1. European Federation of Energy Traders GIE annual conference 2008 Bukarest, 23-24 October Needs of the market participants with respect to creating an integrated and competitive European Gas market EFET Gas Committee Stephan.ressl@efet.org Vice Chairman

2. Stephan Ressl Madrid, 22.05.2008 2 What market players need  Predictability of regulatory framework:  3 rd package most important and clear harmonised guidance on implementation  Integration towards a single European gas market  System investments (capacity optimisation) necessary with a European view  Regional approach necessary for pragmatic and technical reasons  Transparency  Access to the system (capacity existing and new, tariffs, market rules, licensing)  Published market based prices (balancing, spot, forwards) per area  Data for the past, the present and the future as available – EFET to publish a list of minimum requirements soon, jointly with other associations  Access to the system  Capacity available where necessary  Cross border incompatibility  Intransparent balancing rules (Not market based and market should reflect system stress)  System should be as large as possible (several TSOs) and not one pipeline only

3. Stephan Ressl Madrid, 22.05.2008 3 Then market players could  Have confidence in stable and positive development and hence derive business cases  Investments into energy business activities have long lead time (trading floor, affiliates, or even power plants, pipelines and LNG terminals,..)  With confidence more market players will arrive on the scene  E.g. Horizontal diversification (oil, gas, electricity) and/or vertical (going downstream or e.g. large customers getting more upstream)  Establish liquid traded markets with a sufficiently large physical market underneath the Hub/exchange:  NBP, a North West Continental one, EEX (EGT+Bayernet), Italian gas exchange (PSV new), CEGH if regional, Iberian,..????

4. Stephan Ressl Madrid, 22.05.2008 4 Market pricing in EU

5. Stephan Ressl Madrid, 22.05.2008 5 Market pricing in EU - arbitrage 1 17,02 17,98 19,93 19,32 18,97 21,80 24,72 Prices: Summer 2006 in EUR/MWh

6. Stephan Ressl Madrid, 22.05.2008 6 Market pricing in EU – arbitrage 2 96,31 95,92 55,00 26,80 57,25 21,20 42,00 Prices: 13 March 2006 in EUR/MWh

7. Stephan Ressl Madrid, 22.05.2008 7 Market pricing in EU  Current Hubs/Exchanges in the EU  In some parts many  In other parts none  CEE is rather iliquid for the time being NBP / ICE PEG TTF / ENDEX EGT / EEX CEGH ZEE PSV GTF

8. Stephan Ressl Madrid, 22.05.2008 8 Multi - TSO integration potential JV of EGT and Bayernet are a good new example Part of Grid 2007

9. Stephan Ressl Madrid, 22.05.2008 9 9 Market players’ needs – an independent study

10. Stephan Ressl Madrid, 22.05.2008 10 Market pricing in CEE – PWC study in GRI SSE

11. Stephan Ressl Madrid, 22.05.2008 11 Market pricing in CEE – PWC study in GRI SSE