PROGRESS REPORT ON THE DEVELOPMENT OF THE IBERIAN GAS MARKET (MIBGAS) Presentation for South Gas Regional Iniciative 17th September 2007

2 DEVELOPMENT OF IBERIAN GAS MARKET (MIBGAS) Background 8 th March Agreement between Portugal and Spain at Governments level: ”Plan to reconcile the regulation on the energy sector between Portugal and Spain” MIBGAS. Both Governments have decided to create several working groups in order to develop a true Iberian Gas Market and, taking into account the significant LNG capacity in the Peninsula, to create an Iberian hub at international level. Key issues: REGULATORS: CNE and ERSE to identify the principles for the MIBGAS organization by October 2007 TSO’s: REN and ENAGAS to design an investment plan for increasing the interconnection and storage capacity. GOVERNMENTS: To design a general agreement on gas natural reserves for security of supply reasons.

3 PRINCIPLES FOR THE IBERIAN GAS MARKET CNE and ERSE have elaborated a draft document with the General Principles and Organization Model of the Iberian Gas Market (MIBGAS). Integration of Spanish and Portuguese gas systems is beneficial for both consumers. It must allow all market agents access to the gas market at the same conditions of equality, transparency and objectivity. DEVELOPMENT OF IBERIAN GAS MARKET (MIBGAS) Principles for the MIBGAS ORGANIZATION

4 Creation of the Iberian Gas Market (MIBGAS) will have as aims:  Increase security supply as a result of the integration and coordination of both gas systems, and the gas interconnection reinforcement.  Increase the degree of competition as a result of a longer market, both at energy and number of participants.  Simplify and harmonize regulatory frame for both countries.  Stimulate efficiency at regulated and liberalized activities, as well as market transparency. DEVELOPMENT OF IBERIAN GAS MARKET (MIBGAS) Principles for the MIBGAS ORGANIZATION

5 Draft document with the General Principles and Organization Model of the Iberian Gas Market. GENERAL CONTENTS: - Definition of the Organization model and general principles -Analysis of the regulatory framework: - Considerations about gas marketers (elegibility, tariff of last resource, office of change supplier) -Considerations about security o supply and coordination of gas systems -Considerations about the development of the Iberian Gas Market The document will be presented for public consultation to be discussed by all interested parts of the gas market development. DEVELOPMENT OF IBERIAN MARKET (MIBGAS)

6 DETAILLED AGENDA - Public consultation of the Draft Document with the General Principles and Organization Model of the Iberian Market (MIBGAS) - Approval of the document by board members of CNE and ERSE -Presentation of the Document to the next Spain – Portugal Summit. - Elaboration of a action plan for 2008 to develop the Iberian Gas Market DEVELOPMENT OF IBERIAN MARKET (MIBGAS)