Madrid, 13 th November th SG Meeting South Gas Regional Initiative

2 10th SG meeting S-GRI- Agenda

3 RESULTS OF THE BINDING CAPACITY REQUESTING PERIOD Participation of 8 different business groups 33 companies, from 11 different countries, showed their interest in the process (OS 2013 and OS 2015) 12 application forms received II. Results of the Open Season 2013 Capacity requesting period

4 PRELIMINARY CAPACITY ASSIGNEMENT INCLUDING LARRAU AND IRÚN (based on requested capacity) II. Results of the Open Season 2013

5 CAPACITY ASSIGNEMENT WITHOUT IRÚN (based on requested capacity) II. Results of the Open Season ,8 GWh/d (22,3%) with Irún 186,6 GWh/d (91,5%) with Irún 180 GWh/d (100%) with Irún

6 II. Results of the Open Season 2013 Capacity assigned in case of not building Irún Capacity assigned with only Larrau Capacity not assigned due to lack of invetsments in Biriatou

7 INVESTMENT REQUIRED (according to joint TSOs investment plan-March 2008) II. Results of the Open Season 2013

8 IG held on October 27 th Objective: to discuss the results of the Open Season and to agree on the capacity allocation of the capacity for 2013 in the French- Spanish interconnection Participants agreed on the fact that the process had been a success for the S-GRI, with a high degree of participation showing the market interest in these infrastructures Main point of discussion: the need to validate capacity allocations only at Larrau interconnection, or at both existing interconnections, Larrau and Irún. II. Results of the Open Season 2013

9 IG held on October 27 th (cont.) CRES ECONOMIC TEST TO VALIDATE INVESTMENTS IN FRANCE

10 II. Results of the Open Season 2013 IG held on October 27 th (cont.) ARGUMENTS AGAINST BUILDING IRÚN (CRE, TIGF and French Ministry) Rules stated in the Information Memorandum contains a test stating that capacity allocated to shippers, adding both directions of the interconnections, should be 250 GWh/day or above before going into discussion of development of Irún. For the credibility of the past process and of the coming open season 2015, the predefined rules have to be complied with. Should the rules be changed during the allocation phase, it is to be feared that shippers will not be ready to commit on the long term in the next open seasons

11 II. Results of the Open Season 2013 IG held on October 27 th (cont.) ARGUMENTS AGAINST BUILDING IRÚN (CRE, TIGF and French Ministry) There is a risk of legal claims by shippers if rules are not respected. For instance, an end consumer could claim that he would be exposed to higher transmission tariffs because of excessive investment. The need for strong arguments to invest in France since gas demand is not foreseen to increase was also underlined.

12 II. Results of the Open Season 2013 IG held on October 27 th (cont.) ARGUMENTS IN FAVOR OF BUILDING IRÚN (CNE, ERSE, Spanish TSOs and Spanish Ministry) Great interest showed by markets agents (requested 200% of the capacity offered adding both interconnections at the Spanish-French border, from Spain to France, and 58% in reverse flow; on average, allocated capacity would be approximately 84% of the total capacity offered in both interconnections and in both directions) In the other Open Seasons launched in Europe capacity reserved 100% in only one direction has been sufficient to justify investment. The relevant importance of these interconnections for strategic purposes and for Security of Supply reasons, not only for the Iberian Peninsula, but also for Europe, as well as the benefits these interconnections would bring for the European single market.

13 II. Results of the Open Season 2013 IG held on October 27 th (cont.) ARGUMENTS IN FAVOR OF BUILDING IRÚN (CNE, ERSE, Spanish TSOs and Spanish Ministry) Not allocating the capacity of Irún means not allocating some capacity available between TIFG and GRTgaz South and between GRTgaz South and GRTgaz North. This may negatively affect investment recovery involving higher tariffs. Not building the capacity initially offered would create uncertainty among shippers, in particular, for future Open Seasons. Building Larrau and Irún allows allocate only 50% of capacity requested in the direction Spain-France. If Irún is not built, this figures drops to 36,5%, which may seriously affect shippers business. Recovery EU plan subsidies (245 mill. for Africa-Spain-France and Western axis) to these infrastructures made the project more attractive for TSOs, implying that less market requests are needed to recover the investment.

14 II. Results of the Open Season 2013 IG held on October 27 th (cont.) CONCLUSIONS: Meeting participants were not able to reach an agreement on Irún development, so only Larrau capacity will be allocated to shippers by TSOs, being also the only investment analyzed by French TSOs that should take the decision to invest by January So the S-GRI will proceed following the rules previously established in the Information Memorandum

15 II. Results of the Open Season 2013 First phase of OS 2013: publication of results (

16 III. Last steps of the Open Season 2013 Decision-making step Decision-making step

17 III. Last steps of the Open Season 2013 In 15 days, TSOs will provide Regulators with the following information regarding OS 2013: Detailed list of infrastructures to be built related to OS 2013 Estimation of the starting operation date of every infrastructure Estimation of updated cost associated to every infrastructure Building status records, once cpmpleted, for every infrastructures, in order to be loaded on ERGEGs website

18 IV. Preparation of the Open Season 2015 RESULTS OF THE NON-BINDING CAPACITY REQUESTING PERIOD

19 IV. Preparation of the Open Season 2015 First phase of OS 2015: publication of results (

20 IV. Preparation of the Open Season 2015 OPEN SEASON 2015: CALENDAR

21 IV. Preparation of the Open Season 2015 NEXT STEPS REGARDING 2015 OS Principles to decide on network scheme design: Interconnection capacity between Enagas and TIGF, and Enagas and GRTgaz (different capacity products: A and C, plus B and D Interconnection capacity between Enagas and only one French TSO (2 different capacity products: A-B or C-D Amount of capacity to be sold Criteria for defining investments: Economic test Detailed calendar for 2010 Documentation required for the binding phase Information memorandum, Application forms, Allocation rules, other

22 IV. Preparation of the Open Season 2015 As soon as possible, TSOs will provide Regulators with the following information regarding OS 2015: List of infrastructures to be built related to OS 2015 Estimation of starting operation date of every infrastructure Estimation of investments associated to every infrastructure