1. 28-29 September 2006 GIE Annual Conference 2006, Bratislava1 Role of storage for SoS / Necessary signals for investing in new storage Klaus-Dieter Barbknecht GSE President GIE Annual Conference 2006, Bratislava 28-29 September 2006

2. 28-29 September 2006 GIE Annual Conference 2006, Bratislava2 Storage = Solid as a rock?

3. 28-29 September 2006 GIE Annual Conference 2006, Bratislava3 Agenda 1.Developments on the energy market 2.Role of storage 3.Investment 4.Necessary framework conditions 5.Emergency Gas Stocks Outlook: Madrid XII

4. 28-29 September 2006 GIE Annual Conference 2006, Bratislava4 Market demand for flexibility Source: The Heren Report 2006  The inventories of storage are already filled in some European countries.  An expression of the new gas world?

5. 28-29 September 2006 GIE Annual Conference 2006, Bratislava5 Who is going to satisfy the European import demand? North Africa 11 % 10-15 % Russia/ Caspian Region 22 % 30-40 % Source: Wingas EU 25 [Mrd. M³/a] 75 % 25 % Norway 14 % 15-20 % Others (LNG) 3 % 10-15 % Import 2004 2015 50 % 20042015 ~ 500 ~ 700 Import Own production

6. 28-29 September 2006 GIE Annual Conference 2006, Bratislava6 Role of Storage Balancing seasonal variations in consumption Covering demand peaks Securing gas supply in case of interferences in production, transport or supply Enhancing cost effectiveness of gas transport Seasonal modulation and security of supply (technical availability) seconded by products to support the new market a part of the flexibility market = SECURITY OF SUPPLY

7. 28-29 September 2006 GIE Annual Conference 2006, Bratislava7 Storage volumes: future Some examples of current storage projects in Europe: UK: Humbley Grove (Star Energy): since 2005 a capacity 315 mcm Aldbrough (Statoil/Scottish, Southern Energy): 420 mcm by 2009 Welton (Star Energy): 435 mcm by 2008/2009 Germany: Rüdersdorf (EWE): 300 mcm Bernburg (VNG): 390 mcm Italy: Alfonsine (Agip): 1.300 mcm Conegliano (Edison): 190 mcm Netherlands: Alkmaar PGI (BP): 500-750 mcm

8. 28-29 September 2006 GIE Annual Conference 2006, Bratislava8 Labyrinth? Where are we now?

9. 28-29 September 2006 GIE Annual Conference 2006, Bratislava9 Investment  Netherless massive investments are needed for safe and reliable storage facilities in order to guarantee a secure supply of gas  Long-term financing of investment has to be assured  Framework conditions as an precondition for growth and investments: clear stable predictable

10. 28-29 September 2006 GIE Annual Conference 2006, Bratislava10 Necessary framework conditions Positive investment climate development of gas infrastructure Clear responsibilities Stable legal framework

11. 28-29 September 2006 GIE Annual Conference 2006, Bratislava11 Emergency Gas Stocks Development of emergency gas stocks would lead to : –undermining investments in existing and future storage –huge investments that could be used to achieve more efficiently SoS –substantial repercussions on gas prices

12. 28-29 September 2006 GIE Annual Conference 2006, Bratislava12 Conclusion: Necessary Signals for investing in new storage  clear, predictable and reliable framework  decision about the option to regulate the storage  if regulation: need for allowing storage activities to be in line with market expectations, no threat to security of storage infrastructure due to low tariffs

13. 28-29 September 2006 GIE Annual Conference 2006, Bratislava13 Outlook: Madrid XII ERGEG will present the last monitoring for implementation the Guidelines for Good Practice for Storage Operators (GGPSSO) = recommendation to the European Commission regulation of the storage voluntary guidlines ?