Allocation of Capacity in Portugal Under the New Regulation 20th SG Meeting, S-GRI, Madrid 15th November 2013

Index Main changes New Regulatory Framework Capacity Management 18-09-2018 Index Main changes New Regulatory Framework Capacity Management Some results Secondary Market ERSE - Entidade Reguladora dos Serviços Energéticos 18-09-2018 ERSE - Entidade Reguladora dos Serviços Energéticos

Main changes What has change with the new regulation on Access to Gas Infrastructures? Five Major changes The new Regulation sets a complete new standard for capacity booking and trading, promoting convergence with CAM NC and enabling the implementation of secondary market Capacity rights to use the transmission system are offered to Shippers Assignment of capacity rights by the TSO for MT and ST products Capacity allocation calendar, standardization of products, allocation through auction, etc Convergence towards CAM NC rules Shippers pay according to allocated capacity, instead of used capacity, at all entry/exit points (except LDC) Ex-ante payment of capacity rights Improves interaction between primary and secondary market, while enabling daily auctions Capacity allocation via booking platform (Primary Market) Enhances liquidity, avoiding contractual congestion Promotion of the secondary market for capacity rights trading ERSE - Entidade Reguladora dos Serviços Energéticos 18-09-2018

New Regulatory Framework Changes within the scope of Regulatory documents Relevant regulatory documents that govern the capacity allocation process: Main activities Programming / Nomination Daily Operation / System Management MAC, MEDC, MRC (per infrastructure) MPGTG Before System Operation Commercial Margins Imbalances Penalties Cap. Calculation Cap. Programming Congestion Mgmt. Assignment of Capacity Rights MPAI MPGTG Product definition Auction rules Cap. Allocation Invoicing Credit Risk Mgmt. Combines former contents with nomination rules Includes provisions on Secondary Market After NOTE: MPAI (Infrastructure’s Access Procedures Manual) – New regulatory document, encompasses former 8 documents governing cap. calculation (MEDC), cap. allocation (MAC), congestion management (MRC) and Strategic Reserves storages ERSE - Entidade Reguladora dos Serviços Energéticos 18-09-2018

Capacity Management A major change in the capacity management chain 18-09-2018 Capacity Management A major change in the capacity management chain Until 30th September, 2013 Commercial Mgmt. (TSO) Available capacity is published Programming/ Nominating ‘Allocation’ Utilization Payment due for used capacity Global System Manager Before Gas Day Gas Day After Gas Day As from 1st October, 2013 Commercial Mgmt. (TSO) Available Products Capacity allocation (auctions) Capacity contracting Payment due for contracted capacity Shippers Forecasts/ Nomination Utilization Global System Manager ERSE - Entidade Reguladora dos Serviços Energéticos 18-09-2018 ERSE - Entidade Reguladora dos Serviços Energéticos

Capacity Management Standard Products offered Products \ Maturity Yearly Quarterly Monthly Daily (week-ahead) (day-ahead) Storage of LNG x Underground storage Physical IPs (*) Regasification at LNG terminal Backhaul at LNG terminal UGS injection UGS withdrawal (*) only for unbundled capacity at Valença do Minho and Campo Maior (outside the VIP) ERSE - Entidade Reguladora dos Serviços Energéticos 9/18/2018

Capacity Management 2013/ 2014 2014/ … Calendar for 2013 and beyond (VIP) Y and Q Capacity Auctions (VIP) M and D Cap. Allocation (FCFS) Yearly Capacity Products * Yearly Consumption Forecast Quarterly Capacity Products * Monthly Capacity Products * Y and M Utilization Forecast Rolling Day-Ahead Capacity Auctions 2013/ 2014 30.Sep 2013 - 30.Sep 2014 Jun/Jul As from Jul 31.Jul-06.Sep 3.Sep 06–13.Sep 13 - 20.Sep 23.Sep Daily Capacity (Re)-Nomination Governing Reg. MPAI MPGTG 2014/ … 30.Sep 2014 - 30.Sep … Mar Jun As from Sep 3.Sep 16 - 23.Sep Yearly Capacity Auctions Quarterly Capacity Auctions Rolling Monthly Capacity Auctions Yearly Consumption Forecast Yearly and Monthly Utilization Forecast Rolling Day-Ahead Capacity Auctions * This activity includes the publication of available capacity, the auction and the final allocation of capacity to shippers ERSE - Entidade Reguladora dos Serviços Energéticos 18-09-2018

Capacity Management 2014/ … Calendar for 2014 and beyond Governing Daily Capacity (Re)-Nomination Governing Reg. MPAI MPGTG 2014/ … 30.Sep 2014 - 30.Sep … Mar Jun As from Sep 3.Sep 16 - 23.Sep Yearly Capacity Auctions Quarterly Capacity Auctions Rolling Monthly Capacity Auctions Yearly Consumption Forecast Yearly and Monthly Utilization Forecast Rolling Day-Ahead Capacity Auctions ERSE - Entidade Reguladora dos Serviços Energéticos 18-09-2018

Some Results On assignment of Capacity rights (*) Only for unbundled capacity at Valença do Minho and Campo Maior (outside the VIP) (**) Monthly products for October and November Until now, no Quarterly and Daily capacity rights have been bought at LNG Terminal and Transmission network. ERSE - Entidade Reguladora dos Serviços Energéticos 18-09-2018

Some results On assignment of Capacity rights Nominations % of booked capacity Average Minimum Maximum IP Campo Maior (*) 94% 83% 100% IP Valença do Minho (*) 91% Regaseification at LNG Terminal 66% 28% (*) only for unbundled capacity at Valença do Minho and Campo Maior (outside the VIP) ERSE - Entidade Reguladora dos Serviços Energéticos 9/18/2018

Secondary Market Main Rules Since October 2013 : Primary capacity holders can sell the total allocated capacity or part of it. The sell can be placed at OMIP platform: Allows transferring the capacity use or also the rights and obligations Optional financial settlement (OMIClear) Products Cascading Y > Q > M > D TSO has the option of buyback ERSE - Entidade Reguladora dos Serviços Energéticos 18-09-2018

Secondary Market Operations Bilateral Model (OTC) and anonymous for third parties. For all products (annual, quarterly monthly and daily). All authorized shippers are allowed to buying/selling the capacity. The operations can be done on a efficient way (fax / e-mail / recorded phone call). Flexible Financial settlement (optional) IF Price = 0 => Settlement between the two shippers IF Price > 0 => Settlement by OMIClear Fungibility of positions (compensation effect: Sales cancel purchases)> full netting of positions and responsibilities Types of Collateral: cash and bank guarantees Maturity: (i) By cascading (long contracts); (ii) By notice to the System Operator Dissemination of information: All information on transactions, positions and deliveries on a centralized system Payment of Fees by shippers ERSE - Entidade Reguladora dos Serviços Energéticos 18-09-2018

ERSE - Entidade Reguladora dos Serviços Energéticos Thank you ENTIDADE REGULADORA DOS SERVIÇOS ENERGÉTICOS Rua Dom Cristóvão da Gama, 1, 3º 1400-113 Lisboa Portugal Telefone: +(351) 21 303 32 00 e-mail: pverdelho@erse.pt url: http://www.erse.pt ERSE - Entidade Reguladora dos Serviços Energéticos 18-09-2018