APA GROUP — Investor Presentation 2014

Sep 17, 2014

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The changing face of gas transmission services

Rob Wheals, Group Executive Transmission Eastern Australia's Energy Markets Outlook 2014, Sydney 18 September 2014

About APA Group

APA is Australia’s largest gas infrastructure business

APA is an integrated operating business with direct management and operational control over its assets and investments

Core business areas

� Gas transmission pipelines and storage

• Owning and operating two thirds of Australia’s onshore pipelines

• Interconnected pipeline networks

• Transporting approximately half the gas used domestically

� Gas distribution networks

• Operating approximately a third of the nation’s gas distribution networks

APA (September 2014)

Market A$6.4 billion capitalisation S&P/ASX 50 MSCI All World Index; FTSE All World Index Assets Over $12 billion owned/ Gas transmission operated 14,100 km transmission pipelines Underground and LNG gas storage Gas distribution

27,100 km gas network pipelines 1.3 million gas consumers

Other energy infrastructure 430 MWpower generation[(1)] 239 km HV electricity transmission Gas processing plants

� Other related energy infrastructure

• APA has developed and acquired complementary energy infrastructure, including gas and wind electricity generation, gas processing and electricity transmission

Employees More than 1,600 Operator Operator of APA’s assets and investments

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APA Group, September 2014

APA – Australia’s largest gas pipeline owner

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under development
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APA Group, September 2014

APA in eastern Australia

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• 7,000 km across 5 states and territories

• Configuration:

• 5 interconnected APA Pipelines;

• 98 Delivery Points;

• 30 Receipt Points.

� Bi-directional flow:

• Vic NSW interconnect - operational

• SWQP, BWP - commissioning

• MSP, RBP - under construction

• Configuring pipelines to operate as single network system

APA Group, September 2014

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Eastern Australia gas market – supply challenges

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• More than tripling of east coast demand due to LNG exports

• Supply sufficient for east coast demand for ~20 years

• BUT does not allow for any increase in demand, or any decline in reserves, or any demand beyond 20 years

Source: AEMO Gas Statement of Opportunities Update, May 2014

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Source: Queensland Department of Natural Resources and Mines, Coal Seam Gas Reserves, update 1 July 2014

Surat-Bowen CSG reserves

• = 82.4% of East Coast 2P reserves

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APA Group, September 2014

Gas market - changing dynamics

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• Step change in gas demand

• Gas price linkage to global markets

• Diversified supply portfolios

• Changes in upstream contracting

• Changing outlook for gas-fired power generation

• LNG ramp-up & supply interruption

• Gas supply & demand hubs

• Shorter term arrangements

• Dynamic outlook

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APA Group, September 2014

Changing gas market – customer requirements

From few options …

• Portfolio optimisation

• Flexibility of moving gas from multiple supply sources to multiple markets

• New enhanced services e.g. load factor

• management

… to multiple options!

• Storage e.g. for peaking & security of supply

• Reduced complexity

• Bundled solutions, greater optionality

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APA Group, September 2014

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Essential gas market characteristics
Innovation
Transparency
Competition
Essential
Flexibility
characteristics
Investment
These factors will
drive depth and
liquidity in the market
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APA Group, September 2014

Current APA activities and services

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Innovation
Transparency � Grid services –
multi receipt/
� Capacity trading
delivery points
website
� Storage services
� Contract terms
available on APA’s
website
Competition
� Interconnection
� basin on basin
Essential competition
Flexibility
characteristics
� Flexible transportation
and storage services
� Seamless multi-pipeline
services
� Capacity trading and Investment
�
In Pipe Trade services Significant capacity
� Future hub services expansion underway
� NT Link feasibility
study
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APA Group, September 2014

Transparency – information availability initiatives

• Currently published to Gas Market Bulletin Board

• Pipeline capacity

• Nominations (3-day outlook moving to 7)

• Actual pipeline flows

• Proposed[*] additional pipeline information availability:

• Available firm (spare) capacity

• List of shippers with contracts

• Information on capacity trades

• Aggregated receipt allocations

• Early warning notices on Line-pack adequacy & any pipeline issues

• Detailed pipeline schematics

  • APA’s submission on information provision and publication

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APA Group, September 2014

Flexibility - market based products & services

• Capacity trading service

• Facilitates the secondary trading of firm transportation rights on APA’s systems

• Reduced administrative burden and risk for seller

• Increased confidentiality and options for buyer

• Capacity Trading website:

  • http://capacitytrading.apa.com.au

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• In pipe trade service

• Facilitates the transfer of gas commodity after it has been receipted into pipeline

• Voluntary service

• Increases options for Shippers to sell gas

• Enhances liquidity at the Wallumbilla Gas Supply Hub

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APA Group, September 2014

Investment - Eastern Australia growth capital projects

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APA Group, September 2014

Innovation - responding to customer needs

• Customer solution - integrated suite of services

• Storage

• Bi-directional transportation services

• Mix of ‘firm’ and ‘as available’ services

• Across multiple pipelines

• Multiple receipt and delivery points

• Delivery and receipt points at STTM Hub

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Gas Demand
basin centre
STTM
Storage Hub
Gas basin
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APA Group, September 2014

Possible future market design?

� Gas commodity market

Voluntary gas supply hubs (GSH’s)

• New Victorian GSH, potentially also Moomba

• Consolidate 3 nodes at Wallumbilla

• Localised demand balancing markets

� Pipeline capacity market

Contract carriage model – supports firm capacity rights and efficient investment

• Major expansions underpinned by long term primary contracts

• Mix of long term and short term primary capacity contracts for available capacity

• Secondary capacity trading providing efficient utilisation

• Improved transparency around utilisation

• Modified Victorian market (market carriage struggles to deliver investment, competition and innovation characteristics)

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APA Group, September 2014

Possible future market design?

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Brisbane
balancing
market
Wallumbilla
Moomba supply hub
reference hub
Sydney
Adelaide balancing
market
balancing
market
Wollert?
supply hub
Melbourne
balancing
market
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APA Group, September 2014

Conclusion

• Dynamic Australian gas market

• Significant drivers of future change & growth

• Existing infrastructure in place to deliver gas to all major markets

• Further capacity expansion in line with customer demand

• APA is responding to market changes with …

• innovative services and

greater information transparency

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APA Group, September 2014

Disclaimer

This presentation has been prepared by Australian Pipeline Limited (ACN 091 344 704) the responsible entity of the Australian Pipeline Trust (ARSN 091 678 778) and APT Investment Trust (ARSN 115 585 441) (APA Group).

Summary information: This presentation contains summary information about APA Group and its activities current as at the date of this presentation. The information in this presentation is of a general background nature and does not purport to be complete. It should be read in conjunction with the APA Group’s other periodic and continuous disclosure announcements which are available at www.apa.com.au.

Not financial product advice: Please note that Australian Pipeline Limited is not licensed to provide financial product advice in relation to securities in the APA Group. This presentation is for information purposes only and is not financial product or investment advice or a recommendation to acquire APA Group securities and has been prepared without taking into account the objectives, financial situation or needs of individuals. Before making an investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and consult an investment adviser if necessary.

Past performance: Past performance information given in this presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance.

Future performance: This presentation contains certain “forward-looking statements” such as indications of, and guidance on, future earnings and financial position and performance. Forward-looking statements, opinions and estimates provided in this Presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions.

This presentation contains such statements that are subject to risk factors associated with the industries in which APA Group operates which may materially impact on future performance. Investors should form their own views as to these matters and any assumptions on which any forward-looking statements are based. APA Group assumes no obligation to update or revise such information to reflect any change in expectations or assumptions.

Investment risk: An investment in securities in APA Group is subject to investment and other known and unknown risks, some of which are beyond the control of APA Group. APA Group does not guarantee any particular rate of return or the performance of APA Group.

Not an offer: This presentation does not constitute an offer, invitation or recommendation to subscribe for or purchase any security.

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APA Group, September 2014

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Delivering Australia’s Energy

For further information visit APA’s website www.apa.com.au