1. GTE151101.ppt 1 Brussels, 15.11.2001 Henri Cattoor, Edigas Chairman GTE Interoperability, EASEE-gas and LNG

2. GTE151101.ppt 2 GTE Interoperability Working group reports pipelinepipeline LNGLNG

3. GTE151101.ppt 3 Pipeline Interoperability Issues  Gas quality  Communication Protocol  Harmonisation  Interconnections  European Gas Industry Standard Board

4. GTE151101.ppt 4 Gas Quality  A delicate issue due to structural & historical reasons reasons  Complete solution of quality differences would involve significant investment & time involve significant investment & time  It does not take “100 % free physical movement of gas” to achieve free commercial movement of gas” to achieve free commercial movement of gas of gas  A large percentage of European gas trade already involves cross border flow : still valid for additional involves cross border flow : still valid for additional quantities from the same sources quantities from the same sources

5. GTE151101.ppt 5 Gas Quality  Communication protocol GTE suggests a standardisation of communication GTE suggests a standardisation of communication via the adoption of the Edig@s standard. via the adoption of the Edig@s standard.  Harmonisation GTE favours the harmonisation of key definitions GTE favours the harmonisation of key definitions (e.g. gas day, gas year) and measurement units (e.g. gas day, gas year) and measurement units  Interconnections GTE recommends a widespread use of operational GTE recommends a widespread use of operational balancing agreements interconnection points balancing agreements interconnection points

6. GTE151101.ppt 6 LNG section - Time Schedule  Kick-off meeting : June 5th, 2001  Report structure internal organisation : June 5th, 2001 June 5th, 2001  Abstracts definitive index : June 30th, 2001 2001  Report : October, 2001

7. GTE151101.ppt 7 EASEE-gas Streamlining gas business processes

8. GTE151101.ppt 8 STREAMLINING GAS BUSINESS PROCESSES Why the need ? Why the need ? The US example The US example The European project The European project

9. GTE151101.ppt 9 WHY THE NEED ? Few participants, stable and long lasting relationships Before liberalisation After liberalisation Many players, short lived and fast changing relationships Need to standardise transactional processes

10. GTE151101.ppt 10 WHY THE NEED ? Gas market liberalisation multiplies interfaces and reduces their duration.Gas market liberalisation multiplies interfaces and reduces their duration. Evolution from simple, stable, low changing environment with few participants towards complexity and high rate of change with many playersEvolution from simple, stable, low changing environment with few participants towards complexity and high rate of change with many players - slide bundled - slide bundled - slide core - slide core Emphasis on successful handshake, not on long lasting relationshipEmphasis on successful handshake, not on long lasting relationship Need for standardization of transactional processes so that players can focus on real goals : making money by serving their customersNeed for standardization of transactional processes so that players can focus on real goals : making money by serving their customers

11. GTE151101.ppt 11 BUNDLED BUSINESS MODEL Producer Gas Merchant End user physical contractual LDC

12. GTE151101.ppt 12 GENERIC CORE BUSINESS MODEL Producer Transporter End user Trader Shipper Supplier commodity commodity capacity Title transfer title transfer supply base management shipping shipping tittle transfer commodity capacity hand over physical contractual notional commodity

13. GTE151101.ppt 13 THE US EXAMPLE Gas Industry Standards Board GISB

14. GTE151101.ppt 14 THE US EXAMPLE Gas Industry Standards Board created in 1994 with a mission to : “ develop and promote standards to simplify and expand electronic communications and to simplify and streamline business practices that will lead to a seamless market place for natural gas “

15. GTE151101.ppt 15 THE US EXAMPLE GISB structure segments members segments members producers 12 producers 12 pipelines 44 pipelines 44 distributors 28 distributors 28 end users 17 end users 17 services (incl. marketers) 49 services (incl. marketers) 49 Total 150 Total 150 government (observer) 1

16. GTE151101.ppt 16 AMERICAN (GISB) BUSINESS MODEL Producer Pipelines End user Marketers & other services LDC physical contractual

17. GTE151101.ppt 17 THE US EXAMPLE GISB structure Board of Directors Board of Directors Advisory Committee Advisory Committee Executive Committee Executive Committee - Working groups 3 staff 3 staff

18. GTE151101.ppt 18 THE US EXAMPLE GISB General Policies balanced voting rules that : balanced voting rules that : - protect minorities - protect minorities - promote consensus - promote consensus open to all open to all partnership with government partnership with government driven by volunteers driven by volunteers

19. GTE151101.ppt 19 THE US EXAMPLE GISB achievements 7 years of existence : 400 business practices established 400 business practices established 40 transactions standardised 40 transactions standardised 5 model agreements 5 model agreements Transforming to include power

20. GTE151101.ppt 20 THE EUROPEAN PROJECT Promoted by GTE and Edig@s Promoted by GTE and Edig@s Task Force Task Force

21. GTE151101.ppt 21 THE EUROPEAN PROJECT Promoted by GTE and Edig@s (1) : joint visit to GISB recommendation in GTE interoperability report recommendation in GTE interoperability report proposed to Madrid Forum by GTE proposed to Madrid Forum by GTE well accepted by the participants to the Forum well accepted by the participants to the Forum supported by EU & CEER supported by EU & CEER OGP, EFET and Eurogas invited to Task Force OGP, EFET and Eurogas invited to Task Force (1 ) Centrica, Distrigas, Gasunie, Gaz de France, Gazprom, Ruhrgas, SNAM, Statoil

22. GTE151101.ppt 22 THE EUROPEAN PROJECT Task Force participants EFETOGPEurogasGTEEdig@s

23. GTE151101.ppt 23 THE EUROPEAN PROJECT Task Force remit Defining the principles Defining the principles Setting up the organisation Setting up the organisation Adapt US example to liberalised European gas Adapt US example to liberalised European gas scene scene Defining relationship with other organisations Defining relationship with other organisations Started : October 2001 Started : October 2001 Target : April 2002 Target : April 2002

24. GTE151101.ppt 24 THE EUROPEAN PROJECT Proposed name : European Association for Streamlining of EnergyExchange - gas

25. GTE151101.ppt 25 THE EUROPEAN PROJECT EASEE-gas

26. GTE151101.ppt 26 THE EUROPEAN PROJECT EASEE-gas mission statement “To develop and promote common practices to “To develop and promote common practices to simplify and streamline business processes simplify and streamline business processes that will lead to an efficient and effective that will lead to an efficient and effective European Gas Market” European Gas Market”

27. GTE151101.ppt 27 THE EUROPEAN PROJECT EASEE-gas basic principles Open, independent organisation Open, independent organisation Company based membership by segment Company based membership by segment Driven by volunteers Driven by volunteers Financed through membership fees Financed through membership fees

28. GTE151101.ppt 28

29. GTE151101.ppt 29 GENERIC CORE BUSINESS MODEL Producer Transporter End user Trader Shipper Supplier commodity commodity capacity Title transfer title transfer supply base management shipping shipping tittle transfer commodity capacity hand over physical contractual notional commodity

30. GTE151101.ppt 30 GENERIC COMPLETE BUSINESS MODEL Gas services StorageTerminalingHubetc. Non gas services LegalFinanceSoftwareetc. Core Business Partners physical contractual notional

31. GTE151101.ppt 31 INDICATIVE VOLUME CHAIN Producers Traders Ship/Trans End Users Large accounts End Users Res. & Dom. 100 50 Suppliers 50 50 100 0-300 0-300 Storage 50 Suppliers Ship/Trans 50 10-20