1. European Economic Congress, Katowice, 17 May 2011 Challenges in Gas Transmission: The V4+ Perspective Andreas Rau Member of the Board of Directors

2. 2 100% 56% 35% Holding Trade & Sales Transmission Distribution Storage E&P Storage Employees 893 Turnover > € 800 million Transmission volume 71 bcm Key Business Data  transmission contracts for 90bcm/a  2,270 km of pipelines  four compressor stations (aggregated power >1,000 MW; Veľké Kapušany biggest compressor station in the EU) Facts and Figures 2010

3. 3 About 75% of today’s gas flow from Russia to Western Europe is passing through Slovakia Kiev Minsk Moscow Vienna Warsaw St. Petersburg Berlin Prague Budapest Existing Eustream 90 bcm/a EuRoPol Gaz 33 bcm/a New Nord Stream 2 x 27.5 bcm/a South Stream 30-60 bcm/a Nabucco 31 bcm/a New projects can easily double existing pipeline capacities! New challenges due to increasing pipe-to-pipe competition! Bratislava Market Position

4. 44 Development of Transmission Capacities in Slovakia Capacity 2009=100% contracted capacities max. technical capacities (acc. to decommissioning plan) expected impact of Nord Stream How reasonable are new routes if they lead to stranded investment elsewhere?

5. 5 Our Vision: A Central European “Gas Turntable” Czech Republic  reverse flow (capacity of 25 mcm/d via Lanzhot) Ukraine  gas storages and E&P?  technical cooperation SK/UA?  reverse flow at SK/UA border (capacity cca. 85 mcm/d) Hungary  SK/HU Interconnector (“bridgehead” for Nabucco)  access to LNG (Krk)? Poland  interconnection PL/SK?  access to LNG (Świnoujście)? Austria  development of Baumgarten Hub  reverse flow (capacity of cca. 40 mcm/d via BOG)

6. 6 Short-term / Short-haul Gas Transmission increasing no. of hub related transactions in SK (e.g. arbitrage NCG/CEGH) sufficient transmission capacities available in Slovakia in the long run (no investment need) new products (e.g. title transfer, VTP prepared) positive impact expected from SK/HU interconnector

7. 7 TSO Cooperation : GATRAC 7 Cross border VP2VP products – Overview Direct connection between respective VPs Bundled products with one single contract (similar “train tickets”) Bookable with each participating TSO on FCFS-principle First product: Firm daily capacity Bookable one to more days ahead* No renomination *More days ahead will be used to allow bookings over the weekend and holidays and to align capacity booking periods with trading times on the EEX Gas Spot Market VP

8. 8 The North-South Gas Corridor discussion triggered i.a. by 2009 gas crisis strong political support by V4+ initiative (six countries directly involved) 2,300 km of pipelines (+upgrade of existing lines) 900,000 t of steel investment approx 3,800 MEUR financing under EU programmes: 220 MEUR access to two LNG terminals (Świnoujście, Krk) Realistic concept for enhancing market liquidity and security of supplies or wishful thinking?

9. 9 SK/HU The Hugarian/Slovak Interconnector I 115 km of pipeline length 5 bcm/a of (design) capacity bidirectional flow investment app. 120 MEUR financing under EERP (30 MEUR) start of operations initially planned for 2013

10. 10 6/2009MoU signed by FGSZ and Eustream 7/2009EEPR application 12/2009 end of non-binding open season 6/2010 end of binding open season I 12/2010 end of binding open season II (start of operations postponed to 2014) 4/2011FGSZ withdraws from project, OVIT new partner on Hungarian side 10/2010 EEPR grant decision by EC The Hungarian/Slovak Interconnector III

11. 11 Conclusions further diversification of transmission routes and supply sources (e.g. Nord Stream, Nabucco, South Stream ) – mainly enhancing east-west capacities huge efforts of TSOs to increase transmission capacities and implement new interconnections (forward and reverse flow) special focus on establishing a north-south corridor in Central Europe significant financial support of EU and political support by V4+ TSOs introducing new products (e.g. GATRAC) some uncertainties as to development of commodity markets some routes already having spare capacities today Start with realistic projects (e.g. HU/SK) and then follow a step-by-step approach (always verifying market demand, needs in terms of security of supply and cost/benefit ratio)

12. 12 For further information: www.eustream.sk

13. 13 pipe-to-pipe competition EU gas demand stagnating? stricter environmental regulations new unbundling requirements short-term bookings and increased speed of shipper transactions consolidation among European TSOs? Strategic Challenges

14. 14 1- CZ/SK reverse flow Lanžhot 2- AT/SK reverse flow WAG 3- AT/SK reverse flow TAG 4- SK/HU interconnector 5- Internal reverse flow SK 6- Gazelle 7- EuRoPol Gaz / Jamal 8- Nord Stream 9- LNG PL 10- LNG CRO 11- OPAL 12- HU/CRO interconnector 13- Nabucco / South Stream 1 4 5 6 7 8 9 10 1 2 3 12 Back-up: Main Gas Corridors in Central Europe 13

15. 15 Virtual Trading Platform Virtual trading point is a requirement of liberalized markets: - it allows exchange of title within the transmission network - it enhances liquidity and trading - it brings additional source of revenues Eustream currently developing respective IT solution