1. Titel: Achieving the Internal Gas Market The Danish Experiences Jan Ingwersen Senior Vice President Gastra A/S

2. Transmission Pipelines M/R stations Offices Gastra Activities The Technical System  860 km transmission pipeline  40 M/R stations  Annual gas transport 7-8 BCM The Company  Established 1 January, 2004  100% state owned  Operates under regulated license  110 employees The Economy  Equity 150 mill. Euro  Assets 670 mill. Euro  Revenue 120 mill. Euro The Technical System  860 km transmission pipeline  40 M/R stations  Annual gas transport 7-8 BCM The Company  Established 1 January, 2004  100% state owned  Operates under regulated license  110 employees The Economy  Equity 150 mill. Euro  Assets 670 mill. Euro  Revenue 120 mill. Euro

3. 3 Gastra's Core Business Transmission Security of Supply Market Facilitator

4. 4 Milestones in 2003/04 summer 2004 summer 2002 2003 Shipper forums Political decision on full market opening and unbundling May New name and address March Entry/exit and One-zone model 1.10 Gas Transport Seminars May GasMarket2004 Project November State Ownership January Full market opening 1.1.2004 CTF May GTF January Legal unbundling from DONG January Metering and IT systems 1.1.2004

5. 5 Entry-Exit and One-zone model Transit Exit Entry Transit Exit Entry Exit–zone DK Transit Exit

6. 6 Entry-Exit and One-zone model Three entry/-transit exit points One exit zone for DK Capacity booking from 1 Day to Multiple Years Hourly capacity tariff + commodity tariff Daily balancing – national level Balance Price - Zeebrügge based One virtual storage entry/exit point

7. 7 The Gastra "Tool Box" "Tools" supplementing the transport conditions: Capacity booking (with 1½ day notice) Gas Transfer Facility (within the day trading) Capacity Transfer Facility (with 1½ day notice) Balance margin Transfer Facility (with 1½ day notice) Electronic Bulletin Board

8. 8 Security of Supply Gastra is responsible for Security Of Supply – which at present includes : Securing gas supply for all firm consumers for a 60 days period and supply capacity in very cold periods Provided by storage agreements and transportation capacity from the North Sea Paid via a separate SOS-tariff The concept for SOS is under evaluation – taking the consequences of the market liberalization into account.

9. 9 "Virtual World" Roles on the Danish Gas Market "Physical World" Trans- mission Distribution Tilstødende Lager Tilstødende Storage Tilstødende systemer Tilstødende systemer Production Tilstødende systemer Tilstødende systemer Tilstødende systemer Adjacent systems nDMS DMS ShippersSuppliers TransmissionDistribution

10. 10 Roles on the Danish Gas Market Transmission Distribution Tilstødende Lager Tilstødende Storage Tilstødende systemer Tilstødende systemer Prod. Tilstødende systemer Tilstødende systemer Tilstødende systemer Adj. sys. nDMS DMS ShippersSuppliers TransmissionDistribution

11. 11 Roles on the Danish Gas Market Transmission Distribution Tilstødende Lager Tilstødende Storage Tilstødende systemer Tilstødende systemer Prod. Tilstødende systemer Tilstødende systemer Tilstødende systemer Adj. sys. nDMS DMS ShippersSuppliers TransmissionDistribution INVOICE Distribution charges Taxes and VAT INVOICE Gas Price – including Transmission & Storage

12. 12 Gas Market 2004 Joint project between transmission and distribution companies Organization Steering Committee Market Model Group Reconciliation Group EDI Group Advisory Group – dialogue with the authorities Main Challenges Roles and communication Who is billing who? And for what? Reconciliation Gastra facilitated process

13. 13 Status on the market liberalisation 20% of the market volume have changed gas supplier Primarily larger industries and power plants have changed supplier – and very few residential consumers Basically the market model and the it-systems have worked very well Initially, data quality and speed of data exchange was problematic - but has been improved significantly Systematic data correction schemes and on line "traffic light" information has been introduced

14. 14 April 2003 EU "Third benchmarking report" on implementation of the internal gas market 19 EU gas transmission companies March 2004 April 2003

15. 15 Possible further developments … Gastra tool-box expansions … lower response times Standardising and automation of procedures and processes … especially improving data quality and speed Improving interoperability (Germany and Sweden) Improving competition by attracting and assist new market players to enter the Danish market Continue the dialogue with the market players and authorities

16. 16 Experiences from Denmark The Danish Case is more simple than in many other European countries – smaller market, fewer companies etc – but some experiences may be offered : Establishing a strong and committing cooperation amongst the infrastructure companies Look for simplification rather than perfection – and especially regarding : Market model Profiling Reconciliation Information to and dialogue with market players, authorities and infrastructure companies … and acknowledge that often the devil is in the detail

17. 17 The GasPool2004 Project – a Danish Gas Market Place 2004 2005/06 Implementation GasPool GasHub Analysesof thebasis for a gas pool Analysesof thebasis for a gas pool Analysesof thebasis for a gas pool Analysisof thebasis for a gas pool Possible decision Possible decision GasPool2004 Gastrainitiatives Gastrainitiatives Nord Pool + Gastrapreparations Nord Pool + Gastrapreparations CommitmentfromMarket Players CommitmentfromMarket Players Gastrainitiatives Gastrainitiatives Nord Pool + Gastrapreparations Nord Pool + Gastrapreparations CommitmentfromMarket Players CommitmentfromMarket Players

18. 18 Gas Market Places in Europe Eurohub Gmbh. Baumgarten Eurohub Huberator NBP TTF PSV Virtualhubs Physical hubs Eynatten Wallbach

19. 19 The Future EU Gas Market Places? One European Gas Price? A main price with satellites?

20. 20 The Future EU Gas Market Places? One European Gas Price? A main price with satellites?