1. Perspectives of the Greek and Italian gas markets and the role of the IGI project as a Trans-European project ECSEE Workshop October 2005 Belgrade J. Florentin DEPA S.A. Projects Director E. Ruggeri EDISON S.p.A Business Development Manager

2. 2 Plan of presentation PART 1 – GREECE (by Mr J. Florentin) DEPA S.A. The Greek Gas Market The Interconnection Turkey-Greece (ITG) PART 2 – ITALY (by Mr E. Ruggeri) EDISON S.p.A. The Italian Gas Market The Interconnection Greece-Italy (IGI)

3. 3 PART 1 – GREECE and the ITG Project by Mr J. Florentin

4. 4 Greek gas market - Historic One of the last European countries to introduce natural gas Gas supply contracts signed in 1987 (Gazexport) and 1988 (Sonatrach) Establishment of DEPA in 1988 Start of commercial operation: November 1996 Completion of the LNG terminal in 1999 Market dominated by power generation

5. 5 Greek gas market – Main infrastructure HP (70 bar) mainline –511 km, 36 and 30 HP branches –450 km, 10 to 30 LNG terminal –2 tanks 65.000 m 3 each –Send out rate 220.000 Nm 3 /h (2007: 600.000) 4 Operation & Maintenance Centres 24 M/R stations

6. 6 Gas distribution companies of Attiki, Thessaloniki and Thessaly (ownership of fixed assets) Greek gas industry corporate structure 49 % Greek State Private investors (Athens & London S.E.) Hellenic Petroleum 65 % DEPA Local Authorities 35 % 32 % 35 % Thessaloniki EPA Thessaly EPA Italgas Attiki EPA Attiki Denmark (60% Cinergy – 40% Shell Gas) 3 Prospective EPAs East Macedonia & Thace Central Macedonia Sterea & Evia Investors 51 % 49 % 51 % 49 % 51 % 49 % 100% Flow of dividents (10%) EPA : Regional Gas Supply Company PanEuropean Holdings S.A. 33 %

7. 7 Market - Demand

8. 8 Market - Supply

9. 9 Market – Growth drivers (1/2) Power generation –Regulator: all new capacity should come from either RES or gas fired units. –Increase of electricity demand forecast: 3,1% p.a. up to 2015 One new power plant (400 MW) p.a. Nat.Gas accounted for 15,0% of electricity generation in 2002 It is expected to account for 36,7% by 2015 Power CAGR 1997-2002: 5,9% Energy CAGR 1997-2002: 4,2%

10. 10 Market – Growth drivers (2/2) Residential and commercial sector –Three EPAs (RGDCs) with obligation, in their licenses, to expand the distribution networks in four major cities (length to be reached in the first 7 years). –Three additional EPAs might be created to wholly cover the areas crossed by the gas infrastructure. –According to the EU Dir. 2003/55 Art 28 § 8, the existing EPAs have a 30 year monopoly for consumers up to 9 bcm/y. –According to the EU Dir. 2003/55 Art 28 § 5b, the future EPAs may have a conditional monopoly for up to 20 years.

11. 11 Interconnection Turkey-Greece (ITG project) Greek part –86 km, 36 –Funding: Studies: TEN 50% Construction –CSF III (EU): 29% –CSF III (Greek State) 29% –Equity & loans 42% Turkish part –200 km, 36 (17 km off-shore, max. depth 70m) –Funding: Studies: TEN 50% Maximum capacity (with 2 compressors): 11 bcm/y On stream: 1Q2007

12. 12 Interconnection Turkey-Greece (ITG project) Progress to date: Interstate agreement signed in Feb. 2003 Gas sales agreement signed in Dec. 2003 -(0,75 bcm for 15 years) Construction of Greek part: Phase 1 approaching completion, Phase 2 to start 1Q2006 Construction of Turkish part: awarded Construction of Border metering station: awarded Tender package for HDD under Evros/Meric river under preparation Mechanical completion forecast: 1Q2007

13. 13 PART 2 – ITALY and the IGI Project by Mr E. Ruggeri

14. 14 Edison Shareholder Structure Market 34,2% EDISON 63,3% Transalpina di Energia EDF DELMI 50% 50% 2,5% AEM Milano Dolomiti Energia Trento 51%10%10% 6% BPM 3% Crt 5% ENIA 15% SEL MedioBanca

15. 15 Edison Positioning in the Italian Energy Market EnelEdisonEndesaEnipower Others AEM Milano 126.0 48.0 20.8 13.9 9.5 58.1 Major power producers in Italy in 2004 (TWh) (a) Net of losses and settlements with National Grid Operator (GRTN) Major gas suppliers in Italy in 2004 (Bcm) ENIENELEdisonOthers purchases from ENI 9.0 54.1 18.0 13.1 9.4 7.7 8,6 3,4

16. 16 Edison Development Plan (1/2) Power availability mix (TWh) (a) (a) Net of losses and settlements with National Grid Operator (GRTN) Import and domestic purchases Edison hydroelectric and wind production Edison thermoelectric production 51.5 2004 44,3 3,7 3,5 0 5 10 15 20 25 30 35 40 45 50 55 54 2009 60 65 70 75

17. 17 Edison Development Plan (2/2) Gas availability mix (bcm) Domestic purchases Domestic production Direct gas supplies to power plantsImports Changes in stock Foreign production 2004 13.4 -0,3 -2 0 2 4 6 8 10 12 14 3,7 6,7 1,0 0,3 2,0 2012 16 18 20 19,5

18. 18 Italian Gas Market The Italian market is structurally short in capacity compared with most other EU countries. New ongoing projects - already sanctioned (Rovigo LNG, Transmed and TAG repowering) and under development - will be able to satisfy demand growth (driven by power generation) and increase availability and security of supply.

19. 19 Russia Netherlands Norway Libya Algeria Algeria LNG Qatar LNG Algeria Caspian + LNG Algeria Libya Algeria LNG AUSTRIA, SLOVENIA CROATIA HUNGARY FRANCE GERMANY HUB The diminishing gas production of the UK and the NL coupled with the increasing gas demand in the French and German markets will call for more use of alternative gas supplies. Significant natural gas reserves (approx. 20-25% of global gas reserves) are situated in N. Africa and in the Caspian region. Italy is in a geographical strategic position and, through the necessary contractual, infrastructure and technical developments, could become a Transit Country for African and Caspian gas to N. European markets. A Reverse Flow, virtual first and physical eventually, is expected to occur in the north Italian border, once new infrastructures are developed. The European context The creation of an interconnected European gas system will support the creation of a Hub

20. 20 Interconnection Greece-Italy (IGI): Project Description The Interconnection Greece-Italy (IGI Project) is developed, since 2002, by Edison and Depa in cooperation with Botas (Turkish natural gas state company), with the aim to connect the huge Caspian and Middle East gas resources to the European market. IGI CAPACITY: 8 – 10 bcm/y ITG CAPACITY: approx. 12 bcm/y IGI ITG IRAN AZERBAIJAN RUSSIA IRAQ EGYPT The Interconnection Turkey-Greece (ITG) has been developed by Depa and Botas with the aim to connect the two countries, creating a corridor for gas supplies to Greece and Europe. The project, currently under construction, will start operations in 1Q 2007. Existing Under Development Under Construction

21. 21 IGI onshore section Total length : 595 Km Pipeline diameter : 36 Capex:600 M IGI offshore section Total length : 212 Km Pipeline diameter : 32 Max. water depth:1450 m Capex:350 M Compressor stations Kipi CS: 39 MW Komotini CS: 26 MW Nea Mesimvria CS: 39 MW Stavrolimenas CS: 75 MW Interconnection Greece-Italy (IGI): Project Description Nea Messimvria Kipi ITG IGI offshore section IGI onshore section Comp. station

22. 22 Status of the IGI Project Edison and Depa have finalised the IGI Project feasibility study, which has benefited of an EU financing of approx. 1 M. The Feasibility Study included the following activities: Part 1: Technical Feasibility Gas flow simulation study for the entire system (from Turkey to Italy) Project Design Basis Definition of system routing Pre-Basic Engineering of IGI system Capex and Opex assessment Preliminary environmental impact assessment Project impact on the Italian Gas Grid Part 2: Economic and Financial Feasibility Definition of the project business plan (unlevered version) Finalisation of the net-back analysis and assessment of the project economic viability Definition of the optimum corporate, commercial and financial structures Development of the project financial plan Confirmation of project financial feasibility

23. 23 The Commercial Structure of the IGI Project The IGI project is divided into two sections: offshore and onshore, to be developed via two separate companies: Poseidon Co. (or Neptune Co) and Demeter Co. respectively. These Companies will act exclusively as transportation companies. Edison, Depa and Botas respective role in the development of the IGI Project will be as follows:

24. 24 The Commercial Structure of the IGI Project Edison: Principal shipper within the IGI system (securing at least 80% of the Long term capacity) Shareholder in Poseidon Co. Depa: Shipper within the IGI system for 20% of the capacity Shareholder in Poseidon Co Carrier through the Greek grid and 100% owner of the onshore section of the IGI project (Demeter Co) Botas: Carrier through the Turkish grid Possible bridge supplier to IGI project shippers Possible shareholder in Poseidon

25. 25 Time Schedule Expected start-up date: 2010