Central European Gas Hub

OTC DEVELOPMENT Volumes Traded in July 2009: 1.78 bcm Churn rate in 2009 at 2.91 on average 1475 nominations per day necessary to complete matching (stated July 2009) Interface to Exchange systems Technical implementation of ITAB Allocation process prepared for OBA Enhancement of BUBD functionalities Billing functionalities for exchange trades Adaption of existing IT systems 2009 Deals brokered via ICAP Development of spreads 2600 nominations / day including intraday operations 92 customers registered with July 2009, 71 members active CEGH – Monthly Title Tracking Volumes Number of Customers Number of daily Nominations CEGH – Churn Rate

Price quotations in Baumgarten are reflecting the market environment

Globalizing trading activities Exchange: contribution to trade Standardizing trading activities Anonymous trade Price quotation (anonymous) No risk exposure for traders Traders not utilizing EFET term sheets can easily participate trade Across regions Across industries and businesses Standardized contracts ( interchangeable with other exchanges) OTC - clearing

EXCHANGE STRUCTURE Contractual Authorities Operational BackUp/BackDown- Services Co-operation Contract Clearing-&Settlement Rules Membership- agreement Market Participation Rules Trading Rules Fee Matrix Trading License Market Maker Contract CEGH Agreement Nomination Clearing Agreement Co-operation Contract Trading Workshop Trade Report Billing General Clearing Agreement Trade Report General Clearing Member Trading Systems Federal Ministry of Economy, Family and Youth Financial Market Authority Austria Federal Financial Supervisory Authority Germany European Federation of Energy Traders Austrian Federal Competition Authority Connectivity Agreement -Premium Access -Combined Access -iAccess -Brokernet Interconnection Agreement Operating Balancing Agreement Service Level Agreement EUStreamOMV Gas GmbHTAG GmbHBOG GmbH European Regulators Group for Electricity and Gas Matching Nomination iAccess Premium Combined Member Database ID, Name, GCM Helpdesk Quantitiy Report Exchange Participant CEGH Market Operations & Analysis CEGH Dispatching Margining Billing Brokernet

Rough concept IT data flows Frankfurt any where Vienna Leipzig any where Vienna Anywhere 85 traders 4 TSOs

TAG c HUB as trading point between many transportation and storage systems ccccc WAG Regulatory Zone Austria HAG MAB Storage eustream

CEGH Activities 2009/ Nominations per day

Partner

Clearing volumes ( energy) in € 2008

Power Natural Gas Emissions Spot Derivatives Spot Derivatives Spot Derivatives ECC Clearing across products and across exchanges

JanFebMarAprMayJun Jul Daily Cash Flows / Variation Margin [€] Sample Portfolio 25 MW Sell Powernext Base load Contract 25 MW Buy EEX Base load Contract Separated Clearing Integrated Clearing Benefits of integrated clearing Netting of cash flows 12 Source: ECC

Margin system to cover counterparty risks 13 Clearing Member/ NCM Clearing Member Variation Margin 0…145 Mio. € ECC 14 Mio. € Margin 3…657 Mio. € Clearing Member 3…28 Bn. € Clearing Fond 117 Mio. €â ECC Clearing Members pledge margins in cash or securities. Clearing Members are obliged to call margins from Non- Clearing Members in at least the same amount. ECC bears the counterparty risk for all cleared exchange and OTC-transactions. To cover the potential insolvency of one or more Non-Clearing Members, ECC calculates and calls margins from the Clearing Members. Source: ECC

Non-Clearing Members Non-Clearing Members 19Countries as of January 2009 Source: ECC

CEGH Customers as of January 2009 / June 2009 Source: ECC / CEGH … CEGH Customers Customers 16Countries

Clearing volumes in € 2008

Clearing volumes in € including ICE Brent 2008

Clearing volumes in € including LCH 2008

Result

Correlation long term – short term

Back UP

CLEARING & SETTLEMENT (RISK MANAGEMENT) Physical Trade - OTC EXCHANGE TRADING OTC TRADING General Clearing Member(GCM) Non Clearing Member(NCM) DirectClearing Member(DCM) Non Clearing Member(NCM) Non Clearing Member(NCM) Non Clearing Member(NCM) RemoteMember Clearing Agent (Bank) Exchange Trader 1 Exchange Trader 2 € t € t Day of Delivery -1 Supply & Demand

GasExchange

CLEARING & SETTLEMENT (RISK MANAGEMENT) EXCHANGE TRADING OTC Transfers General Clearing Member(GCM) Non Clearing Member(NCM) DirectClearing Member(DCM) Non Clearing Member(NCM) Non Clearing Member(NCM) Non Clearing Member(NCM) RemoteMember Clearing Agent (Bank) Exchange Trader 1 Exchange Trader 2 € t € t Day of Delivery -1 Supply & Demand Physical Trade - OTC

Geographical spread What to clear is what to trade Seasonal spread Commodity spread

Gas price development

06:00 am Start physical delivery Lines of Defense 06:00 am Final allocation RE-CONCILIATION PROCESS? 09:00 am Start of exchange trading 05:00 pm End of exchange trading 07:00pm Scheduling t t + 1 t Re- Nomination 2. Backup / Back down 3. Re- conciliation ? or cash adjustments? Physical interruption

Price quotations in Baumgarten are reflecting the market environment

Trading Day Gas Spot Market MAIN TRADING PHASE Pre- trading Post- trading Call Continuous Trading 09:00 until 17:00 Opening auctionClosing auction 8:00 until 8:59 1 min max. 15 sec 1 min max. 15 sec 17:01 until 17:45 … random end Source:WBAG

Rough concept IT data flows Frankfurt any where Vienna Leipzig any where Vienna Anywhere 85 traders 4 TSOs

09:00 am Start of exchange trading 05:00 pm End of exchange trading t 06:00 am Start physical Delivery 06:00 am t + 1 SCHEDULING OF PHYSICAL DELIVERIES t :30 pm First matching run ≤01:00 pm Confirmation (  Deliveries to Italy!) 05:30 pm Final matching run ≤06:00 pm Final confirmation

Trading Day Gas Spot Market MAIN TRADING PHASE Pre- trading Post- trading Call Continuous Trading 09:00 until 17:00 Opening auctionClosing auction 8:00 until 8:59 1 min max. 15 sec 1 min max. 15 sec 17:01 until 17:45 … random end Source:WBAG

OBLIGATIONS: “ … during 50% of trading hours providing simultaneously buy and sell quotes for Spot Day- Ahead products with a minimum size of 30 MWh and a maximum spread of 0.5 €/MWh …”  50% of trading hours?  But at least 2 hours in the morning  30 MWh minimum size?  Maximum spread:  Threshold value = 5.0 €  If last price < 5.0 €  absolute spread = 0.5 €/MWh  If last price >= 5.0 €/MWh  relative spread = 2 - 5%?  INCENTIVES:  x% rebate on trading fees MARKET MAKERS

SPOT MARKET:  Spot Exchange start with Day Ahead Product ONLY!  Physical delivery: delivery on 06:00 am (t+1) to 06:00 am (t+2)  Gas product type: Base load  2 Delivery points: Virtual point Baumgarten + Oberkappel  continuous trading from 09:00 am to 05:00 pm  Price units: EUR/MWh  Minimum price increment: EUR / MWh  Minimum trade size: 10 MW  single sided nomination – initial nomination by CEGH for customers and no re-nomination by customers FINAL MAIN CONTRACT SPECIFICATIONS - SPOT