1. Madrid, 23rd July 2007 3rd IG Meeting South Gas Regional Initiative

2. 2 3rd IG meeting S-GRI- Agenda I. 13:00 – 13:10 Opening: approval of the agenda. (for approval) I.1 Welcome I.2 Approval of the agenda and the last meeting minutes II. 13:10-13:40 Outcome of the meeting with DGTREN: next steps. (for information) III. 13:40 – 15:40 Working group to solve interconnection infrastructures and interoperability issues. (for discussion) III.1 Follow up of the new infrastructures proposed by TSOs: model to be fulfilled and published on TSO/ERGEG web site III.2 Priorities to be addressed: CAM, interoperability issues identified by Stakeholders, transparency improvements…Regulators presentation III.3 Composition of the group III.4 Roles and responsibilities III.5 Working plan: agenda IV. Next meetings V. AOB

3. 3 II. OUTCOME OF MEETING WITH DGTREN II. OUTCOME OF MEETING WITH DGTREN Main conclusions regarding natural gas Necessity of giving renewed priority to further integration of the French, Portuguese and Spanish gas market, in particular through increased interconnection capacity Importance of developing the Iberian gas market integrated into the EU, in line with others EU markets. Regulators involve will collaborate to implement SGRI including MIBGAS To speed up implementation of improvements in congestion management for cross-border interconnections

4. 4 II. OUTCOME OF MEETING WITH DGTREN II. OUTCOME OF MEETING WITH DGTREN Next steps Implementation of the result of TSOs studies so that infrastructures are available by the planned date Development of a coordinated capacity allocation mechanism for new interconnections capacity Improving interoperability and transparency

5. 5 II. OUTCOME OF MEETING WITH DGTREN II. OUTCOME OF MEETING WITH DGTREN Supervision CREATION OF A INTERNAL WORKING GROUP A working group, building on existing working groups, will be set up for gas interconnection. It will be able to rely on the regular involvement, at technical level, of all parties present in the meeting with DGTREN. The EC, at the request of participants, and assisted by the European coordinator, will closely follow the work of this group. Meetings with DGTREN will be hold each 6 months to look at the progress of this group on the issues considered.

6. 6 III. Working group for interconnections and interoperability III. Working group for interconnections and interoperability Origin-3rd SG meeting PRIORITY 1. Interconnection capacity TSO’s of countries involved in this Regional Initiative should coordinate in order to establish the map of capacity for the next years. They will undertake actions 1 and 2, assisted, where necessary, by SG members. The results of their work will provide RCC with valuable information in order to decide on further measures (action 3) to make possible the development of new infrastructure and to maximize the use of the capacity. Action 1. Analysis of the current status of the interconnection infrastructures. (France-Spain) TSO’sNovember 2006 IG - 11 th Dec. 06 Action 2. Analysis of the future interconnection infrastructures need. (France-Spain) TSO’s, with the support of SG. 1st part : SG - 6th Feb. 07 2nd part (2011-2015): SG - 15th Jun. 07 Action 3. Decision on further actions to make possible new infrastructure projects, further actions to manage possible congestions, taking into account the functions and powers of each regulator RCC in close coordination with IG To be determined

7. 7 III. Working group for interconnections and interoperability III. Working group for interconnections and interoperability Origin-3rd SG meeting PRIORITY 2. Interoperability Analysis of the possible interoperability problems, by the means of the study of practical cases of transit among the three countries France – Spain, Portugal – Spain. This should reveal the main interoperability problems that may hamper the efficient trade between countries. From the information gathered from the previous action, IG members should elaborate an action plan to solve the concrete interoperability obstacles identified. Action 4. Study of practical cases of transit, with the aim to identify possible interoperability problems. 4.1. France-Spain 4.2 Portugal-Spain SG members with support from RCC 4.1 France – Spain Start - SG - 6th Feb. 07 SG - 15th June 2007 4.2. Portugal – Spain Postponed Action 5. Study and action plan to solve interoperability problems, taking into account the result of the previous action IGJune 2007 (agreement on action plan France- Spain)

8. 8 III. Working group for interconnections and interoperability III. Working group for interconnections and interoperability Origin-3rd SG meeting In last SG meeting, French TSOs required to set up a transparent and non discriminatory capacity allocation mechanism (CAM) coordinated between involved TSOs, to allocate the capacity of the new French-Spanish interconnections. A working group between TSOs and regulators is to be created to look at the CAM. Investments should also be coordinated for obvious efficiency reasons.

9. 9 III. Working group for interconnections and interoperability III. Working group for interconnections and interoperability Follow up of new infrastructures proposed by TSOs First task of the new group: Supervision of the development grade of proposed new interconnections Sufficient interconnection capacity are the first requirement to create the internal market, therefore it is essential to know periodically the grade of development of new interconnections capacities. Proposal of developing a model on the new interconnection/capacity state to be fulfilled and published in TSO/ERGEG web sites each 4 months.

10. 10 III. Working group for interconnections and interoperability III. Working group for interconnections and interoperability Follow up of new infrastructures proposed by TSOs Name of the infrastructure: _______________________________________ Name of the responsible TSO: ___________________________________ New capacity in both senses (GWh/day):____________________________ In possession of all required administrative authorisations: Yes No Building starting date: ___________________________________________ Starting operation date considered in the planning: ___________________ Updated forecast of starting operation date: _________________________ (according to real works status) Current state of building (in percentage): ___________________________ Developments achieved in last period: _____________________________ Causes of delays (if applied): _____________________________________

11. 11 III. Working group for interconnections and interoperability III. Working group for interconnections and interoperability Priorities to be addressed Second task of the new group: Developing a coordinated Capacity Allocation Mechanism, in particular for new interconnections capacities The CAM must enable the allocation of the capacity for transit in a transparent, non discriminatory and objective way in the interconnections among countries. CAM to be developed must follow principles by Regulation 1775/2005/EC. Necessity of distinguish between long term and short term capacities. New long-term capacities: Open subscription (To be defined) Short-term capacities: FCFS (One stop shop)

12. 12 III. Working group for interconnections and interoperability III. Working group for interconnections and interoperability Priorities to be addressed Second task of the new group (cont.): CAM Based on the following contents: Specific timetables: periods and deadlines Active and continuous communication among TSOs Simplicity for applicants and also for TSO’s (the most similar to “one stop shop”) Fist come first served as a general principle, for existing infrastructures considering that FCFS is the main CAM on force in the involved countries, and taking into account ERGEG comments on Regulation 1775/2005. Open season/open subscription period as an option to allocate capacity in the case of new infrastructures.

13. 13 III. Working group for interconnections and interoperability III. Working group for interconnections and interoperability Priorities to be addressed Second task of the new group (cont.): CAM New infrastructures capacity allocation Identification of new interconnection infrastructures done Capacity available to the market Open season / Open subscription Long term YES NO CAM Initial subscription period needed T=0 Joint TSOs capacity allocation Type of CAM: pro-rata Decision on the procedure Joint TSOs capacity allocation Coordinated mechanism among TSO to evaluate, accept and sign the contract with the counterpart Harmonization France-Spain: Long term? >1 or 2 years Financial guarantees? Amount reserved for short term (20%-25%) Contract signed among the shipper and the TSOs CAM: FCFS

14. 14 III. Working group for interconnections and interoperability III. Working group for interconnections and interoperability Priorities to be addressed Second task of the new group (cont.): CAM Long term: Open subscription procedure to be proposed When, where, who and how Allocation mechanism in case of surplus demand Coordination among TSO: to allocate and sign contract Short term: Applications models to request capacity at interconnections Periods and deadlines to exchange information The way information must be exchanged among TSOs Feasibility studies Coordinated Refusal/Acceptation Contracts signing, counterparts, etc…

15. 15 III. Working group for interconnections and interoperability III. Working group for interconnections and interoperability Priorities to be addressed Third task of the new group: Improvement on interoperability and transparency issues Difficulties regarding interoperability have been identified by Stakeholders and with the comments of TSOs: Compatibility of the sales of capacity (including short term capacity and rules for congestion management), Compatibility of the technical conception of the pipes should allow for efficient operation ( e.g. interconnection points…), Compatibility of the day to day issues (e.g., gas day, matching procedures, gas quality specifications…). Study carried out by regulators showed deficiencies on transparency requirements included in Regulation 1775/2005/EC. Also, transparency needs have been pointed out by Stakeholders. Necessity of prioritizing the objectives of the group with reference to operability and transparency improvements

16. 16 III. Working group for interconnections and interoperability III. Working group for interconnections and interoperability Composition of the group Working group formed by TSOs and Regulators Necessity of defining: TSOs representatives (number and designations) Regulators representatives (number and designations)

17. 17 III. Working group for interconnections and interoperability III. Working group for interconnections and interoperability Roles and responsibilities Necessity of defining: TSOs responsibilities: - Definition and Propose CAM ( As a first step there is the document proposed by Regulators - possible improvements, inconveniences, procedures to be applied, etc.) -Developing technical/procedural aspects -Update the information regarding new infrastructures -Implement interoperability and transparency improvements -Other responsibilities to be defined… Regulators responsibilities: - General directives regarding CAM and CMP - Supervising, approve and amend (if necessary) TSOs operability proposals - Supervising development of new infrastructures - Encouraging TSOs transparency accomplishment - Other responsibilities to be defined…

18. 18 III. Working group for interconnections and interoperability III. Working group for interconnections and interoperability Working plan: agenda FIRST WORKING GROUP MEETING mid SEPTEMBER To develop the CAM discussing: Clearly defined principles (When, Where, How and Who) Required procedures (Allocation model,TSO communication channels, application models, transparency requirements for the CAM, etc.) Coordination with new infrastructure construction In order to present it to the next IG for information NEXT WORKING GROUP MEETING TO BE DEFINED

19. 19 IV. Next meetings End September: IG meeting France - Spain Interconnection: Final investment document Interoperability: Capacity Allocation Mechanisms agreement Transparency: National regulation changes requirements Portugal - Spain Interconnection: Current status of infrastructures presentation MIBGAS