1. Sound Investment Climate? Jacques Laurelut GTE President CEO of GRTgaz Bratislava, 28 September 2006

2. 2 Market analysis 1.High market prices last winter and currently long term contracts are cheaper than the market (12 month flat basis) 2.Important price differentials between NW Europe and N Europe 3.Price differentials are lower within regions (e.g. UK, Belgium and France versus The Netherlands)

3. 3 Towards an attractive European market  Europe needs to be more attractive for producers and suppliers  Providing them long term visibility could reduce their risks, enabling lower margin expectations  They have long term projects  What is the market size and depth?  Producers claim for Security of Demand  European Energy Supply Observatory: could provide transparency and predictability (at least next 10 years)  By monitoring demand and supply patterns and providing statistics to stakeholders  By providing visibility on the existence of appropriate infrastructures  The regulatory framework has to be stable 1. Prices are and will remain high if the market is short of gas (or perceived to be so)

4. 4 Target: no major congestion within European gas Network 2. Important price differential is the result of congested pipe through the Netherlands  Congestion has to be avoided: splits the market, make it less attractive and introduces excessive and durable spreads  Investments have to be timely and efficient: identification and funding of investments are issues (e.g. Non Domestic Investments - NDI) At least when there is no pipe to pipe competition:  Open seasons lead to a tight network Short term contracts with end users Few suppliers are able/willing to take a long term view and signal investment need TSOs build to the signal  Transnational coordination should be improved (regulators and transmission operators are involved)  How to achieve a trans-national and trans-regional cooperation?

5. 5 Improving cooperation between regulators Possible alternatives:  A European Regulator above national regulators?  Decision rules could be a problem  No political responsibility?  ERGEG?  National regulators: more interested in short term and national conditions  Investment and NDI are not priority items in the Gas Regional Initiative (NW)  When there is no pipe to pipe competition: a solution somewhere in-between should be found  GGPs on investment?  GGPs on operators’ revenue determination?  …

6. 6 A question of priority… 3. No congestion: price differentials are relatively low between two markets  Improving the access conditions to European transmission networks could have a positive impact on gas prices  A lot of work has been done: numerous initiatives and actors involved in improving these operational and commercial conditions  European Commission, ERGEG, Eurogas, EASEE-gas…  GTE promotes full implementation of existing measures  Some areas without market price published BUT  No need of new rules  Priority should be given to issues that have a huge market impact: gas price, investment and NDI  Lead time: 5 years are necessary to build a new pipe… and even more for a complete supply route

7. 7 GTE Action Plan  GIE:  Response to Commission’s Green Paper  Public hearing on the Strategic EU Energy Review  Contacts with DG Tren (C. Jones)  Experts meeting PIP  By the end of September, GTE  Will define its priority tasks (e.g. Investment, Transparency, Capacity…)  Will elaborate and publish a Working Program  Should send a draft to DG Tren  By the end of 2006, GTE  Will organise two workshops  Investment  Transit (with ERGEG)