This presentation, developed in conjunction with our consultants Pace

Global, characterizes the growing opportunity associated with utilizing LNG

in the global mining sector.
Pace has both extensive history and deep ongoing involvement in the
mining industry.

1. As Gazprom employees we are all familiar with the well-established use

of natural gas as a motor fuel.
2. Here (on the left) we see a rather interesting image depicting early
natural gas vehicle technology. The photo on the right shows Gazprom
Germanias Senior Managing Director, Vyacheslav Krupenkov, fueling a
current model Volkswagen at a Gazprom Germania fueling station of
contemporary design that is located in Berlin.

1. As suppliers of natural gas, perhaps our greatest interest lies in the

consumption of natural gas by various types of motor vehicles.
2. This very useful chart illustrates the significant variation in fuel
consumption across various classes of vehicles, from light duty cars and
vans to medium duty delivery and service vehicles to heavy duty trucks
and buses.
3. Note the significant increase in per vehicle fuel consumption (in terms of
millions of Btu, cubic meters equivalent, and estimated revenue
assuming this gas is sold into the market at 325 euro per thousand cubic
meters.
4. The reason for our current focus on the heavy duty sector (largely buses
and over the highway freight hauling trucks) becomes quite obvious as
you note how nicely the per vehicle economics improve as we move from
left to right on this slide.

1. Pace has been working with its mining clients as well as mining
equipment producers to advance and deliver super heavy duty natural
gas engine technology to the mining industry. The majority of these
images were taken by Pace consultants during the course of mining
engagements.
2. What we are looking at is an ore-carrying haul truck. Loaded with 250300 tones of ore, it conveys the load to a processing facility some 5
kilometers distant, returning empty to the loading point and repeating the
cycle effectively around the clock. The engine produces approximately
2500 horsepower.
3. When we convert observed rates of diesel fuel consumption to natural
gas, it provides the following points
a) Such a truck could consume as much as 300,000 euro annually in
natural gas;
b) The market is quite large, even considering only the larger trucks
operated by the worlds 10 largest mining entities.

1. This slide details our calculations and, also, touches on additional issues
that are important to the end user.
2. These include
A. The reduction of operating costs;
B. Minimizing theft of fuel;
C. The need for consistent and reliable performance; hence, factory
developed and supported haul trucks. Conversions and retrofits to
natural gas are generally frowned upon.

1. This slide characterizes a real world example of one of Paces clients.

2. Many of these mines have dozens of haul trucks operating in a remote,
yet relatively small and finite geographic area. Effectively, this comprises
a captive fleet.
3. The consumption of such an operation can be significant.
4. You may also note that fueling is centralized and performed by
designated, trained personnel. This approach is highly compatible with
LNG fueling.

You may ask me a question why this silent revolution is taking place only
now. What prevented natural gas from displacing oil products as a motor
fuel in the past? There are three main reasons for this.
The first major problem with using gas as transport fuel was its lower energy
density. Even when compressed to around 200 atmospheres, natural gas
still has only 25% of the energy content that diesel fuel has. Add to this the
greater weight of the pressurized tanks needed to contain the compressed
natural gas (or CNG), and the advantage of conventional liquid fuels
becomes clear. In the past, the poor energy density of CNG limited the use
of natural gas in the transportation sector to light duty vehicles and public
intercity transportation with a short haul.
The solution to the density problem came from liquefied natural gas or LNG.
LNG has an energy density more than double that of CNG. Compared with
diesel, the lower density of LNG (around 0.4 g/cm3 against 0.8 g/cm3) is
partly compensated for by a significantly higher calorific value on a weightfor-weight basis (54 MJ/kg for LNG against 46 MJ/kg for diesel fuel),
resulting in an energy density roughly 60% of that of diesel.
With the possible exception of long-haul flights, LNG has made nearly all
transportation industry sectors viable for natural gas penetration from longhaul trucking to maritime shipping to 300-ton heavy duty trucks in the mining
industry.
The huge expansion of the global LNG manufacturing and distribution
system over the past decade has made LNG accessible to motor-fuels
markets around the world, although the need for dedicated infrastructure for
small-scale LNG still exists and creates an impediment for the rapid growth
of LNG-fueled truck and vessel fleets.
7

1. We will conclude with the following take-aways.

2. LNG is poised to become a meaningful fuel for the mining industry.

3. Mining offers a stable load profile, effectively comprising a base load .

4. Sales to the mining industry could be quite large in volumes.
5. When evaluating mining clients, we should consider all site loads
(including the ancillary loads identified in Item 4).
6. We can supply natural gas fuels to the domestic as well as export
markets.
7. Gazprom should consider strategic partners to move this initiative
forward.
8. This prospective market may help to justify investments in Gazproms
LNG resources.

Well be pleased to work with Pace to answer any follow up questions that
you have coming out of this seminar.
Thank you very much!