Financing LNG Projects and Infrastructure member of MUFG, a global financial group The Bank of Tokyo-Mitsubishi UFJ, Ltd. Financing LNG Projects and Infrastructure SEPTEMBER 2016 2

A member of MUFG, a global financial group

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Financing LNG Projects and

Infrastructure

SEPTEMBER 2016

2

Bank of Tokyo-Mitsubishi UFJ

BTMU in Indonesia

• BTMU is the only Japanese bank operating a branch in Indonesia

• BTMU is one of the largest foreign bank operating in Indonesia by loans outstanding

• In 1957 the former Bank of Tokyo opened a representative office in Jakarta that began full-service operations in 1968

Mitsubishi UFJ Financial Group (MUFG) is one of the world’s leading financial groups. MUFG aimsto “be the world’s most trusted financial group”

Bank of Tokyo-Mitsubishi UFJ (BTMU) is the commercial bank unit of MUFG.

BTMU is Japan's largest and one of the world's largest commercial banks, with offices throughoutJapan and in 40 other countries, providing professional financial solutions to our valuedcustomers.

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Investment Banking Division for the Americas, New York & Los Angeles

Investment Banking Division for Europe, Middle

East and Africa, London Structured Finance Division,Financial Solutions Division,

Syndication & Product Planning Division, Tokyo

Australian Structured Finance Office,

Sydney & Melbourne

Asian Investment Banking Division, Singapore &

Hong Kong

• Asian Investment Banking Division (AIBD) is headquartered in Singapore and Hong Kong

• Our Investment Banking Divisions provide professional investment banking solutions to our clients across the globe.

BTMU Investment Banking Division Global Network

BTMU - Asian Investment Banking Division

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BTMU as Project Finance Market Leader

Global Initial MLA League Table (2015 Full Year)

Rank Mandated lead arrangers US $ MM Share Deals

1 MUFG 16,127 5.8 143

2 SMBC 12,832 4.6 108

3 Bank of Taiwan 12,053 4.3 1

4 State Bank of India 10,855 3.9 30

5 Mizuho 8,730 3.1 79

6 Credit Agricole 8,286 3.0 90

7 ING 7,852 2.8 89

8 Santander 6,879 2.5 91

9 BNP Paribas 6,683 2.4 76

10 Societe Generale 6,568 2.4 70

Asia Pacific Initial MLA League Table (2015 Full Year)Rank Mandated lead arrangers US $ MM Share Deals

1 Bank of Taiwan 12,053 15.8 1

2 State Bank of India 10,855 14.2 30

3 MUFG 5,386 7.1 38

4 KDB 4,422 5.8 12

5 SMBC 3,667 4.8 25

6 Mizuho 2,696 3.5 23

7 Commonwealth Bankof Australia 2,630 3.5 22

8 Westpac 2,540 3.3 23

9 ANZ 2,513 3.3 21

10 National Australia Bank 1,995 2.6 26

(Source) Project Finance International (PFI)

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Our Expertise Proven by Industry Awards

(Source) Project Finance International (PFI), Global Finance, Euromoney, IJGlobal

Asia-Pacific’s Deal of the Year

Ichthys LNG Pty Ltd.AustraliaUSD16bn

Bookrunner and Mandated Lead Arranger

Asia-Pacific’s Oil & Gas Deal of the Year

Australia Pacific LNG Australia

USD8.5Billion

Mandated Lead Arranger

Americas’ Bond Deal of the Year

FPSO Cidade de AnchietaBrazil

USD 500m

Latin America Upstream Oil & Gas Deal of the Year

Rating Adviser andPlacement Agent

Nghi Son RefineryVietnam

USD 5,000m

Asia-Pacific Petrochemicals Deal of the Year

Financial Advisor, MLA, DD/Modelling Bank,

Offshore Account Bank, JBIC agent

Asia Pacific Oil & Gas

Deal of the Year

Donggi-Senoro LNGIndonesia

USD 1,527m

ECA Coordinator, Mandated Lead Arranger,

Security Agent, Account Bank

2014

Asia-Pacific Bank of the Year

2013

Global Bank of the Year

2012

Global Arranger

2012

Latin America Arranger

2012

North America Financial Adviser

2015

Global Bank of the Year

Global Project Finance Bank of The Year 2015 and 2013 / Asia-Pacific Project Finance Bank of The Year 2015

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BTMU Indonesia Track Record

Banten Power

Mandated Lead Arranger

2013

Indonesia

USD 998 million

PT. Smelting

Mandated Lead ArrangerOnshore Account Bank

2011

Indonesia

USD 300 million

Paiton 3

Onshore Account Bank, Onshore Security Agent

2010

Indonesia

USD 1,215 million

Cirebon Power

Mandated Lead Arranger

2010

Indonesia

USD 850 million

Tanjung Jati B

Mandated Lead Arranger

2008

Indonesia

USD 2,200 million

Central Java

Mandated Lead Arranger

2016

Indonesia

USD 4,000 million

Lampung FSRU

AdvisorMandated Lead Arranger

2013

Indonesia

USD400 million

Sarulla Geothermal

Onshore Account Bank

2014

Indonesia

USD 1,600 million

Balongan Refinery Expansion

Mandated Lead Arranger

2008

Indonesia

USD 225 million

Donggi-Senoro LNG

Mandated Lead Arranger

2014

Indonesia

USD 2,866 million

Tangguh LNG Train 3

Mandated Lead Arranger

2016

Indonesia

USD 3,750 million

West Java FSRU

Mandated Lead Arranger

2013

Indonesia

USD 252 million

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Rationale for LNG

• West Java and Central/South Sumatra represents the largest natural gas demand centers,however local supply is unable to match demand.

(Source) Wood Mackenzie

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Rationale for LNG

• Natural gas demand in Indonesia is projected to grow at a CAGR of 4.1% between 2017 and2025 and exceed the domestic production.

• LNG infrastructure is needed for import of LNG

(Source) Investment Opportunity in East Java ProvinceSource: Business Monitor International

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The entire natural gas/LNG value chain must be commercially viable and bankable.

Key Issue : Risks along the LNG Value Chain

Upstream Gas Production

Gas Liquefaction

LNG Transportation

LNG Regasification

Gas Pipeline Distribution

End User / Power Plant

• LNG Infrastructure is a means to bring natural gas to End Users such as Power Plants.

• LNG infrastructure includes LNG Transportation and LNG Regasification.

• LNG infrastructure is developed and operated within the natural gas value chain.

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The entire natural gas/LNG value chain must be commercially viable and bankable.

Key Issue : Risks Along the LNG Value Chain

Upstream Gas Production

Gas Liquefaction

LNG Transportation

LNG Regasification

Gas Pipeline Distribution

End User / Power Plant

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Most of the capital cost of the LNG Infrastructure is USD denominated

Key Issue : Currency Mismatch

• Bank Indonesia Regulation No. 17 (No. 17/3/PBI/2015) requires the mandatory use of Rupiah for transactions conducted in Indonesia, whereas most of the capital cost is incurred in USD.

Source: Yahoo! Finance

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Most of the capital cost of the LNG Infrastructure is USD denominated

Key Issue : Offshore Borrowing Regulations

• Bank Indonesia Regulation No. 16 (PBI no 16/21/PBI/2014) and Circular Letter No. 16/24/DEKM implements prudent principles in the management of offshore borrowings by local companies, requiring

• Hedging of at least 20% of open foreign currency exposures that fall due within the next 3 to 6 months

• Maintenance of a minimum 50% Liquidity Ratio, where current assets are equal to 50% of current liabilities due

• External credit ratings from a rating agency recognised by Bank Indonesia, of at least “BB-” (applicable from 1 Jan 2016).

• The hedging and external credit ratings requirements would create additional costs to LNG Infrastructure projects.

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Case Study : Guangdong LNG Terminal 2004

• In October 1998, a Guangdong LNG Terminal project was given the initial go-ahead by the Chinese government. The project was comprised of a 3.3m tpa LNG import terminal and a 213km pipeline in Chentoujiao, Shenzhen, Guangdong Province.

• Estimated project cost was USD600m.

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Power Plant(Offtake 3)Power Plant

(Offtake 3)Power Plant(Offtake 3)Power Plants

Case Study : Guangdong LNG Terminal 2004

Guangdong DapengLNG Company Ltd

CNOOCGuangdong

Province consortium

TowngasHK ElectricBritish Petroleum

New Built LNG Vessel SPV

STTS Group(LNG Terminal EPC

Contractor)ShipyardChina Petroleum

Pipeline Engineering(Pipeline EPC Contractor)

North West Shelf Venture

(LNG Supply)

Power Plant(Offtake 1)Power Plant

(Offtake 2)Power Plants(Under Construction)

Time Charter Agreement

Pipeline EPCTerminalEPC

Ship BuildingContract

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Case Study : Guangdong LNG Terminal 2004

Financing Issues

• Regulatory Issues

• Demand Risk

• Construction Risk

• Project-on-Project Risk

• Offtaker Credit Risk

• Cashflow Risk

The first non-recourse deal in China financed purely by Chinese banks for more than RMB 5 billion was signed on April 30, 2004 .

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Neither this presentation material nor any other communication prepared by BTMU is or should be construed as investment advice, a recommendation to enter into a particular transaction or pursue a particular strategy, or any statement as to the likelihood that a particular transaction or strategy will be effective in the light of your business objectives or operations. Any decision to enter into a transaction will be yours alone, not based on nor in reliance on any information prepared or provided by BTMU. BTMU hereby disclaims any responsibility to you concerning the characterisation or identification of terms, conditions, and legal or financial or accounting or tax or other issues or risks that may arise in connection with any particular transaction or business strategy. You should obtain separate independent professional, legal, financial, tax or other advice, as appropriate.

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