1. DEVELOPMENT OF GAS HUBS South Gas Regional Initiative Madrid, 29th October 2007

2. 2 Agenda 1. Current gas trading hubs in the South GRI 2. Working plan for hub development 3. Working plan for secondary capacity trading

3. 3 1. Current gas trading h 1. Current gas trading hubs in the South GRI  Liquid and transparent gas hubs are an important foundation for the development of efficient and effective markets.  Hubs allow for gas to gas competition and to set a market price reflecting supply and demand  The ability to trade inside and between hubs, with no barriers, is crucial to market integration.  Work is being undertaken across the region on the development of gas hubs.

4. 4  In Spain, the wholesale gas market trading is organized at the Spanish single balancing point (CDG) and in the LNG terminals. The gas trade is done by a platform developed by ENAGAS, named MS-ATR. The volume of gas traded in the Spanish gas system, by 17 companies, from January to August 2007 is 310.1 TWh and represent a 120 % of the total gas consumption of Spain. This volumes are close to TFF and Zeebrugge markets.  In France, wholesale gas market trading is organized at the Gas exchange Points (PEGs), which are virtual points within each balancing zone. On the 2nd quarter 2007, the net physical volume of gas exchanged at the PEG was 32.5 TWh. Exchanges which do not lead to gas supply are not recorded. 1. Current gas trading h 1. Current gas trading hubs in the South GRI

5. 5 2. Working plan for hub development PRIORITY 5. DEVELOPMENT OF HUB IN THE REGION Areas of work: GAS TRADING: Report current functioning of gas trading hubs in the region Identification of possible barriers to the development of gas hubs Monitoring the development and evolution of spot gas markets Facilitate the development of gas hubs CAPACITY TRADING: The first thing seems to be to allow for secondary trading where it is not the case The SSE region agreed to Implement a standardized bulletin board for secondary capacity trading To be discussed at the meeting: is there a need for a standardized bulletin board ? Would it be useful?

6. 6 Task 1. Elaborate a Report (by the TSO/Hub Operator) explaining the actual functioning of the Spanish and French hubs Content of the report. Information about: Description of Hub rules and conditions to become a registered trader at the Hub Types of possible trading and services at the Hub Description of the IT platform (if it exist) Liquidity: Volume of gas traded and number of operations Number of traders registered / actives at the Hub IT platform Market share of main trader / three main traders at the Hub trade platform Transparency of hub information: Prices, market rules and volume of gas traded  Activities TSO/Hub operators: Present a report explaining the actual functioning of the Spanish Hub and the French Hub Date: Next meeting 2. Working plan for hub development

7. 7 Task 2. Comments of Traders are welcome about : 1. Understanding the detail of barriers to further development of these hubs 2. Ways of improving liquidity 3. Solutions for improving the operation of hubs. 4. Other hubs in the region, in particular, in Portugal?  Activities Stakeholders will present slides in the next SG meeting 2. Working plan for hub development

8. 8 Task 3. Discuss Implementation of a standardized bulletin board for secondary capacity trading (as in SSE region) To be discussed at the meeting: is there a need for a standardized bulletin board ? Would it be useful? Most advanced option to make an open and transparent secondary capacity market is a common platform. However, this market may not be so liquid to justify investment in IT platform. In this context, implementation of a Bulleting board could be a practical solution to allow transparent capacity trading Next pages shows Bulleting board implemented by OMV in Austria Task for next meeting: Stakeholders will present slides in the next SG meeting 3. Working plan for secondary capacity trading

9. 9 3. Working plan for secondary capacity trading Example of bulletin board for secondary capacity trading (OMV)

10. 10 3. Working plan for secondary capacity trading Example of bulletin board for secondary capacity trading (OMV)

11. 11 3. Working plan for secondary capacity trading Example of bulletin board for secondary capacity trading (OMV)

12. 12 3. Working plan for secondary capacity trading Example of bulletin board for secondary capacity trading (OMV)

13. 13 3. Working plan for secondary capacity trading Example of bulletin board for secondary capacity trading (OMV)