1. Trading in the SEE Gas Market A traders vision Zagreb, 28 September 2004 Doug Wood Chair, EFET Gas Hub Development Group Member, EFET Gas Committee www.efet.org

2. EFET represents 75 members in 16 European countries and is still growing

3. What does a market deliver? qConsumer choice, product innovation, improved efficiency from… qPrice Transparency l Signals to producers, l Signals to consumers l Signals to infrastructure providers qShort term optimisation qCongestion management

4. What does a market do ? What can a market deliver ? qConsumer choice qSends price signals for production & consumption qRewards lower cost / higher value operators qPrices are market based not cost based qCongestion management qContract optimisation qImproved efficiency What characterises a competitive market? qWilling buyers and sellers qLow barriers to entry/exit qProduct innovation and variety qLiquidity, depth, transparency qVolatile prices $ X s d

5. What is necessary for a competitive market? qAccess to customers qAccess to transportation qAccess to gas qAccess to storage / flexibility qOrganised markets: exchanges and hubs l Information transparency l Data exchange l Products and procedures l Laws and regulations l Standardised contracts

6. The Traded Gas Market in Europe Zeebrugge Hub 55 Counterparties NBP 80 Counterparties TTF 27 Counterparties Eynatten Small number of traders with physical access Zelzate app. 7 counterparties Baumgarten 8 Counterparties? Wallbach 10 Counterparties Emden/Oude Flange Trading > 12 Counterparties PSV 22 Counterparties PEG Balancing Zones GasPool ? Counterparties Eurohub Gmbh 15 Counterparties

7. What is a Gas Hub? A contractual point where buyers and sellers execute transactions for gas Hubs can be: Notional or physical Trans-regional (1 or more TSOs) or within-country (1 TSO) Hubs generally consist of: Hub Services Agreement - Hub Operator own/draft Standard Trading Contract - Traders own/draft

8. The SEE Gas Market – shopping list for a liberalised gas market qEncourage multiple buyers and sellers qProvide non-discriminatory access to transportation & storage qPromote price transparency qAvoid subsidised prices and protected markets qLiberalise power markets qPromote gas availability – release schemes? qEnsure rules are transparent qEmpower strong and effective regulators and competition authorities qDeal with credit

9. Conclusions qSEE is an important market in its own right qSEE has an opportunity to become an important transit region qNew areas of potential from environmental improvement But… qPolitical will is paramount qTransit faces competition from NE Europe, Baltic, LNG, N Africa, Mediterranean Set a realistic achievable timetable and stick to it!