● Established in Aug 1983, pursuant to ‘Korea Gas Corporation Act’ ● Korean Government holds stakes of 54.56% - Korean Government(26.15%), KEPCO(20.47%) and Local Governments(7.93%) ● Listed on Korea Stock Exchange(KSE) in Dec 1999 Korean Gov. Commitment to KOGAS KOGAS’ Operational & Financial Excellence (As of April, 2018) KOGAS Act Strong Ties with the Government Critical Role of KOGAS in Korea Founded in August 1983, pursuant Direct and indirect Gov. ownership Korea’s only fully-integrated natural gas to the Korea Gas Corporation Act 54.56% provider holding monopolistic position Gov. participated in capital increase Mandates KOGAS the monopolistic Imports approximately 88% of Korea’s position in Korean LNG market (Nov. 2013) demand for LNG Reinstatement of the Cost Pass- Owns and operates nationwide pipeline Through System and guaranteed profit network and storage tanks by Gov. Secures resources through overseas oil & gas projects Domestic Business Overseas(E&P) Business Stable Profitability Growth Opportunity Supply of LNG Purchasing Construction & Exploration and Production(E&P) rd Natural Gas - World 3 Operation of LNG Mozambique, Iraq, Myanmar, etc. - City Gas and largest LNG buyer Storage Tanks생 and - Engines for Business Expansion & Growth Power Sector Nationwide산 Pipelines - Monopoly ● Importing 88% of Korea’s natural gas demands ● 15 Long-term(20 to 25 years) contracts in 10 countries, mixed with ST, MT, spot ● Various efforts to diversify supplier, contract duration, pricing mechanism Qatar (3) 러시Sakhalin(1)아 사할린(1) 4.92MM tons/yr 1.5MM tons/yr The United States(1) 2.1MM tons/yr 2.8MM tons/yr 2MM tons/yr Malaysia(2) Yemen(1) 2MM tons/yr 2MM tons/yr 2MM tons/yr LNG Import 브Brunei(1)루나이(1) (Unit: thousand tons) Oman(1) 1.0MM tons/yr 4MM tons/yr 인Indonesia(2)도네시아(3) 1MM tons/yr Portfolio(2) 0.7MM tons/yr 3.6MM tons/yr Australia(1)호주(4) 2 MM tons/yr 3.5MM tons/yr ● Currently operating 72 storage tanks in 4 LNG receiving terminals (storage capacity of 5.23mmton, 11.47mmkl) ● Nationwide pipeline network (4,790km) managed by 397 stations Existing Terminals (As of Dec ‘17) Samcheok Incheon Pyeongtaek Tongyeong Samcheok Total Incheon Start-up 1996 1986 2002 2014 – Pyeongtaek No. of Tanks 20 23 17 12 72 CAPEX Forecast* Tongyeong (in KRW bn) • Main pipeline - Additional 261km will be added reaching a total grid 5,051km (3,139 mile) by 2021 • Terminals - Incheon expansion(#21~23tanks) : Oct ’15 ~ Jul ’20 (0.2mmkl x 3) - Jeju : 2 tanks are under construction(0.045mmkl x 2, Feb. ‘17~Aug. 19) * Source : FY18 ~ 20 based on the mid-long term financial management plan approved by the government in Sep. 2017(total capex) ● 24 Projects in 13 countries (as of March, 2018) (3 Exploration, 9 Development/Production, 8 LNG Liquefaction/Receiving, 4 Downstream) ● Operating 2 Projects (Iraq Akkas, Mozambique Maputo Pipeline) Exploration (3) Development/Production(9) LNG Project (8) Downstream (4) Project Overview Performance Additional Well and More Production • 2010 : Startup of commercial operation • Production Volume : Total 6.5 billion barrels • Partner : ENI • 2017 OP : 152billion Korean won • Contract Type : TSC (Technical Service Contract) • 1Q 2018 OP : 22 billion Korean won 2017 In bn 1Q Difference Full KRW 2018(A) 1Q(B) (A-B, %) Year Revenue 80 108 485 -28(-25.9%) OP 22 31 152 -9(-29.0%) NI 18 29 139 -11(-37.9%) • Average production : 420kbbl/d (1Q 2017) → 430kbbl/d (1Q 2018) Project Overview Performance • Production Volume : Total 670 million barrels • Sep 2014 : Startup of commercial operation (more than 115,000bbl/d at least for 7 years (production : 15,000bbl/d) during 20 years of production period) • 2017 OP : 11.8 billion won • Partners : Gazprom, Petronas, TPAO • 1Q 2018 OP : 5 billion won • Contract Type : TSC(Technical Service Contract) (1Q 2018 Avg 78,000bbl/d) ※ Consistent increase in production will generate incremental operating profit 1Q 2017 Difference (In bn won) 2018 (A) (A-B) 1Q(B) Full Year Revenue 85.1 63.6 284.4 21.5(33.8%) OP 5.1 11.8 21.2 -6.7(-56.8%) NI 5.6 12.4 -75.3 -6.8(-54.8%) Project Overview Performance • Total of 23 exploration wells drilled • Nov 2013 : Startup of Commercial production • Development of gas field and construction of pipeline • 2017 OP : 46 billion won : Aug ’09 ~ Jul ’13 • 1Q 2018 OP : 17 billion won • Production period : Jul ’13 ~ ’38 2017 1Q Difference In bn won Full 2018(A) 1Q(B) (A-B,%) Scope of Business Stake Year Gas field Production, Marketing, Operation 8.5% (offshore gas field) Revenue 25 21 75 4(19.0%) Offshore Construction and Operation 8.5% 17 4(30.1%) pipeline (Approx.110km) OP 13 46 Onshore Construction and Operation 4.17% pipeline (Approx. 800km) NI 17 13 46 4(30.1%) • Gas Field & offshore pipeline : Posco Daewoo(51%), OVL(17%), MOGE(15%), GAIL(8.5%) • Onshore pipeline : CNPC(50.9%), Posco Daewoo%), MOGE(7.37%), OVL(8.35%), GAIL(4.17%) Project overview Performance Gas Field Browse Basin, 475km offshore of Broome, Western Australia • Made a Final Investment Decision in March 2012 Production Design Capacity 3.6MMton/year - Develop Prelude/Concerto gas into a floating LNG facility Condensate 1.3MMton/year • World’s first FLNG development project LPG 0.4MMton/year • Made an SPA regarding 360,000 tons Participants KOGAS 10%, Shell 67.5%(Operator), • Expect first commercial production from 3Q 2018 Inpex 17.5%, CPC 5% and generate an operating income from 2019 ✽ CAPEX status and forecasts (Unit : US$Million) FY ~2014 2015 2016 2017 2018(E) Total Amount 1,169 193 164 196 159 1,881 Project Overview Plan • Development of Surgil Gas Field, and Sales of Gas and • Oct 2015 : Construction of Chemical Plant Completed Chemical Products • • Products : HDPE* 0.38Mtpa, PP 0.08Mtpa, Feb 2016 : Startup of commercial operation Methane2.5Mtpa • Equity Method gains of W40bn in 2017 * HDPE(High Density Polyethylene), PP(poly propylene) • Equity Method gains of W14.8bn in 1Q 2018 • Reserves : Surgil gas field 97BCM(71MMton) “We expect to make annual average earnings • Partners : UNG 50%, Kor-Uz Gas Chemical Investment *50% * KOGAS 22.5%, Lotte Chemical 24.5%, GS E&R 3% of 50 billion won in this project until 2041” * Brent price assumption : $45/bbl with annual average increase of 1.9% * BCM (Billion Cubic Meter) : 1BCM=0.73MMton of LNG <Business Flow Chart> Project Overview Plan • Terms of contract : 2007 ~ 2053 • Plans to develop each field one by one for entering commercial • Partners : KOGAS 10%, Galp 10%, ENH 10% stage EEA 70% - (Coral FLNG) Made a final investment decision(FID) at June 2017 * EEA : Eni/Exxon Mobile 35.7% respectively, CNPC 28.57 - (Mamba LNG) Working on FID in 2019, plans to enter • Gas initially in Place : Approx. 85 Tcf commercial production in 2024 (expected) - (Mamba Project) Area 1 and 4 straddling project, Co-development between participants of two areas Coral field (C1) Mamba field (M2) Mamba structure (M1-1, M1-2, M1-3) Agulha structure (A1) Project Overview • Area : 12,523 km2 (southeastern offshore of Cyprus) • Terms of contract : 2013 ~ 2018 • Partners : KOGAS 20%, ENI 80% (operator) • Gas initially in Place : Approx. 2.77 Tcf • Major activities - May 2012 : Exploration and Production Sharing Contract - Jan 2014 : 2D(7,086 km2), 3D(4,744 km2 ) seismic aq. - Mar 2015 : 2 exploration wells drilled Plan • Amendment of contract to extend the terms of contract to Jan 2019 • 1 exploration well remaining for commitment in 2018 Project Overview Performance • Sep 24, 2015 : 1st cargo loaded Gas Field Arcadia, Fairview, Roma, and • Oct 27, 2015 : 1st cargo discharged at PyeongTaek Scotia Gas Field in the East Australia • May 27, 2016 : Train 2 production started Proven 5.4 Tcf (101 MMton) Reserves • 1Q 2018 OP : 14 billion won (19 cargos) Liquefaction Design Capacity 7.8MMton/year ✽1 cargo : about 66,000 tons Plant (3.9MMton/year x 2 Trains) u Technology of CBM development being optimized Participants KOGAS 15%, Santos 30%(Operator), Petronas 27.5%, Total 27.5% 2017 1Q Difference In bn won Full 2018(A) 1Q(B) (A-B) Year Revenue 110 95 436 15(15.8%) 25 OP 14 -11 -21 (convert into OP) NI -11 -28 -997* 17(60.7%) Project Overview • Area : 180 km2 (Horn River), 394 km2 (Westcut Bank) • Terms of contract : ’10~ Horn River basin • Partners : KOGAS 50%, EnCana 50% (operator) • Resources (2P+2C) : 871 Bcf (HR), 691 Bcf (WC) • Feb 2010 : Farm-in contract • 34 horizontal wells drilled and hydraulic fractured • Cumulative production : eq. 1.4MM ton of LNG (end 2017) Plan • Adjust development plan in line with Market situation and progress of Canada LNG project u Conduct R&D activities on enhancing productivity of shale gas Glaser et al. (2013) Various productivity in a shale gas play with area and formation 1 9 Engineering factors of hydraulic fracturing ↓ Optimization ↓ Productivity partly enhanced 2 0 Geological, geochemical, geomechanical factors ↓ Sweet spotting ↓ Productivity significantly enhanced 2 1 Procedure of sweet spotting on Shale Gas Forecast fracturing efficiency & sweet spot in shale gas reservoir Optimizatoin of drilling path in shale gas reservoir Forecast fracturing efficiency & sweet spot in shale gas reservoir .