Views on the EC Draft LNG Paper Extracts for the GLE Workshop Bilbao, 13th Mar ‘09

Structure of this input to the GLE workshop 1. Regulatory approach and tariffs 2. Capacity Allocation Mechanisms and Anti-Hoarding Rules 3. Transparency and Services 4. Gas Quality and TSO-LSO Coordination Summary

3. Transparency and Services TPA services A delicate balance is needed between primary and secondary interests Stimulating continuous delivery of additional primary capacity will be the most effective way to create associated secondary capacity trading opportunities When creating incentives to stimulate secondary capacity, it is crucial not to disregard incentives for investment in primary capacity – to do so might discourage further capacity investment

3. Transparency and Services Standardisation of contracts Rights purchased under a contract for LNG terminal capacity, should be assignable and free to sell on to third parties (not just back to the terminal operator). Such freedom would help to stimulate secondary trading Product offerings to different potential capacity purchasers should be non discriminatory That is not to say there must be a standard contract - some capacity purchasers may require different combinations of products / services offered by an LSO

3. Transparency and Services Standardisation of contracts ( continued) Standard terminology reduces transaction costs, reduces contract management issues, reduces legal risks / fees – and is therefore beneficial when practicable A standard contract might inhibit products offering flexibility and unnecessary limit commercial activity EFET supports the harmonisation (where practicable and appropriate) of trading arrangements at LNG importation facilities (whether regulated or TPA exempt) in order to stimulate the development of trading on secondary markets

3. Transparency and Services Transparency EFET is supportive of appropriate transparency which will provide a stimulus for increased trading Need to define ‘prospective transparency’ and debate from a common understanding EFET supports appropriate information release in a consistent and user friendly format. This will stimulate the development of traded markets LSO’s should consider what aggregate information they could provide regularly.

Summary LNG trading & arrangements for access to LNG terminals must be non-discriminatory & facilitate participation of large/small established/new players Diversity & choice in bundled / unbundled capacity should be encouraged Potential for new LNG trading products & some degree of contract harmonisation at LNG terminals, but overly prescriptive could frustrate LNG terminal capacity rights should be assignable & free to sell to third parties Improved transparency should provide a stimulus for increased trading, discussion with terminal operators is recommended The notification period for making available unused slots is a key factor, but anti hoarding measures should be recognised as just an extreme backstop The priority should be to ensure that there are effective arrangements for trade in secondary capacity

Thanks for your attention European Federation of Energy Traders Tel: +31 (0)20 5207970 Email: secretariat@efet.org www.efet.org