1. Shippers’ Meeting 18 November 2004
Sheraton - Amsterdam

2. Program Introduction Willem Faber Long Term Planning Piet Nienhuis
Invoicing Karl Vogel
Tolerance Service Paula Olthof
Quality Conversion Tineke v.d. Meij
Miscellaneous Tineke v.d. Meij
Lunch

3. Program Introduction Willem Faber Long Term Planning Piet Nienhuis
Invoicing Karl Vogel
Tolerance Service Paula Olthof
Quality Conversion Tineke v.d. Meij
Miscellaneous Tineke v.d. Meij
Lunch

4. GTS annual Long Term Planning cycle
Feedback
and kick-off
Identify grid
bottlenecks
Send out questionnaires
April
November-April
April
Feedback
results
Receive questionnaires
November
May
August/ September
May-
Juni
Interview
NNOs
July-August
Interview shippers
Analyze questionnaires

5. The Process Some statistics
After the kick-off meeting in April and our request to shippers to contact GTS, only 2 shippers reacted. GTS initiated other contacts
GTS had contact with 21 shippers
From these, GTS held meetings with 16 shippers during May/June/July
13 completed questionnaires were returned
GTS had meetings with 5 NNOs during August/September

6. Long Term Planning
Purpose : To keep GTS transmission system fit for the future
Challenge : Lack of reliable planning information caused by a tendency towards short term contracts and involvement of more parties
Solution : Collect planning information from shippers and NNOs after contract period

7. Neighbouring countries NL production and demand
Network load determined by four types of gas flows
Netherlands
Neighbouring countries
Supply
Transport
Demand
NL production and demand
Import
Export
Transit

8. Scenario I : low import and low transit
Norwegian gas
Russian gas
LNG
Middle-East gas

9. Scenario II : high import and high transit
Norwegian gas
Russian gas
LNG
Middle-East gas

10. The interviews Some observations
Almost all shippers share the same view on the scenarios
Scenario I (low import/low transit) is thought to be the most likely one for the short term (till 2008) while scenario II (high import/high transit) is the most likely scenario for the longer term
Shippers were not always able to make a distinction between entry points : they usually speak about “the Emden – Bunde area”; the data presented in the next slides should be interpreted bearing this in mind

11. Conclusions of the 2004 LT planning process
Balgzand:
Entry as a result from NOGAT connection with Danish fields
Emden/Oude Statenzijl:
Clear interest for additional entry capacity
Julianadorp:
Entry and exit as a result from connections with Bacton and OSZ
Winterswijk/Zevenaar:
No significant interest for entry capacity
Zelzate:
Interest for bi-directional capacity
‘s Gravenvoeren/Bocholtz
/Hilvarenbeek:
No significant interest, entry nor exit
Zandvliet-H:
Additional exit point to supply local Belgian H-gas market

12. Scenario I : medium import and transit flows
Entry Emden 13/13/14
Entry Balgzand 1/1/0
Entry Oude Statenzijl 8/12/13
Total Entries for Import and Transit1/2): 26/29/29
Exit Julianadorp 0/12/12
Only major volumes shown
Currently known long term import and transit contracts included
Entry Winterswijk/ Zevenaar 0/0/0
Entry Zelzate 3/2/2
Exit Zelzate /Zandvliet 2/2/2
Entry Bocholtz/ ‘s Gravenvoeren 0/0/0
Annual volumes shown apply for 2006/2009/2012
Unit : mrd m3 [35,17]

13. Scenario II : high import and transit flows
Entry Emden 13/15/16
Entry Balgzand 2/3/3
Total Entries for Import and Transit1/2): 27/39/45
Entry Oude Statenzijl 8/18/20
Exit Julianadorp 0/12/12
Only major volumes shown
Currently known long term import and transit contracts included
Entry Winterswijk/ Zevenaar 0/1/2
Entry Zelzate 3/2/3
Exit Zelzate /Zandvliet 2/7/7
Entry Bocholtz/ ‘s Gravenvoeren 0/0/1
Annual volumes shown apply for 2006/2009/2012
Unit : mrd m3 [35,17]

14. Comparison of scenarios

15. Norwegian Gas Infrastructure
Norpipe ~ 43 MSm3/d
(including compression in Norpipe)
Europipe I ~ 44 MSm3/d
Europipe II ~ 68 MSm3/d
(expected capacity from 2005)
Sum Germany ~ 155 MSm3/d
Emden/Dornum area

16. Pipelines in the Emden/OSZ area
Acrobat document

18. Conclusions LT planning 2004
Conclusions from shippers
Large amounts of gas will enter GTS grid in the Emden/OSZ area
Entry flows from south decrease
Exit flows SW NL increase for local Belgian market (Zandvliet-H) and further transit; also increased interest in Dutch domestic Hi-Cal exit capacity
Conclusions from NNOs
Gassco has some options to increase capacity to Emden/Dornum but insufficient to support all GTS shippers indications
Additional gas in Emden to NL must be Norwegian gas swapped with Russian gas in Northern Germany
German NNOs state that they are able to transport large volumes to OSZ with relatively moderate investments in their transmission systems
Flows south NL recognized by Fluxys

19. Consequences
Large investments required to accommodate indicated capacities, order of magnitude between € 100 and € 400 mln
However, just indications, no commitments (yet)
Insufficient ground for investments
How do we continue ?

20. Open Season - 1
GTS will collect commitments in an open season procedure
GTS may decide to develop capacity
GTS will start formal procedure early 2005
Main characteristics :  Hi-cal  NE entry points: Emden, Bunde (OSZ), possibly others  SW exit points: Zelzate, Zandvliet-H, other domestic exits  both domestic and border points  capacity available >= 2009

21. Open Season - 2 Planning Commitments of both shippers and GTS in 2005
Capacity allocation Basis is normal two step procedure : upgrading interruptible, followed by new booking requests
For capacity within scope of open season project  step 1 : only interruptible bookings based on requests before 18 November 2004 are eligible for upgrading  step 2 : new booking requests will be replaced by commitments in open season

22. Open Season - 3
Possible ullage will be sold according to normal procedures
Options may be offered to the market, even with respect to the points included in the scope of the project
Such options will not relate to capacity to be realised within the scope of the project, but may justify some additional investment

23. Open Season - 4
GTS will publish further details and invite shippers to participate early next year thru the usual channels (website, , letter)

24. Program Introduction Willem Faber Long Term Planning Piet Nienhuis
Invoicing Karl Vogel
Tolerance Service Paula Olthof
Quality Conversion Tineke v.d. Meij
Miscellaneous Tineke v.d. Meij
Lunch

25. Status of invoicing 2002 2003 2004 Monthly Fixed part TTF Usage part
Finalized
(corrections due to avoidance of penalties possible)
Monthly invoice is up to current date
TTF
Fixed/usage part
Q1 and Q2 finalized
Q3/Q4 to be finalized as soon as possible
Usage part
(Last invoices are being finalized)
To be finalized
Q4 2004
(70% finished)
Invoices starting Q2 2005

26. Other subjects
Letters for “Recalculations of RNB 2003” sent to shippers and LDCs to identify the outstanding revisions (deadline 15 December 2004)
Reconciliation (start foreseen Q1 2005, depending on delivery of RNB data for reconciliation)
Supplier invoicing: Peak supply (start Q4 2004)

27. Program Introduction Willem Faber Long Term Planning Piet Nienhuis
Invoicing Karl Vogel
Tolerance Service Paula Olthof
Quality Conversion Tineke v.d. Meij
Miscellaneous Tineke v.d. Meij
Lunch

28. Contents
Tolerance Service 2004 overview
Tolerance Service 2005
Tender
Sales procedure

29. Tolerance Service 2004 overview (1)
December 2003:
Annual Basic Tolerance Service
whole year 2004
shortage cap : excess cap = 1 : 1/3
tolerance volume = 24 x shortage capacity
Annual Tolerance Excess Capacity Service
additional to Annual Basic Tolerance Service
upgrade tolerance excess capacity to 1:1
Half Year Tolerance Service
second half year of 2004
Basic Tolerance Service: valid for the whole year 2004 (incl. 1 unit shortage -> 1/3 unit excess cap; 24Xcap = volume)
Tolerance Excess Capacity: additional to basic (1 unit shortage -> max 1 unit excess)
Half year: related to liberilisation; offer shippers possibility for extra tol service

30. Tolerance Service 2004 overview (2)
July 2004:
Additional Basic Tolerance Service:
August 1st 2004 – December 31st 2004
With reference to questions from shippers about additional tolerance for the second half year of 2004 , during 2004, GTS has decided to offer Additional Basic Tolerance Service for the period august-december 2004.

31. Tolerance Service 2005
GTS has the intention to offer tolerance services 2005:
Ingredients:
shortage capacity (incl. 1/x excess capacity)
where x between 1/3 and 1/2
tolerance volume 24 x shortage capacity
Different periods
4 times a year possibility to buy from GTS
Jan-Dec; Apr-Dec; Jun-Dec; Okt-Dec
Aim at more suppliers

32. Fase 1: preselection of potential suppliers (5x)
Tender
Fase 1: preselection of potential suppliers (5x)
Fase 2: master agreement (3x)
agreement fixed for whole year
amount/price is fixed during bid per period
Fase 3: first bid from supplier(s)
for period January – December 2005
ultimately
one week sales window
Fase 1: who met the requirements in the tender
Fase 2: more then one suppliers of flex succesfully passed fase 1; GTS tries to conclude a masteragreement with all these suppliers
Masteragreement: because GTS want to offer tolerance service every quarter to the market we like to have an agreement with the suppliers that is valid for all 4 sell-periods

33. Sales procedure

34. Sales procedure option 1: notary
Booking request form:
Price: Amount:
A …
C …
A …
B …
B … B
Option 1: notary
Amount =
desired maximum amount
per price level

35. Example sales procedure option 1: notary
Shippers A, B, C, D, E, filled in the booking request form
Notary sequence: E, D, A, C, B

36. Example sales procedure option 1: notary
100
100

37. Sales procedure option 2: pro rata
Booking request form:
Price: Amount:
A …
C …
A …
B …
B … B
Option 2: pro rata
Amount =
desired maximum amount per
price level
Total assigned amount =
limited to amount first level

38. Example sales procedure option 2: pro rata

39. Sales procedure: which option ?
WHAT DO YOU PREFER ?
Option 1: notary
Option 2: pro rata

40. Program Introduction Willem Faber Long Term Planning Piet Nienhuis
Invoicing Karl Vogel
Tolerance Service Paula Olthof
Quality Conversion Tineke v.d. Meij
Miscellaneous Tineke v.d. Meij
Lunch

41. Quality Conversion Q4 2004 QC sold out (announced earlier in 2004)
Indication of required QC capacity
GTS facilitates redistribution of QC capacity by:
Repurchase (letter LTF , 15 Sept. 04) - 3 shippers responded - ‘neutral’ price
Capacity release (Letter LTF Sept. 04) - possible to book per month - normal tariff for QC - 2 shippers booked initially
Recently: last capacity booked  web site: zero
Secondary market: 6 trades for Q of which
1 in September 2004, 5 end 2003/early 2004

42. Quality Conversion 2005 (1) 2005: QC redistribution
- GTS will act as quantity manager
- Secondary market (trading of QC capacity)
Repurchase - Back to Back - Shippers can offer QC capacity - Letter LT d.d. 15 October Neutral price as payable by shipper to GTS - Some shippers replied before deadline 25 October - Ultimately 1 December 2004 the amount to be
repurchased is known

43. Quality Conversion 2005 (2)
Capacity Release - Back to Back  GTS will only allow profiles
as offered to GTS - Profile 1: full year Profile 2: July/August Bookings (special form) possible before
deadline of 24 November LET - Tariff according to TSC

44. Quality Conversion 2005 (3)
If more QC is requested for booking than available  notary draw (per profile)
Ultimately GTS informs each participating shipper - on the amounts to be repurchased
or - on the amounts booked
Back to Back  QC capacity available after process of repurchase/ capacity release = zero  web site

45. Transition 2004  2005 TSC 2005-2 published 29 October 2004
Declaration of acceptance TSC :
LTF d.d. 29 October 2004
Transition of booked services: LTF 04.xxx Nov list of ‘relevant services’ - interruptible tranches - connection tariff - pseudoGOS content

46. Miscellaneous
Request for exemption publication information on border points DTe.
 Letter LTF d.d. 3 November
 Deadline 19 November 2004
VAT: change in legislation VAT tariff depending on permanent establishment (Dutch: ‘vestigingsplaats’) of shipper.  Letter this week, deadline 15 December 2004
Deadline for booking requests: 17 December 2004
Next Shippers’ Meeting: early 2005
APX

47. Thank you for your attention and enjoy your lunch!
Shippers’ Meeting
18 November 2004
Sheraton - Amsterdam
Thank you for your attention and enjoy your lunch!