Shippers’ Meeting 18 November 2004 Sheraton - Amsterdam 09.04.2019

Program Introduction Willem Faber Long Term Planning Piet Nienhuis Invoicing Karl Vogel Tolerance Service 2005 Paula Olthof Quality Conversion Tineke v.d. Meij Miscellaneous Tineke v.d. Meij Lunch

Program Introduction Willem Faber Long Term Planning Piet Nienhuis Invoicing Karl Vogel Tolerance Service 2005 Paula Olthof Quality Conversion Tineke v.d. Meij Miscellaneous Tineke v.d. Meij Lunch

GTS annual Long Term Planning cycle Feedback and kick-off Identify grid bottlenecks Send out questionnaires April November-April April Feedback results Receive questionnaires November May August/ September May- Juni Interview NNOs July-August Interview shippers Analyze questionnaires

The Process Some statistics After the kick-off meeting in April and our request to shippers to contact GTS, only 2 shippers reacted. GTS initiated other contacts GTS had contact with 21 shippers From these, GTS held meetings with 16 shippers during May/June/July 13 completed questionnaires were returned GTS had meetings with 5 NNOs during August/September

Long Term Planning Purpose : To keep GTS transmission system fit for the future Challenge : Lack of reliable planning information caused by a tendency towards short term contracts and involvement of more parties Solution : Collect planning information from shippers and NNOs after contract period

Neighbouring countries NL production and demand Network load determined by four types of gas flows Netherlands Neighbouring countries Supply Transport Demand NL production and demand Import Export Transit

Scenario I : low import and low transit Norwegian gas Russian gas LNG Middle-East gas

Scenario II : high import and high transit Norwegian gas Russian gas LNG Middle-East gas

The interviews Some observations Almost all shippers share the same view on the scenarios Scenario I (low import/low transit) is thought to be the most likely one for the short term (till 2008) while scenario II (high import/high transit) is the most likely scenario for the longer term Shippers were not always able to make a distinction between entry points : they usually speak about “the Emden – Bunde area”; the data presented in the next slides should be interpreted bearing this in mind

Conclusions of the 2004 LT planning process Balgzand: Entry as a result from NOGAT connection with Danish fields Emden/Oude Statenzijl: Clear interest for additional entry capacity Julianadorp: Entry and exit as a result from connections with Bacton and OSZ Winterswijk/Zevenaar: No significant interest for entry capacity Zelzate: Interest for bi-directional capacity ‘s Gravenvoeren/Bocholtz /Hilvarenbeek: No significant interest, entry nor exit Zandvliet-H: Additional exit point to supply local Belgian H-gas market

Scenario I : medium import and transit flows Entry Emden 13/13/14 Entry Balgzand 1/1/0 Entry Oude Statenzijl 8/12/13 Total Entries for Import and Transit1/2): 26/29/29 Exit Julianadorp 0/12/12 Only major volumes shown Currently known long term import and transit contracts included Entry Winterswijk/ Zevenaar 0/0/0 Entry Zelzate 3/2/2 Exit Zelzate /Zandvliet 2/2/2 Entry Bocholtz/ ‘s Gravenvoeren 0/0/0 Annual volumes shown apply for 2006/2009/2012 Unit : mrd m3 [35,17]

Scenario II : high import and transit flows Entry Emden 13/15/16 Entry Balgzand 2/3/3 Total Entries for Import and Transit1/2): 27/39/45 Entry Oude Statenzijl 8/18/20 Exit Julianadorp 0/12/12 Only major volumes shown Currently known long term import and transit contracts included Entry Winterswijk/ Zevenaar 0/1/2 Entry Zelzate 3/2/3 Exit Zelzate /Zandvliet 2/7/7 Entry Bocholtz/ ‘s Gravenvoeren 0/0/1 Annual volumes shown apply for 2006/2009/2012 Unit : mrd m3 [35,17]

Comparison of scenarios

Norwegian Gas Infrastructure Norpipe ~ 43 MSm3/d (including compression in Norpipe) Europipe I ~ 44 MSm3/d Europipe II ~ 68 MSm3/d (expected capacity from 2005) Sum Germany ~ 155 MSm3/d Emden/Dornum area

Pipelines in the Emden/OSZ area Acrobat document

Conclusions LT planning 2004 Conclusions from shippers Large amounts of gas will enter GTS grid in the Emden/OSZ area Entry flows from south decrease Exit flows SW NL increase for local Belgian market (Zandvliet-H) and further transit; also increased interest in Dutch domestic Hi-Cal exit capacity Conclusions from NNOs Gassco has some options to increase capacity to Emden/Dornum but insufficient to support all GTS shippers indications Additional gas in Emden to NL must be Norwegian gas swapped with Russian gas in Northern Germany German NNOs state that they are able to transport large volumes to OSZ with relatively moderate investments in their transmission systems Flows south NL recognized by Fluxys

Consequences Large investments required to accommodate indicated capacities, order of magnitude between € 100 and € 400 mln However, just indications, no commitments (yet) Insufficient ground for investments How do we continue ?

Open Season - 1 GTS will collect commitments in an open season procedure GTS may decide to develop capacity GTS will start formal procedure early 2005 Main characteristics :  Hi-cal  NE entry points: Emden, Bunde (OSZ), possibly others  SW exit points: Zelzate, Zandvliet-H, other domestic exits  both domestic and border points  capacity available >= 2009

Open Season - 2 Planning Commitments of both shippers and GTS in 2005 Capacity allocation Basis is normal two step procedure : upgrading interruptible, followed by new booking requests For capacity within scope of open season project  step 1 : only interruptible bookings based on requests before 18 November 2004 are eligible for upgrading  step 2 : new booking requests will be replaced by commitments in open season

Open Season - 3 Possible ullage will be sold according to normal procedures Options may be offered to the market, even with respect to the points included in the scope of the project Such options will not relate to capacity to be realised within the scope of the project, but may justify some additional investment

Open Season - 4 GTS will publish further details and invite shippers to participate early next year thru the usual channels (website, e-mail, letter)

Program Introduction Willem Faber Long Term Planning Piet Nienhuis Invoicing Karl Vogel Tolerance Service 2005 Paula Olthof Quality Conversion Tineke v.d. Meij Miscellaneous Tineke v.d. Meij Lunch

Status of invoicing 2002 2003 2004 Monthly Fixed part TTF Usage part Finalized (corrections due to avoidance of penalties possible) Monthly invoice is up to current date TTF Fixed/usage part Q1 and Q2 finalized Q3/Q4 to be finalized as soon as possible Usage part (Last invoices are being finalized) To be finalized Q4 2004 (70% finished) Invoices starting Q2 2005

Other subjects Letters for “Recalculations of RNB 2003” sent to shippers and LDCs to identify the outstanding revisions (deadline 15 December 2004) Reconciliation (start foreseen Q1 2005, depending on delivery of RNB data for reconciliation) Supplier invoicing: Peak supply (start Q4 2004)

Program Introduction Willem Faber Long Term Planning Piet Nienhuis Invoicing Karl Vogel Tolerance Service 2005 Paula Olthof Quality Conversion Tineke v.d. Meij Miscellaneous Tineke v.d. Meij Lunch

Contents Tolerance Service 2004 overview Tolerance Service 2005 Tender Sales procedure

Tolerance Service 2004 overview (1) December 2003: Annual Basic Tolerance Service whole year 2004 shortage cap : excess cap = 1 : 1/3 tolerance volume = 24 x shortage capacity Annual Tolerance Excess Capacity Service additional to Annual Basic Tolerance Service upgrade tolerance excess capacity to 1:1 Half Year Tolerance Service second half year of 2004 Basic Tolerance Service: valid for the whole year 2004 (incl. 1 unit shortage -> 1/3 unit excess cap; 24Xcap = volume) Tolerance Excess Capacity: additional to basic (1 unit shortage -> max 1 unit excess) Half year: related to liberilisation; offer shippers possibility for extra tol service

Tolerance Service 2004 overview (2) July 2004: Additional Basic Tolerance Service: August 1st 2004 – December 31st 2004 With reference to questions from shippers about additional tolerance for the second half year of 2004 , during 2004, GTS has decided to offer Additional Basic Tolerance Service for the period august-december 2004.

Tolerance Service 2005 GTS has the intention to offer tolerance services 2005: Ingredients: shortage capacity (incl. 1/x excess capacity) where x between 1/3 and 1/2 tolerance volume 24 x shortage capacity Different periods 4 times a year possibility to buy from GTS Jan-Dec; Apr-Dec; Jun-Dec; Okt-Dec Aim at more suppliers

Fase 1: preselection of potential suppliers (5x) Tender Fase 1: preselection of potential suppliers (5x) Fase 2: master agreement (3x) agreement fixed for whole year amount/price is fixed during bid per period Fase 3: first bid from supplier(s) for period January – December 2005 ultimately 29-11-2004 one week sales window Fase 1: who met the requirements in the tender Fase 2: more then one suppliers of flex succesfully passed fase 1; GTS tries to conclude a masteragreement with all these suppliers Masteragreement: because GTS want to offer tolerance service every quarter to the market we like to have an agreement with the suppliers that is valid for all 4 sell-periods

Sales procedure

Sales procedure option 1: notary Booking request form: Price: Amount: A1 … C1 … A2 … B1 … B2 … B3 ... Option 1: notary Amount = desired maximum amount per price level

Example sales procedure option 1: notary Shippers A, B, C, D, E, filled in the booking request form Notary sequence: E, D, A, C, B

Example sales procedure option 1: notary 100 100

Sales procedure option 2: pro rata Booking request form: Price: Amount: A1 … C1 … A2 … B1 … B2 … B3 ... Option 2: pro rata Amount = desired maximum amount per price level Total assigned amount = limited to amount first level

Example sales procedure option 2: pro rata

Sales procedure: which option ? WHAT DO YOU PREFER ? Option 1: notary Option 2: pro rata

Program Introduction Willem Faber Long Term Planning Piet Nienhuis Invoicing Karl Vogel Tolerance Service 2005 Paula Olthof Quality Conversion Tineke v.d. Meij Miscellaneous Tineke v.d. Meij Lunch

Quality Conversion Q4 2004 QC sold out (announced earlier in 2004) Indication of required QC capacity GTS facilitates redistribution of QC capacity by: Repurchase (letter LTF 04.0374, 15 Sept. 04) - 3 shippers responded - ‘neutral’ price Capacity release (Letter LTF 04.0385 16 Sept. 04) - possible to book per month - normal tariff for QC - 2 shippers booked initially Recently: last capacity booked  web site: zero Secondary market: 6 trades for Q4 2004 of which 1 in September 2004, 5 end 2003/early 2004

Quality Conversion 2005 (1) 2005: QC redistribution - GTS will act as quantity manager - Secondary market (trading of QC capacity) Repurchase - Back to Back - Shippers can offer QC capacity - Letter LT 04.0605 d.d. 15 October 2004 - Neutral price as payable by shipper to GTS - Some shippers replied before deadline 25 October - Ultimately 1 December 2004 the amount to be repurchased is known

Quality Conversion 2005 (2) Capacity Release - Back to Back  GTS will only allow profiles as offered to GTS - Profile 1: full year 2005 - Profile 2: July/August 2005 - Bookings (special form) possible before deadline of 24 November 10.00 LET - Tariff according to TSC

Quality Conversion 2005 (3) If more QC is requested for booking than available  notary draw (per profile) Ultimately 1-12-2004 GTS informs each participating shipper - on the amounts to be repurchased or - on the amounts booked Back to Back  QC capacity available after process of repurchase/ capacity release = zero  web site

Transition 2004  2005 TSC 2005-2 published 29 October 2004 Declaration of acceptance TSC 2005-2: LTF 04.682 d.d. 29 October 2004 Transition of booked services: LTF 04.xxx Nov. 2004 - list of ‘relevant services’ - interruptible tranches - connection tariff - pseudoGOS content

Miscellaneous Request for exemption publication information on border points DTe.  Letter LTF 04.0726 d.d. 3 November  Deadline 19 November 2004 VAT: change in legislation VAT tariff depending on permanent establishment (Dutch: ‘vestigingsplaats’) of shipper.  Letter this week, deadline 15 December 2004 Deadline for booking requests: 17 December 2004 Next Shippers’ Meeting: early 2005 APX

Thank you for your attention and enjoy your lunch! Shippers’ Meeting 18 November 2004 Sheraton - Amsterdam Thank you for your attention and enjoy your lunch!