1. Madrid 24 th March 2009 OS Working Progress 9 th IG meeting

2. 2 Index 1.Background. 2.Information Memorandum. 3.Memorandum of Understanding. 4.Confidentiality Agreement.

3. 3 Background. 1

4. 4 Background  During the 8 th IG meeting TSOs expressed their willingness to comply with the Regulators’ agenda for the Open Season, although considered ambitious with respect to deadlines.  For the development of the Open Season, TSOs developed a working sheet with a leader and intermediate deadlines for each document with the aim to define the procedure details as soon as possible.  TSOs have had three meetings since the 8 th IG meeting: 2 nd March, 10 th March and 16 th March.  TSOs have been working in the following documents:  Information Memorandum,  Memorandum of Understanding,  Confidentiality Agreement between TSOs, and  Allocation Rules.  On 12 th March, TSOs sent to NRAs an e-mail with the draft version of the Info Memo and some questions that appeared during the discussions.

5. 5 Background  French regulator and French TSOs are currently working together with other market participants on a possible new market design in France.  Conclusions of a corresponding public consultation should be known before end of June 2009 and taken into account documentation for the Open Season.  With the foreseen development of the Spanish infrastructures the Gas System will increase its liquidity allowing almost any combination of entry and exit point.

6. 6 Information Memorandum. 2

7. 7 Contents of the Info Memo  The Info Memo has been designed taking into consideration the conclusions outcome from the Public Consultation on the future design of the OS carried out by NRAs from 14 th November 2008 to 12 th December 2009.  The main contents of the Information Memorandum are:  Review of the current status of the interconnection capacity between France and Spain,  Framework of the project: a European will.  Rationale for the Open Season.  Description of the projects: infrastructures and capacities.  Marketing of 2013 capacities and 2015 capacities.  Schedule.  Tariff Regulation.  Binding & non-binding transmission capacity request.  Allocation procedures.

8. 8 Spain – France interconnection projects WESTERN CORRIDOR  Larrau: development of an existing interconnection (Enagás / TIGF).  Biriatou: development of an existing interconnection (Enagás / Naturgás / TIGF). EASTERN CORRIDOR  MidCat: new interconnection (Enagás / GRTgaz / TIGF). TO BE COMPLETED

9. 9 Capacity development between balancing areas

10. 10 Available capacity between balancing areas TO BE UPDATED

11. 11 Marketing of capacities: One OS, two phases

12. 12 Marketing of capacities: Common considerations  Marketing of capacities:  Only firm available capacities will be sold in the OS.  All firm available capacities will be sold.  80% of the available capacity will be sold under long-term basis, and the remaining 20% under short-term basis.  Multiannual and multiseasonal capacities will be offered separately, where relevant. Multiseasonal capacities might not available at all interconnection points. Only the surplus of one season on the other will be offered in multiseasonal capacities.  2015 capacities will be offered regardless the results for 2013 capacities during the 1 st phase.  Duration of contracts:  Maximum duration of contracts: 31 st March 2033 (20 years).  Minimum request period: 1 year.

13. 13 Marketing of 2013 capacities  In 2013, there are two capacity products on the Western side of the border: Larrau and Biriatou.  Both of them offer capacity between the same balancing areas (i.e. Spain and TIGF).  Taking into account that Larrau and Biriatou are owned by different TSOs, for Enagás and Naturgás it is out of the question that different contracts will have to be signed.  TSOs expect tariffs to be similar in both points.

14. 14 Possible treatment of Larrau and Biriatou  TSOs had envisaged to treat them as one single point during the first stage for allocation purposes. To this end, TSOs had thought about the possibility of developing a capacity booking contract establishing that shippers commit to subscribe capacity wherever it is decided to develop capacity.  Should there be enough demand for both points, all investments would proceed. There would be no problems to develop the capacity.  If there is not enough demand at each point, this approach could entail some risks if the investment decisions are not clear ex ante. TIGF is concerned that, depending on the rules defined, it might be forced to take a non-optimal decision or not investing (because one or both projects might not pass the economic test).  If different requests for Larrau and Biriatou are asked, the market will decide which of them to develop. The risk is that the market might want capacity but shippers may split their requests between both points, not allowing an increase of capacity in any of them, when, in principle, shippers should have an almost indifferent preference for any of the two points.

15. 15 Offering of 2013 capacities  TSOs have discussed whether 2013 capacities not subscribed during the 1 st phase (which is binding) in June/July may/would be included again in the 2 nd phase (October/November).  If so, it could be done automatically, or could be a decision taken after an assessment of the 1 st phase results.  Moreover, if could be done under amended allocation rules if the ones set for the 1 st phased were not ideal. ?

16. 16 Marketing of 2015 capacities  Different possible products at Le Perthus interconnection point between Spain and France will be proposed in the non-binding round (1 st Phase):  Product 1: Enagás ↔ TIGF  Product 2: Enagás ↔ GRTgaz South  In addition, two other products will be proposed at the GRTgaz South ↔ GRTgaz North interconnection and at the GRTgaz South ↔ TIGF interconnection:  Product 3: GRTgaz South ↔ GRTgaz North  Product 4: TIGF ↔ GRTgaz South  Requests for a mix of the two products will also be possible.  The final type of the 2015 capacity products offered during the 2 nd Phase (binding round) will depend on the results of the 1 st Phase (non-binding round)

17. 17 Proposed schedule – April & May 2009  27 th April: Publication and presentation of draft documents for consultation between stakeholders:  Information Memorandum.  Priority and allocation rules.  Request letter and request forms.  Confidentiality Agreements between each TSO and interested subscribers.  Capacity booking contract between each TSO and interested subscribers (2013 capacities).  Memorandum of Understanding between TSOs.*  Confidentiality Agreement between TSOs.*  MAY 2009, Signing of:  Memorandum of Understanding between TSOs.  Confidentiality Agreement between TSOs. * For information only between TSOs and regulatory authorities.

18. 18 Proposed schedule – June & July 2009  1 st June. Publication of final documents (subject to conclusions of public consultation in France)  Information Memorandum.  Priority and allocation rules.  Request letter and request forms.  Confidentiality Agreements between each TSO and interested subscribers.  Capacity booking contract between each TSO and interested subscribers.  10 th June. Joint presentation by TSOs and information meeting with stakeholders about the OS.  Before 15 th June:  Signing of Confidentiality Agreements between each TSO and interested subscribers.  15 th June. Starting date of the First Phase of the OS.  20 th July. Publication of results of the First Phase of the OS.

19. 19 Proposed schedule – 4Q 2009  SEPTEMBER 2009  Capacity booking contract between each TSO and interested subscribers (2013 capacities).  OCTOBER 2009  Starting date of the Second Phase of the OS.  OCTOBER/NOVEMBER 2009  Publication of results of the Second Phase of the OS.  NOVEMBER 2009  Signing of capacity booking contract between each TSO and interested subscribers (2015 capacities).  Approval of GRTgaz and TIGF global investment programs by their respective Boards of Directors – 2013 capacities at least.  DECEMBER 2009  Approval of GRTgaz and TIGF global investment programs by the CRE – 2013 capacities at least.

20. 20 Schedule  The proposed schedule is subject to revision depending, among other factors, on the timing of the consultation process in France.  In order to be able to manage on due time the investment process the Open Season should be definitively launch before end of summer.

21. 21 Proposed calendar of 2013 capacities

22. 22 Proposed calendar of 2015 capacities

23. 23 Tariff Regulation  In the Information Memoradum a description of the tariffs currently applied will be provided.  At the 8 th IG meeting, NRAs emphasised that:  “TPA tariffs for the Open Season will be based on transparency, cost reflectivity and non discrimination principles. Regulators committed themselves to avoid the introduction of undue distortions in the tariff regime.”  Besides, in the conclusions of the Public Consultation NRAs committed themselves to publish in advance the tariff principles and the setting rules.  TSOs wish NRAs to provide the tariff principles and/or setting rules in due time before launching the Open Season.  In order to allow NRAs to provide the expected tariff visibility, TSOs will detail the expected costs of the infrastructures associated to each project solution in advance.

24. 24 Memorandum of Understanding. 3

25. 25  The 4 TSOs work on a common MoU  Purpose of the MoU :  Share a common understanding of the infrastructure development programs leading to 2013 & 2015 capacity developments  Coordinate development projects  Share relevant information on decisions and progress of the programs  Three points have risen during the discussions:  Final Investment Decisions : key dates in the MoU  Adjustments on investment programs : anticipation and consensus  Position concerning the “Domino Effect” : what happens if one of the projects is finally not decided Memorandum of Understanding

26. 26 Non-Disclosure Agreement. 4

27. 27  A non-disclosure agreement is under discussion among the TSOs.  TSOs agree in principals and the document could be signed quickly Non-Disclosure Agreement

28. Thank you for your attention!