RO-HU-AT - a pilot project for incremental capacity GRI SEE 08 July 2016, Budapest RO-HU-AT - a pilot project for incremental capacity How to develop functioning markets? Infrastructure needs and initiatives for Europe RO-HU-AT - a key project for Central and South-East Europe

Starting Point 2014 Network users indicated non-binding demand for long term transportation services potential natural gas supplies originating from an upstream project initiative in the Black Sea from Romania (RO) via/to Hungary (HU) and further on to Austria (AT)

Physical gas flows in the region

Capacity at the IPs

PCI 6.24 - ROHUAT Expansion and refurbishment of the existing gas transportation systems

New gas route - ROHUAT

Interconnection points Relevant interconnection points (IP) RO/HU border @ Csanádpalota (IP1) in both directions HU/AT border @ Mosonmagyaróvár (IP2) just in Austrian direction

Incremental capacity process To coordinate the process and to find suitable solutions in the framework of the incremental capacity Regulatory Authorities To express the need for new infrastructure To support the initiative to give valuable inputs Network users TSOs To prepare the open season/ incremental process To plan the necessary construction works

Incremental process time line Execution of the open season Definition of the „rule book“ of the open season Market survey on different capacity allocation methods was conducted by the TSOs in February 2016, Project development TSO coordination PCI 6.24 capacity of 4,4 bcm is expected to be available at latest in 2022 Upstream project initiative 2015 Q1 2016 Q4 2016 Q1-Q2 2017 2014 Timeline

The following 3 allocation methods have been consulted Market survey A market survey on different capacity allocation methods was conducted by the TSOs in February 2016, 13 responses were received. The following 3 allocation methods have been consulted 13 responses form market participants

Method 1 Market integration Ascending clock auction algorithm according to Art. 17 of the CAM NC Bundled capacity offered as single years in the auctions

Allocation rule core logic: Market integration Method 2 3 allocation rounds foreseen Allocation rule core logic: Round 1: 15 year commitment for both IPs Round 2: 1 year commitments for both IPs Round 3: 1 year commitments for single IPs (same as Mechanism 1) Round 1 Round 2

preferred option according to outcome of market survey Market integration Method 3 Bundled capacity offered as single years in the auctions (same as Mechanism 1) If demand > offer, capacities shall be allocated on the basis of the highest individual bidder commitment in all auctions conducted throughout the period of 15 years at IP Csanádpalota and IP Mosonmagyaróvár Allocation rule core logic: NU contribution = price IP1 * demanded capacity IP1 * number of years + price IP2 * demanded capacity IP2 * number of years Method 3 preferred option according to outcome of market survey

Next steps to provide tariffs applying the new methodology acc. to TAR NC by March 2017 “Rule book” prepared by TSOs Open season to be carried out in 2017 in parallel to the yearly auction in accordance with the CAM-auction calendar put into operation 2nd phase (4.4 bcm/y) depending on when the FID will be taken, latest for 2022

 alessandro.ischia@e-control.at  www.e-control.at  + 43 1 24 7 24 810  alessandro.ischia@e-control.at  www.e-control.at Contact

Open season platform?

RO-HU-AT – PCI 6.24 TRA-N-423 (GCA Mosonmagyarovar CS) TRA-N-061 (Ercsi-Százhalombatta pipeline) TRA-N-123 (Városföld CS) TRA-N-018 (Városföld – Ercsi – Györ pipeline)

RO-HU-AT – PCI 6.24 TRA-N-126 (RF – Romanian section, 1st stage) (Podisor– Horia pipeline; CS expansion Jupa, Bibesti, Podisor; phase 1 and 2) TRA-N-377 (RF – Hungarian section, 2nd stage) TRA-N-362 (Black Sea-Shore – Podisor pipeline)

Open issues Platform to be used?