PLL-MARC LNG SPA

Clause 9.3 Price Discussion

Meeting Aug 2, 2023

Agenda
1. Data analysis process

2. Contract benchmarking analysis

3. Seller’s proposal

4. Path forward & timeline

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Data Analysis Process
• EM sourced LNG contract information from independent LNG contract databases

• Utilized Facts Global Energy (FGE) full database as of July 2023; cross checked with Wood
Contract
Mackenzie database for accuracy Status: SPA Destination:
only Asia Pacific only

• Key contract terms for benchmarking analysis:

1. Term (Start / End)
2. Destination (Country / region)
3. Delivery Basis (DES, FOB) Contract
Contract
delivering within
4. Contract Price (Price index, % slope, Constants) Likelihood: Firm
Applicable
contracts only
Period

• Analyzed firm, binding LNG SPAs. HOA’s / tenders not converted into binding LNG SPAs are
out of scope

~200
• Large data set of contracts (~200 and 231MTA); validated data set and approach with contracts,
international price review experts 231MTA

• Approach consistent with industry price discussion best practices

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Recap: Applicable Period
Asia Pacific Active Contracts (#) delivering in Applicable Period Asia Pacific Volume
(MTA delivered during Applicable Period)
250
Cumulative No of Contracts

200
32, 14%
150

100

50

199, 86% Signed before

0
2021
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22
Signed 2021-
Signed Year 2022
Before 2021 After 2021

• Price Discussion (PD) applicable period for reference is from PD Notice to next PD opportunity, hence
Applicable Period is May 22 2023 to May 21 2028

• Majority of SPAs delivering volume in the Applicable Period were signed before 2021

• Only binding LNG SPAs with delivery obligations from 22 May 2023 to 21 May 2028 are in scope

Source: FGE 4
Contract Key Term 1 – Duration
Asia Pacific Active Contract Duration
%Vol (delivered during Applicable Period)
Up to 5 years 2%

5-10 years 3%

>=10 years 34%

>=20 years 61%

• PD to consider relevant comparable long-term contracts similar to our SPA

• Contracts with duration 10 years or more considered and account for 95% of volumes delivered

• Contracts are volume-weighted to accurately reflect the market view

Source: FGE
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Contract Key Term 2,3 – Destination and Delivery Basis
Asia Pacific Active Contracts Destination
%Vol (delivered during Applicable Period)
Rest of Asia 12% India 7%
Asia Pacific Active Contract Delivery Basis
%Vol (delivered during Applicable Period)
DES/FOB 3%

FOB 29%

DES 68%
JKTC 81%

• Contracts with delivery to Asia considered; Japan, Korea, Taiwan, China and Rest of Asia account for 93% of volumes delivered

• Contracts delivering on DES and FOB considered; FOB basis account for 29% of volumes delivered

• FOB volume represents a significant amount of the contracts pool

• All volume ultimately competes in the market and should be considered to accurately reflect the total LNG market view

Source: FGE 6
Contract Key Term 4 – Contract Price Indexation
Asia Pacific Active Contract Duration
%Vol (delivered during Applicable Period)

Other Gas Indices 4%

Hybrid 7%

Henry Hub 8%

Oil 81%

• Oil index contracts only considered; oil indexed contracts account for 81% of volumes and is by far the most prevalent pricing index used

• Non-oil indexed contracts account for 19% of volumes to be delivered

• HH, NBP and TTF indexed contracts have different risk allocation profiles vs. our SPA

• Other Gas Indices include JLC and JKM, mostly used for sport and short-term and is not materially evident in LT LNG SPAs

Source: FGE
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 Without Prejudice
Seller’s Proposal
22nd May 2023 Forwards
Price ICE Brent 5 year average $69.71
Price Reviewed Contracts
$/mmbtu
$13 New Contract delivering from '23 - '28
Comparable Contracts (incl. Gas Indexation)
Seller's Offer

~16-17% SPA Price

$12

$11 14.83%
14.29% Market data for Applicable
14.21% Period only
13.95%
$10
Price discussion data only

Benchmarking analysis
results
$9
2023 2024 2025 2026 2027 2028

• Aligning with industry practice, we have benchmarked our SPA for the Applicable Period (22 May 2023 – 21 May 2028) against a comprehensive
consideration of other long term LNG contracts. This is to allow for a consistent and transparent comparison and discussion on pricing.

• The contract benchmarking shows our SPA has observed a lower % slope versus other long term LNG contracts in the Applicable Period
• Seller’s Contract Price adjustment proposal is: 14.21% Brent
• Proposed adjustment is a direct result of objective benchmarking analysis
• Proposal results in lowest price adjustment
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Timeline & Path Forward
Timeline

• Follow-up from 3rd July 2023 meeting; discussion on the PD timeline particularly in reference to “period of 120 days”

• SPA requires Parties to meet and discuss contract price formula 120 days from first PD meeting (3rd July 2023)

Path Forward

• Next meeting target date

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Back-up

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Clause 9.3 Price Discussion
SPA text

9.3 Price Discussion

9.3.1 Subject to Clause 9.3.2, either Party may by Notice to the other request a meeting to discuss the Contract Price formula
contained in Clause 9.2 (“Price Discussion”).

9.3.2 A Price Discussion shall not be predicated on issues relating to the India market only and shall not be initiated before
January 1st, 2023 and the expiration of five (5) years from the immediately preceding Price Discussion request.

9.3.3 Upon receipt of such request, the Parties shall, within sixty (60) days thereof, meet and confer. If after a period of one
hundred and twenty (120) days, the Parties have not reached an agreement, then the prevailing Contract Price formula in
effect at that time shall continue to be applied, and neither Party shall have any claims against the other in relation thereto
nor shall any lack of agreement on the Contract Price formula be open to arbitration or expert resolution under Article 21.

9.3.4 Notwithstanding anything herein, and for the avoidance of doubt, it is agreed and acknowledged that the prevailing
Contract Price formula shall only be amended by an instrument in writing signed by each Party.

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