
1 plant in Dahej – capacity will double late 2008
1 project for a plant in Kochi
Regasification plant
Liquefaction plant
LNG contracts and flows, imports
LNG contracts, export Exploration and production related to LNG
(information on regas projects mentioned below is provided in back up slides)
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Why is being an LNG world leader a key asset for Gaz de France?
LNG supply
LNG is necessary for accessing new reserves, supplying our customers and supporting our sales development
LNG provides diversification and security of supply
LNG provides flexibility, helps balancing supply & demand, and adds value through arbitrage opportunities
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Video presentation
Key Accounts
Gaz de France Investor Day
Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
1 Introduction organisation, facts & figures
2 Fundamentals and trends in global natural gas market
3 Key competitive advantages
Supply portfolio
LNG supply
4 Business Model
Key account management
Energy Trading
5 Outlook & strategic directions
Jean-Pierre Roncato
Senior Vice-President
Key Accounts Sales
Key account management
Mark Bailey
Vice-President Marketing
Energy trading
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
What is a Key Account?
Key account management
Priority segment
European industrial groups present in at least two target countries* consuming more than 150 GWh of gas/year on minimum one site
Complementary segments
National accounts - Gas retailers - Gas-fired power plants
*Target countries: Belgium, Germany, Italy, the Netherlands, Spain, UK + CEEC (Central and Eastern European Countries)
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Key accounts – high value customers
Key account management
Contribute to Group’s growth in Europe and consolidate our leadership in home market
High potential market with 44% of all gas consumed in Europe
Gas consumption in Europe
Power production 19%
SME/SMI manufacturers 11%
Large industries 25%
Residential and service 45%
Leverage for development in other segments
Complements to the retail market: less weather sensitivity and more flexibility
Strengthens our visibility on new markets
Increases probability of success in development projects
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Well-balanced Key Accounts portfolio
Key account management
Retailers 15%
Pan-European Key Accounts 66%
National accounts 19%
% volume of gas sales
Europe (except UK), 2006
Focus on industry sales Sales breakdown
Paper industry 13%
Chemical industry 39%
Glass industry, plaster, cement 17%
Automotive industry 5%
Food industry 16%
Metal industry 10%
A European multi-industry customer base
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Key Account expectations becoming more complex
Key account management
Multi-site and multi-country service offer
Increasing centralisation of purchasing decision
Risk management and advice for market opportunities
Energy optimisation
Tougher environmental constraints
Emergence of a CO2 emissions trading market (EUETS)
Globalisation
Risk of relocation
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Customised three-dimensional offers
Key account management
Multi-site and multi-country gas deliveries
Including transmission, storage, and balancing
Unique ability to supply customer sites in up to 7 countries
Market access and risk management through Gaselys
Fixed prices, cap/collars, options, specific indexation…
Market information and analysis
Energy Services
Energy optimisation
CO2 emissions trading management
Co-development of energy projects (DK6,…)
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Meeting Key Accounts’ expectations in a fast-changing and volatile market
Key account management
Evolution of Key Accounts’ market expertise and risk appetite
+ Market expertise
Traders
- Traders by delegation +
Level of accepted risk
Market reluctants
- Value levers for Gaz de France
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Meeting Key Accounts’ expectations in a fast-changing and volatile market
Key account management
Gaz de France marketing answers
+ Market expertise
Traders
Full market access
- Traders by delegation +
Best of
Level of accepted risk
Market reluctants
Fixed prices
Oil indexed prices
- Value levers for Gaz de France
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Video presentation
Customer testimonial
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Diversity in gas purchasing process across Europe
Key account management
UK 1.5 year
Belgium 1.4 year
Netherlands 1.8 year
France 1.4 year
Germany 1.5 year
Spain 1.1 year
Italy 1.05 year
Purchase Anticipation
3 months
6 months
12 months
18 months
Variable
Typical duration of gas sales contracts
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Gas buying process of Key Accounts
Key account management
Duration of sales contracts from 12 to 24 months
Gas sales contracted up to 18 months in advance
Prices for sales of year n reflect forward vision of year n-1 (or even n-2) for n vs effective prices of year n
We thus hedge our sales contracts at the date of the deal
Illustration for year 2007
For illustration purpose only
Typical short-term market and long-term contract prices
historical forward
– NBP Month Ahead / forward
– Typical Long-Term Price
EUR/MWh
60,00
50,00
40,00
30,00
20,00
10,00
0,00
Janv-06 Janv-07 Janv-08
Forward prices as of March 2006
Typical short-term market and long-term contract prices
– NBP Month Ahead / forward
– Typical Long-Term Price
historical forward
EUR/MWh
50
45
40
35
30
25
20
15
10
5
0
Janv-06 Janv-07 Janv-08
Ex post vision (prices as of March 2008)
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Sales & marketing designed for success
Key account management
Sales & marketing structure “mirroring” that of the customer
Local professional and experienced teams in each country
Pan-European Key Account Managers negotiating with customers’ decision makers
Central marketing team designing service offers for all of Europe, with dedicated experts per country
Creating proximity with customers
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
A unique brand dedicated to Key Accounts across Europe
Key account management
Gaz de France EnergY®
La marca de las Grandes
Cuentas Europeas
Bienvenido
al mundo de
adaptive energY
Gaz de France energy
Gaz de France energy
Global communication, adapted to local markets
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Video presentation
Adaptative energy
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Significant progression of brand awareness
Key account management
& high customer satisfaction levels
Brand awareness progression
Spontaneous awareness + assisted awareness for name or logo
83%
France 77%
70% 2006
Belgium 52%
2005
72%
Netherlands 40%
61%
Italy 47%
83% UK 74% 89%
Germany 29%
57%
Spain 17%
89% of satisfied customers, of which 22% are very satisfied
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Strong international development
Key account management
1 to 5 TWh
5 to 15 TWh
> 15 TWh
2000 135 TWh
250
200
150
100 50
0 2000 2004 2007
Source: Gaz de France Marketing, Key Accounts sales
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Strong international development
Key account management
1 to 5 TWh
5 to 15 TWh
> 15 TWh
2004 199 TWh
250
200
150
100
50
0 2000 2004 2007
Source: Gaz de France Marketing, Key Accounts sales
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Strong international development
Key account management
1 to 5 TWh
5 to 15 TWh
> 15 TWh
2007 214 TWh
250
200
150
100
50
0 2000 2004 2007
Market share 15% Rank 2
Market share 6% Rank
Market 2000 2004 2007
Market share * 1% Rank 7**
Market share 17% Rank 2
Market share 54% Rank 1
Market share 2% Rank 9
Market share 9% Rank 4
Source: Gaz de France Marketing, Key Accounts sales
* Market share on the global market (residential + business + industrial customers)
** Rank on the global market if we except local distributors « stadtwerke »
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
New business development
Key account management
1 to 5 TWh
5 to 15 TWh
> 15 TWh
Market share objective 15% in Europe
Source: Gaz de France Marketing, Key Accounts sales
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Significant increase of market share outside France
Key account management
Volumes (TWh)
250
200
150
100
50
0 2000 2004 2007
Volumes in France
Volumes in Europe excl. France
Since 2006, more gas sales to Key Accounts abroad than in France
Efficient business development strategy to increase sales outside “home” market through internal growth
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
European leader for gas sales to Key Accounts
Key account management
Resulting from:
Pro-active & innovative taylor-made product development
Transparent access to the pricing and risk management tools of Gaselys
Customer proximity via a combined central / local sales organisation
We achieve a strong and unprecedented pan European key account sales development
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Video presentation
Gaselys
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
1 Introduction organisation, facts & figures
2 Fundamentals and trends in global natural gas market
3 Key competitive advantages
Supply portfolio
LNG supply
4 Business model
Key account management
Energy trading
5 Outlook & strategic directions
Thierry Daubignard
CEO - Gaselys
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Gaselys, energy trading
A powerful tool
Unique combination of expertise
Recognised leadership
Energy trading
Customer oriented business
GASELYS
GAZ DE FRANCE & SOCIETE GENERALE
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
A unique combination of expertise
Energy trading
Gaz de France
Present over the whole gas chain
Supply sources among most diversified in Europe
Solid and diversified physical assets
Extensive sales base, in-depth knowledge & understanding of energy customer needs
Société Générale
Market maker since 1989 in commodity derivatives (metals, oil)
Trading activity expanded to physical oil in 1991, natural gas in 1996 in the UK, and electricity in 2000
Expertise in risk management
Strong focus on customer services
Unique synergies in physical and financial activities to exploit opportunities in deregulated environment
GASELYS
GAZ DE FRANCE & SOCIETE GENERALE
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Customer oriented business
Energy trading
1 CUSTOMER ACTIVITY
> GAZ DE FRANCE
> CUSTOMERS OF GAZ DE FRANCE
> DIRECT CUSTOMERS OF GASELYS
Flow marketing
Price risk hedge operations on customer behalf
Market access and energy supply optimisation
Market Making
Quotations on standard and complex products
Management of sales flow and risk optimisation
Deal Making
Structured operations; asset optimisation, tolling contract, asset rental, volume management etc.
2/3 of activity
2 ARBITRAGE AND ASSET-BACKED TRADING
> GAZ DE FRANCE ASSETS
> ASSETS MANAGED BY GASELYS
Storage assets Arbitrage
Transport & Production assets Arbitrage on
Exotic management of contractual flexibility
Other optimisations
3 PROPRIETARY TRADING
Directional positions
Relative value strategies: curve arbitrage, quality arbitrage
Directional positions
1/3 of activity
GASELYS
GAZ DE FRANCE & SOCIETE GENERALE
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Leveraging on cross-commodity trading
Energy trading
Developing physical and financial trading ability in multiple underlyings on marketplaces to serve a client-oriented business
Natural Gas
UK: NBP, main trading market
Belgium: Zeebrugge Hub
Netherlands: TTF
Germany: BEB, EGT
France: PEGs
Deployment at other hubs (PSV, Baumgarten) and at “grey points”: Emden, Bacton…
US Nat Gas (Nymex) and JCC (Japan Crude Cocktail) for LNG arbitrage only
Electricity
UK: UKPX
France: Powernext
Germany: EEX
Belgium, Netherlands, Spain…
Selective deployment on other markets
Green Certificates trading
Carbon emissions
France: BlueNext
Germany: ECX
Oil (financial trading)
Financial trading on swaps and options
Crude oil: main Brent and WTI indices
Refined products: Platts, IPE..
Niches: Rheinschiene, LPG…
Coal
API#2, API#4, Newcastle, BAFA
GASELYS
GAZ DE FRANCE & SOCIETE GENERALE
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Strong growth in traded volumes
Energy trading
2002 2003 2004 2005 2006 2007
3 000
2 500
2 000
1 500
1 000
500
0
+ 59%
+ 37%
+26%
+80%
+25%
Total (TWh) : 691 865 1,554 1,958 2,695 4,292
Gas Oil & products Power Coal EUA + green certificates
GAZELYS
GAZ DE FRANCE & SOCIETE GENERALE
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Unique position among peers
Energy trading
Gaselys’ main competitors
Oil Majors / their trading affiliates: Statoil, BP, Total Gas & Power…
“Utilities” / their trading affiliates: EDF Trading, RWE Trading, Accord (Centrica), E.On Energie
Banks: Goldman Sachs, Morgan Stanley, Barclays Capital…
Market perception
Risk Taking
Access to Physical Assets
Marketing approach
Global offer Physical/Financial
GASELYS
Banks
Utilities
Average
GAZELYS
GAZ DE FRANCE & SOCIETE GENERALE
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Early recognition by observers and peers
Awards & rankings
Energy trading
Energy Power Awards 2003
Award: Natural Gas House of the Year
Winner: Gaselys
energy risk awards 2005
Award: Natural Gas / Europe House of the Year
Winner: Gaselys
Energy Business
Gold Award Winner 2006
Energy Risk Management
Energy Business
Silver Award Winner 2006
Energy Trading
2005
Natural Gas
Continental Europe options: # 3
Continental Europe: # 4
Electricity
France options: # 4
2006
Natural Gas
Zeebrugge: # 4
Electricity
French power: #2
2007
Natural Gas
PEG France: # 2
TTF Netherlands: # 3
Zeebrugge: # 3
EGT Germany: # 4
UK NBP Curve: # 5
UK Gas options: # 5
Electricity
Spanish power: #4
French power: #5
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Purchase & Sale of Natural Gas
A global player with key competitive advantages in changing energy markets
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
1 Introduction organisation, facts & figures
2 Fundamentals and trends in global natural gas market
3 Key competitive advantages
4 Business model
Portfolio Management
Risk Control
5 Outlook & strategic directions
Storage cycle impact
Financial business model
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
1 Introduction organisation, facts & figures
2 Fundamentals and trends in global natural gas market
3 Key competitive advantages
4 Business model
Portfolio Management
Risk Control
5 Outlook & strategic directions
Storage cycle impact
Financial business model
Bertrand Fauchet
Vice-President - Optimisation
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Unique portfolio management expertise
Physical portfolio management
Efficient organisation to capture maximum value
Portfolio Management
Financial optimisation
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Physical portfolio management
Portfolio Management
Match customers supply and demand
Weather variation of demand
Stress tests on resources, especially a supplier 6 month default, under normal weather conditions
Obligation defined within legal framework
Applicable to all gas suppliers
An advantage for Gaz de France: portfolio effect at a european scale
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Physical portfolio management
Strong assets
Portfolio Management
Volume flexibility of supply contracts
Transmission capacity facilitating gas re-routing
Storage capacity
Geographical flexibility of LNG supplies
Access to spot markets
Interruptible sales contracts
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Physical portfolio management
Managing demand variation in line with weather
Portfolio Management
Storage withdrawal
Storage injection
Winter Summer
Purchases (average climate) Sales (average climate)
Purchases (cold climate) Sales (cold climate)
Key figures
Annual volume: 650 TWh
Winter vs Summer demand: 2 vs 1
Weather variation on annual demand: +/- 5% of average annual demand
Daily peak demand vs daily minimum demand: 10 vs 1
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Physical portfolio management
2 real-life cases of gas disruption management
Portfolio Management
January 2004: accident at Skikda liquefaction plant
Total outage of LNG plant for several weeks
Long-term partial outage of export capacities
20 TWh/year supply at stake
Consequences were controlled thanks to
Re-arrangements with Sonatrach
Use of contractual flexibility of portfolio
Access to spot markets
Increased withdrawal from storages
January 2006: dispute over the price of natural gas between Russia and Ukraine
Noticeable cuts in the volumes delivered to western European countries: Germany, Italy, France…
Limited consequences for Gaz de France
Diversified portfolio (less dependant than Germany or Italy)
Anticipation thanks to knowledge of the political situation
Access to spot markets
Gaz de France’ customers unaffected No major impact on Gaz de France’ P&L
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Financial optimisation
Unlocking value of portfolio
Portfolio Management
Purchased volumes (long physical position)
Min qties of LT contracts Short-term traded volumes
Sold volumes (short physical position)
Sales to customers or to other operators
Purchased flexibility (purchased physical option)
LT contracts flex., storage, transmission
Sold flexibility (sold physical option)
Weather risk Default risk
Matching volumes and options
Spot deals when necessary for physical balancing
Purchase cost minimised
Residual flexibility Replacement cost
Short-term deals
Opportunity Best valuation
Identifying best valuation of flexibility
Opportunities
Spot Markets
Structured deals
LNG trade
“Internal market”
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Typical financial optimisation deals
Seasonal sales and purchases
Portfolio Management
Winter gas sale
If extreme cold weather conditions do not occur, it is possible to sell gas on short-term markets without jeopardising customer supply
Typical marginal gain = Market winter price – LT contract price
Summer gas purchase
If extreme warm weather conditions do not occur, no TOP risk: it is possible to lower long-term contract off-takes and replace with cheaper market gas
Typical marginal gain = LT contract price – market summer price
LT Contract
Winter Sale
Market 1
LT Contract
Summer Purchase
Market 1
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Typical financial optimisation deals
Time and geographic spread deals
Portfolio Management
Time spread deal
Storage withdrawal can be adjusted to sell gas in a given month and buy gas in another month
Typical marginal gain = market price of month #1 – market price of month #2
Geographic spread deal
If transmission capacity is available, it can be used to simultaneously buy gas on a given market and sell it on another
Typical marginal gain = price of market #2 –price of market #1
LT Contract
Time spread
Market 1
LT Contract
Market 1
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Seizing multiple market opportunities
Portfolio Management
Short term markets and typical long term contracts prices
Electricity market price net back
JCC Month Ahead
HH Month Ahead
ZGH Month Ahead
TTF Month Ahead
NBP Month Ahead
Typical Long Term Price
Historical forward
janv-00 janv-01 janv-02 janv-03 janv-04 janv-05 janv-06 janv-07 janv-08 janv-09
Ability to trade on financial and physical energy markets
Gas, electricity, oil…
European, American and Asian markets
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Short term transactions on LNG
Portfolio Management
Spot and short term LNG markets: 16% of international LNG trade in 2006
Ability to seize LNG arbitrage opportunities
50 LNG cargoes re-routed in 2007 (36 TWh)
Natural gas market prices
Henry Hub
NBP
JCC
Asian LNG spot operation
USD/MMbtu
01-2003 07-2003 01-2004 07-2004 01-2005 07-2005 01-2006 07-2006 01-2007 07-2007 01-2008
Nota: Asian LNG spot operations as reported in specialized LNG Press
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Structured transaction, an example
Pipe gas /LNG swap with Gazprom, November 2005
Portfolio Management
Delivery Nov 2005
LNG Cove point
Montoir de Bretagne
Delivery Nov-Dec 2005
Pipe Gas
Waidhaus
Baumgarten
Third party
LNG
Gazprom
LNG
Gaz de France with MedLNG&Gas (JV with Sonatrach)
Pipe Gas
Gazprom
Nymex indexed price
Oil indexed price
Variable margin hedged with financial products
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Efficient organisation to generate maximum value
Portfolio Management
3-year position continuously updated by portfolio manager of Supply Division
Continuous process of data collection and update
Use of proprietary mathematical models and software for optimisation
Close dialogue between Portfolio Management and Negotiators
To identify market opportunities as early as possible
To flag up portfolio manager’s interest in proposing potential deals
Efficient and reactive operational teams
Quick implementation of new contracts / delivery points
Proximity between Gaselys and Supply & LNG Divisions adds value
On-going tracking of market opportunities
On-going advice on optimising value of flexibility across portfolio
Designing dynamic financial hedges
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaze de France
Portfolio Management
1 Introduction organisation, facts & figures
2 Fundamentals and trends in global natural gas market
3 Key competitive advantages
4 Business model
Portfolio Management
Risk Control
5 Outlook & strategic directions
Storage cycle impact
Financial business model
Jean-Claude Depail
Executive Vice-President
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaze de France
Best practice applied to global risk control
Risk Control
Dedicated risk control organisation
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaze de France
Best practice applied to global risk control
Risk Control
Global risk control policy is decided at corporate level by the Risk Control Division
Group-wide risk policy
Each entity responsible for managing its own risks
Common methodology
Annual risk-mapping process
Risk identification and description
Risk assessment: impact, probability, severity
On-going improvement process
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaze de France
Dedicated risk control organisation
Risk Control
Fully independent risk function, working closely on a day-to-day basis with operational teams
Value@risk calculation
EBITDA@risk simulation
Risk Control
Risk control supervised by a dedicated team of 30 experts in market, credit and operational risks
Monthly risk meeting
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
1 Introduction organisation, facts & figures
2 Fundamentals and trends in global natural gas market
3 Key competitive advantages
4 Business model
Portfolio Management
Risk Control
5 Outlook & strategic directions
Storage cycle impact
Financial business model
Jean-Claude Depail
Executive Vice-President
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Storage cycle impact on financial results
Case study
Storage cycle impact
Gas is stored to match supply and demand, to guarantee supply continuity to customers under extreme weather conditions or in case of disruptions
Working Gas is accounted for in inventory. Its value is average acquisition cost (import price), plus regasification cost (WACOG)
At the end of the injection period, the value of stored gas is calculated on the average acquisition cost (StWACOG)
Outflows are valued on the basis of StWACOG, whereas their economic value on end-users market is the monthly WACOG of the withdrawal period
Hence a “Storage Withdrawal Effect” on the P&L:
S(WACOGn - StWACOG) x (withdrawn volume)n
withdrawal months n
Market value of withdrawn gas
Average acquisition cost of stored gas
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaze de France
Storage cycle impact on financial results
Case study
Storage cycle impact
Steep increase in oil prices over 2004-2006 period
As oil prices fluctuate, injection/withdrawal cycles cause important spread between StWACOG and monthly WACOG (especially during Winter 05/06)
Heavy withdrawal in Winter 05/06 had significant positive impact on EBITDA. Spread decreased with Summer injection in 06
j-04 m-04 m-04 j-04 s-04 n-04 j-05 m-05 m-05 j-05 s-05 n-05 j-06 m-06 m-06 j-06 s-06 n-06
- Brent $ - WACOG EUR/MWh
m-04 m-04 j-04 s-04 n-04 j-05 m-05 m-05 j-05 s-05 n-05 j-06 m-06 m-06 j-06 s-06 n-06
- WACOG - StWACOG - Storage level
Injection in storage Withdrawal in storage
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaze de France
1 Introduction organisation, facts & figures
2 Fundamentals and trends in global natural gas market
3 Key competitive advantages
4 Business model
Portfolio Management
Risk Control
5 Outlook & strategic directions
Storage cycle impact
Financial business model
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaze de France
Global Gas and LNG business model
Consistent Positive returns
Financial business model
Ability to operate under unfavourable market conditions
Proven and profitable business model
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaze de France
Global Gas and LNG business model
Financial business model
Disclaimer : for illustration purpose only. there is no “typical” breakdown of the EBITDA between the activities : it depends on the weather and market conditions
Revenues
Equity oil & gas sales
Structured deals
LNG mid-term deals and shipping
Non-regulated sales
Regulated tariffs sales
Costs
Production costs
Infrastructure costs
Forecast supply costs*
Sales margin at time of signature (hedged)
E&P financial segment
Storage cycles impact
Trading
Geographical spread arbitrage (incl. LNG)
Time spread arbitrage
Portfolio optimisation
* not including the cost of gas withdrawn
At time of signature
At time of off-take
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Ability to operate under unfavourable market conditions
Financial business model
Long-term security of supply
Balance between domestic markets of producing countries and exports
Global presence
Development of own production (E&P)
Long-term relations with diversified suppliers
LNG to source more remote resources
Short-term security of supply
Unexpected supply reduction
Diversification and flexibility of supply portfolio
Diversification of delivery points
Capacity portfolio
Long-term relations with diversified suppliers
Ability to buy and import more LNG
Weather
Extreme weather conditions in France
Access to markets
Flexibility of supply contracts
Interruptible Key Account sales contracts
Storage capacity
LNG’s geographic flexibility
Energy prices
Competitive distortion of oil-indexed prices
Price review clauses in supply contracts
Markets access to Europe, North America, and Asia
Close relations and added-value services for Key Accounts
LNG’s geographic flexibility
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Proven and profitable business model
Financial performance in radically different environments
Financial business model
2006 Market Environment 2007 Market Environment
Supply
Pressure on supply chain early 2006, progressively decreasing
Tension on delivery of Russian gas (Jan. 06)
Gas markets rather “long”
Strong LNG demand
Weather
Extreme weather conditions
Very cold weather Q1
Very warm weather Q4
Exceptionally warm weather
Prices
High market prices in Europe early 2006
Low market prices in Europe late 2006
Low gas market prices in Europe
High market prices in Asia
Increasing oil prices
Naturally hedged positions play their role
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Consistent positive returns
Financial business model
Average EBITDA 2006-2007 = 955 M€
Solid track record on risk management
Low capital intensive activity
Average CAPEX 2006-2007 = 137 M€
Purchase & Sales EBITDA
(excl. Retail sales, Electricity and Services)
In million Euros
955
2006
956
2007
Purchase & Sales CAPEX
(excl. Retail sales, Electricity and Services)
In million Euros
147
2006
127
2007
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
5 Outlook & strategic directions
Jean-Marie Dauger
Chief Operating Officer
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Wrap up
A global player with key competitive advantages in changing gas market
A top tier player, integrated all along gas chain
Strong competitive advantage in supplies
Expanding global leadership in LNG
Robust base of key account customers
Strong expertise in price engineering
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Strategic directions
Sustaining profitable development
Achieve strong development for natural gas and oil reserves
Continue to adapt our competitive supply portfolio to fast-changing market conditions
Expand LNG sourcing, leveraging on E&P activities
Further develop profitable Key Account business in Europe
Maintain commitment to European infrastructure projects
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Global Gas and LNG in new Group GDF SUEZ
Development of E&P business
Increase in reserves
Achievement subject to market conditions
Diversification and competitiveness of supply portfolio
Strengthening of long-term contracts portfolio
Increased geographic diversification
Global portfolio optimisation
Interests in new transit projects
Strengthening our LNG international leadership
Participation in integrated projects
(Production/Liquefaction) / Transport/ Regasification)
Expanded international arbitrage capacities
16 LNG tankers
5 tankers under construction
Isle of Grain Zeebrugge
Neptune LNG Everett
Montoir
Sabine Pass
Floride
Huelba
Fos
Italy
Carthagene
Petronet GNL (India) Dahej Kochi
Regasfication terminals
Reserved capacities
Projects of regasification terminals
Global Gas and LNG
# 1 gas buyer in Europe
685 Mboe in proven and probable reserves at the end of 2006
World leader in LNG
1,040 TWh in natural gas contracted in 2006
Diversified, global natural gas resources
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Conclusion
European leader on mid-stream and down-stream gas market
Strong competitive advantages in Supply, LNG, Key Accounts, Trading and Portfolio Management
Capitalising on over 40 years’ experience
Long-term relationships with producers and customers
Highly qualified staff with strong technical expertise
Diversified and flexible supply & capacity portfolio
Proven low capital-intensive business model
Delivering high profitability
Managing risk and volatility
Merger with Suez will boost size and open new opportunities
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Purchase & Sale of Natural Gas
A global player with key competitive advantages in changing energy markets
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Appendices
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Investor Day - Presentation scope
Focus on Core Business of Purchase & Sale
Excludes sales of natural gas to customers under regulated tariffs
= 250 TWh of sales out of 609 TWh
retail customers + part of business customers in France
= € 10 billion of Revenues
1/2 of total segment revenues
= 50% of the tariff
is made of Natural gas procurement costs
Tariff design defined in a Public Service Contract
Regulated tariffs - Trend in cumulative lost revenues
In million euros
1,010
926
500
130
NovJanuary 2004 2005
January 2006
January 2007
January 2008
Also out of scope: Electricity, Services dedicated to small customers
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Sales breakdown in France and Europe in the Energy Purchase & Sales segment
Natural gas sales (TWh)
Customers 2007 2006 Change %
Residential 125 133 -6%
Business 164 179 -8%
Key industrial and corporate customers 87 100 -13%
Other customers 26 28 -7%
Total France 402 440 -9%
Industrial customers - International 116 113 +3%
Other customers 13 11 +18%
Total Europe 128 124 +3%
Sales in short-term markets 79 72 +7%
Total Energy Purchase & Sales segment 609 636 -4%
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Natural gas share in world’s energy mix
Natural gas use developed quite recently, in competition with already mature other forms of energy
Energy consumption by type of energy source
Mtoe
12000
10000
8000
6000
4000
2000
0
1965 1970 1975 1980 1985 1990 1995 2000 2005
Oil Coal Gas Hydro Nuclear
(source: BP Statistical Review 2007)
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gas de France
Supply & Demand picture
World Demand 2007: 2850 Bcm
7,982 770 754 North America
294 502 6,300 Europe
779 610 57,170 CIS
6,910 145 131 South & Central America
181 76 14,540 Africa
335 289 73,880 Middle-East
377 439 16,300 Asia-Pacific
Consumption
Production
Proven Reserves as of January 1st, 2007 (not on same scale)
Gas proven reserves (2006)
29% 26% 8% 4% 3% 14% 16%
Gas production (2006)
61% 21% 4% 2% 2% 3% 7%
Russia
Iran
Qatar
Saudi Arabia
UAE
Other MENA
Other non-MENA
Source: BP Statistical Review 2007, Cedigaz
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gas de France
Huge investments needed to secure supplies
Orders of magnitude
Shtokman project (E&P)
$ 20 billion
Annual production: 22.5 Bcm of gas, 205,000 t of condensates
Nabucco project
At least $ 5 billion
Capacity: 31 Bcm/year
Snohvit LNG project
Over $ 10 billion
Capacity 6 Bcm/year
Nord Stream project (on shore + offshore)
$ 12 billion
Capacity 27.5 Bcm/year
Forthcoming 2005-2030 worldwide investments: $ 3,900 billion 56% in upstream - (according to IEA)
Long-term visibility on revenues required to secure return on investment
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Gaz de France shipping fleet
Owner/Charterer
100% GAZ DE FRANCE
Tellier - 40,000 cm
Gaz de France energY
74,500 cm
Provalys
154,500 cm
50% LDA
Edouard LD - 129,300 cm
60% NYK
Gaselys - 154,500 cm
Charterer
LNG Shipping (ENI)
LNG Lerici
65,300 cm
SONATRACH
Ramdane Abane
126,000 cm
MISC
Tenaga satu
130,000 cm
Maran Gas
Maran Gas Asclepius
145,800 cm
Gas Natural
SCF Polar
71,500 cm
Maran Gas
Maran Gas Coronis
145,800 cm
N Y K
Grace Cosmos
147,500 cm
Knutsen OAS
Iberica Knutsen
138,100 cm
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Typical LNG costs
Liquefaction (8 Bcm/y ~ 6,4 mtpa): 70 % of total LNG chain costs
$ 3 to 5 billion => 2 à 3,5 $/MMbtu
Transportation (8 Bcm/y)
145,000 cm LNG tanker: $ 220 million
Idku - Fos (2,000 miles): 3,5 tankers => 0,45 $/MMbtu
Algeria - Québec (4,000 miles): 6 tankers => 0,75 $/MMbtu
Regasification (8 Bcm/y)
$ 600 to 800 million => 0,5 $/MMbtu
Important costs increase since 4 years
Liquefaction costs: x 2 to x 3
Shipping: + 30 %
Regasification: + 40 %
Conversion factor: 1 € = 1,35 $ , 1 $/MBTU = 2,€/MWh
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
New projects: Rabaska terminal in Canada
Eastern Canada needs to diversify its supply (production in Western Canada is declining)
GazMetro life in blue Gaz de France ENBRIDGE
A partnership between Gaz de France, Gaz Métro and Enbridge is developing an LNG terminal project (5 BCM/y) near Quebec City
Terminal is fully authorized
The two Canadian partners are also ready to buy LNG downstream of the terminal under long-term commitments
A FOB netback better than the Gulf of Mexico’s
Closer to supply from Nigeria by 900 nm, from Gibraltar by 1600 nm,
Prices higher than NYMEX’s
Baie-Cameau
Saguenay (Chicountimi)
Rimouski
River du-Loup
Gatineall
Trois-Rivieres
QUEBEC
RABASKA
MONTREAL
Illegible
Illegible
Sherbrooke
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
New projects: India and Italy
Petronet LNG, in which Gaz de France holds a 10% stake and has brought technical expertise,
is doubling Dahej existing terminal (completion due to be late 2008)
plans to build a second terminal in Kochi (Kerala)
Regasification project in Italy
Offshore North Adriatic
Floating terminal
Annual regasification capacity of 5 BCM(n)/y, expandable to 10 BCM(n)/y
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008
Gaz de France
Other projects under Investigations
Looking at opportunities to invest in other European receiving terminals and upstream projects as a partner and as a project manager
Evaluating and participating in R&D developments that can help the acceptability of LNG facilities or improve economics
Safety issues, Cryogenic flexible hoses,…
Assessing offshore LNG facilities
Floating Storage and Regasification Unit (FSRU)
Floating Production Storage and Offloading (FPSO) to produce LNG from stranded gas fields
FPSO
Injection lines
Existing Well Centers
Tanker-Offloading Bouy
Drilling Platform
Gaz de France Investor Day Purchase & Sale of Natural Gas April 16, 2008