SPANISH HUB DEVELOPMENT 17th IG meeting 2nd November 2011

BACKGROUND Background OTC natural gas trade in Spain has taken place since the beginning of the liberalisation process triggered by the new regulatory framework (1998 Hydrocarbons Law transposing Directive 98/30/EC). Gas exchanges take place in the transmission network, LNG plants and underground storages. In 2005 Enagás implemented the exchange platform MS-ATR, connected to Enagás’ logistic system SL-ATR. All transactions in the system are tracked by this platform. While the volume already reached in late 2010 a monthly churn rate value of 2.8, such exchanges are made without a public price. 20,000 40,000 60,000 80,000 100,000 ago-02 nov-02 feb-03 may-03 ago-03 nov-03 feb-04 may-04 ago-04 nov-04 feb-05 may-05 ago-05 nov-05 feb-06 may-06 ago-06 nov-06 feb-07 may-07 ago-07 nov-07 feb-08 may-08 ago-08 nov-08 feb-09 may-09 ago-09 nov-09 feb-10 may-10 ago-10 nov-10 feb-11 Demanda de gas Volumen intercambiado GWh/month UGS 0.5% LNG LNG Transmission Transmission 44.3% 44,3% 55.3% 55,3% Number of exchanges 2010 UGS Transmission 0.5% 6.9% LNG LNG 92.6% 92,6% Volume exchanged 2010

CONTEXT The project is being developed consistently with: The future vision of the European market operation integrated in the "Gas Target Model“, which requires as a basis for the appropriate functioning of energy markets the interaction between virtual exchange points “hubs", linked to balancing zones. The FG on Balancing adopted by ACER on 18 October. Changes foreseen to the Hydrocarbons Law in Spain to complete the transposition of Directive 2009/73/EC.

BASIS FOR THE DEVELOPMENT The following concepts are considered keys for the appropriate development and consolidation of the Spanish hub: Legal and technical requirements aligned and compatible with European trends through the development of a hub which facilitates transactions between trading centers, taking into account the three basic infrastructures: transmission system, LNG plants and underground storages. Services with a real added value for network users, so their input and implication is needed. A single project and integrated which, in addition to the promotion group, will be open to the participation of network users, consumers and other stakeholders, an aspect that will facilitate its acceptance by the market. Users will finance the design, organization and operation. Requires the development and progressive adaptation of the national regulatory framework in order to implement the European regulation. Open, even from the beginning, to the integration of REN to advance the creation of the Iberian gas market.

CORPORATE STRUCTURE INITIAL CORPORATE STRUCTURE Network users 33% CAPITAL SHARE Network users Market operators Others CAPITAL INCREASE 33% CAPITAL SHARE PROMOTION GROUP 33% CAPITAL SHARE

OBJECTIVE Objective This project constitutes a step forward in the creation of a Iberian Hub, considering as a priority the promotion of liquidity in short-term transactions as a as well as its flexibility and transparency, seeking a similar model to other European hubs. The initial services offered and the value provided would include: Services: Standardized contracts. Daily market for imbalance management. Storage services, gas loaning and nominations. Daily monitoring of guarantees and deposits. Added value: To attend a new flexible gas demand in order to facilitate the management of daily imbalances. To provide flexibility to the management of the system, taking into account the role of the natural gas system in supporting intermittent power sources. To put in value assets such as storages or IPs. To provide a transparent reference price in the short term market.

Thank you for your attention! 2nd November 2011