1 CRE proposal on how to allocate capacity according to the Joint Enagas, TIGF and GRTgaz investment plans: points that have been agreed / still need to be discussed ERGEG GRI South, 4th SG Meeting Madrid, October 29, 2007 Dominique JAMME Director, Gas Infrastructure and Networks Directorate Commission de Regulation de l’Energie

2 Introduction During the 4th IG meeting of 17 Sep 2007, CRE made a proposal on how to allocate capacity resulting from joint Enagas / TIGF / GRTgaz investment plan to 2015 Proposal contained 1 mechanism for approved investments and 1 mechanism for other investments Proposal is available on / Gas Regional Initiative Southwww.ergeg.org Proposal was accepted by IG as a “starting point” Important for shippers to be informed / give us their feedback

3 Investments that have been approved Guyenne phase 1 will increase capacity between TIGF / GRTgaz South winter capacities shown on the right in GWh/d summer capacities will also increase (not represented on diagram) already underway - will be completed by end 2008 Larrau phase A and B will increase capacity between Spain and France at Larrau all investments required in Spain approved Almost no investment needed in France Capacity will become available in 2009/10 s GRTgazS TIGF Enagas TIGF

4 Allocation mechanism for approved investments In France, link capacities between balancing zones will be allocated in an OSP in Dec 2007: GRTgazS-GRTgazN and GRTgazS-TIGF IG agreed that Capacity will be sold via open subscription periods Larrau A/B will be held asap, ideally in December 07 but more probably in March/April 08 OSP at Larrau will be jointly conducted by Enagas and TIGF, under regulatory supervision Spanish ministry will publish a norm making joint OSPs possible TSOs will make a proposal by November 17 on other regulatory changes needed to ensure interoperability and make joint OSP possible In the meantime, Enagas will inform regulators about any requests for capacity at Larrau and about the availability of backhaul capacity at Larrau next winter What still needs to be done based on the TSOs’ proposals, make final decisions on product, allocation, interface, timing and coordination issues

5 Guyenne phase 2 and 3 will increase TIGF/ GRTgaz South capacity requires French investments that have not yet been approved capacity available in 20010/2011 Larrau phase C will increase Spain/France capacity at Larrau investments in Spain decided, but not yet in France capacity available in 2011 Midcat phase 1 will create Spain/France capacity at Figueras French investments not approved, Spanish investments conditionally approved capacity available in 2015 (additional phase possible) GRTgazS TIGF Investments that have not yet been approved Enagas TIGF

6 The IG still needs to make a decision on these allocation mechanisms CRE’s proposal is that: market demand must be tested via an open season + capacity must be allocated in a coordinated, non-discriminatory, transparent way Larrau C and Guyenne 2/3 open seasons should be run in parallel Option 1: wait for results of Larrau A/B OSP before launching OSs Option 2: organise the OSP and OSs in parallel we should wait for results of OSs before launching Midcat OS Midcat OS could be organised in parallel with OS for GRTgazS-N capacity The IG needs to come to an on the timing of the open seasons Once these macro issues are solved, TSOs will need to work on the implementation Allocation mechanism for non-approved investments

7 Additional note on Biriatou The TSOs’ investment plan also includes capacity expansions at Biriatou It is especially important that interoperability problems at Biriatou be solved if additional capacity is to be built OK to include Biriatou in the OS/OSPs

8 Timeline Dec 2007: OSP for link capacities in France Option 1: Larrau A/B OSP in March/April 08, then Larrau C and Guyenne 2/3 OSs in June/July 08 Option 2: Larrau A/B OSP and Larrau C and Guyenne2/3 OSs in parallel during 1S S 2008: Midcat and GRTgazS-GRTgazN OSs