Madrid, 11th February 2008

1. 6th IG Meeting South Gas Regional Initiative Madrid, 11th February 2008

2. 6th IG meeting S-GRI- Agenda

3. II. PRIORITY 1. Interconnections II.1 Current status and next steps on CAMs • PROGRESS ON THE OSP DEVELOPMENT: • Development of a detailed OSP procedure. Only some few minor details to be agreed • Integration of the OSP into the Spanish regulation • Modification of RD 949/2001 which introduces the possibility of developing different CAMs to “FCFS” at international connections DONE • Development of a Ministerial Order which describes the procedure to allocate available current and future capacity at French-Spanish capacities up to 2019 ONGOING A proposal has been elaborated and presented to the CNE Board for its approval, in order to send it to the Ministry

4. II. PRIORITY 1. Interconnections II.1 Current status and next steps on CAMs • OSP MAIN CHARACTERISTICS: • Procedure to be developed in 2008 to allocate available capacity at French-Spanish interconnections from 1st April 2009 for ? years • 80% of available capacity for LTC (more than 1 year) and 20% of available capacity for STC (1 year or less) • Allocation rules: • Priority will be given to requests which are matched on both sides of the border, and according to the period required for the service • Within the same level of priority, capacity will be allocated on a pro-rata basis, season by season, taking into account the volumes requested • Allocation in 2 phases, with possibility of withdrawing any or all the requests if capacity assigned in the first phase is not convenient

5. II. PRIORITY 1. Interconnections II.1 Current status and next steps on CAMs • OSP MAIN CHARACTERISTICS (cont.): • After the OSP, the remaining capacities, if any, will be allocated under the standard procedures in place in each system • Subsequent OSPs in each year “y” in order to allocate at least STC . The OSP for the LTC will only be organised once • Further interruptible or conditional capacities might be offered by each TSO according to their own rules, once the OSP has been completed • The terms and conditions applicable to the capacities sold under the OSP will not differ from the rules prevailing in each system at any particular time, unless otherwise stated • Daily interruptible UIOLI

6. II. PRIORITY 1. Interconnections II.1 Current status and next steps on CAMs • POINTS TO BE DECIDED ON THE OSP: • Table on capacity to be offered Numbers to be confirmed by TSOs Regulators to discuss feasibility • Allocation rules for LTC: 3possibilities • Priority will first be given to matched requests for capacity for all the period considered (10 years). • Assign the top priority to 10 year bids, but also say that 10 year bids cannot make up more than X% of the reservations • Assign the top priority to request asking for more than 10 seasons (5 years) • Dates to make the OSP public and launch the procedure

7. II. PRIORITY 1. Interconnections II.1 Current status and next steps on CAMs LESSONS LEARNT IN THE RECENT OSPS IN FRANCE

8. II. PRIORITY 1. Interconnections II.1 Current status and next steps on CAMs

9. II. PRIORITY 1. Interconnection II.2 Open Season Procedure OPEN SEASON DESIGN Presentation by TSOs

10. II. PRIORITY 1. Interconnection II.3 Portuguese-Spanish interconnection capacity study • STATUS OF THE PORTUGUESE-SPANISH INTERCONNECTION CAPACITY STUDY • Presentation by TSOs • CONCLUSIONS

11. III. PRIORITY 3. TransparencyInterconnection Status Records • INTERCONNECTION STATUS RECORDS • Presentation by TSOs • CONCLUSIONS

12. IV. PRIORITY 5. REGIONAL MARKETSProgress with MIBGAS On January 16th, CNE and ERSE approved the final document about "The proposal for the Organization Model and Principles of the Iberian Gas Market (MIBGAS)” • According to the decisions of the Iberian Agreement in Badajoz, the governments of Spain and Portugal agreed on 8 March 2007 to develop a plan for regulatory harmonization whose objective would be the establishment of the Iberian Gas Market. • “The proposal for the Organization Model and Principles of the Iberian Gas Market (MIBGAS)” is the final document resulting from the public consultation which was held by both Regulatory Commissions (CNE and ERSE). Nineteen companies and organizations sent contributions and comments. The final document has been published along with the views of companies and organizations and analysis thereof.

13. IV. PRIORITY 5. REGIONAL MARKETSProgress with MIBGAS The Iberian Gas Market will group in 2008 a total of 7.5 million consumers of natural gas, and a volume of consumption of approximately 500,000 GWh in 2008, which will allow it to become the fourth gas market in Europe by sales volume, and represent about 50 % of LNG imports to Europe. • The proposal suggests a process of regulatory harmonization and construction of MIBGAS, to be developed gradually in mutual agreement between Spain and Portugal. in order to create a common market. • This development represents an active contribution of both countries for the achievement of the European natural gas market inside of the South Gas Regional Initiative and it shares its common goal of reaching a single regional market together with France.

14. IV. PRIORITY 5. REGIONAL MARKETSProgress with MIBGAS CNE & ERSE AGREEMENT ON GENERAL REGULATORY PRINCIPLES, including: • Ownership unbundling of TSO, consistent with 3er package measures proposed by European Commission. • The correct operation of the gas market requires the separation of the network activities of the liberalised activities and which are implemented in free competition (supply). Otherwise, situations of cross subsidies and conflict of interests may arise • Regulated TPA access to all gas infrastructures (including LNG terminals and underground storage) • The liberalisation of the natural gas market is based on regulated third party access to all gas infrastructures, on the basis of the principles of non-discrimination, transparency and objectivity, allowing the facilities to be used by all the suppliers. • Protection to consumers • Both nations will be able to establish protection measures for vulnerable consumers, including the establishment of a last resort tariff.

15. IV. PRIORITY 5. REGIONAL MARKETSProgress with MIBGAS • Action plan for the construction and implementation of the MIBGAS (2008): • An action plan for 2008 has been proposed in order to develop the Iberian Gas Market, which is focused on: • The harmonization of gas marketing licenses in the Iberian area • Convergence in the structure of access tariffs, • Coordinated planning of networks.

16. IV. PRIORITY 5. REGIONAL MARKETSProgress with MIBGAS • All documents are available on the web of CNE and ERSE: http://www.cne.es/cne/contenido.jsp?id_nodo=258&&&keyword=&auditoria=F http://www.erse.pt/vpt/entrada/mercado/mibgas/

17. IV. PRIORITY 5. REGIONAL MARKETSProgress with MIBGAS • CONCLUSIONS

18. V. PRIORITY 2. INTEROPERABILITYUpdate. CBPs implementation in Spain • Harmonization of Units??? • CURRENTLY GCV with combustion reference temperature of 0ºC • CBPs GCV with combustion reference temperature of 25ºC: • Assessment of the change:energy measured decreases 0,26% • Areas affected: • Energy measured at loading and unloading ships SHIPPERS • Retribution depending on the gas regasificated/distributed • INFRASTRUCTURE OPERATORS • TPA tariffs, since less energy will be consumed • Measures procedures • Energy measurement at interconnection with non European countries • Technical changes not significantly important

19. V. PRIORITY 2. INTEROPERABILITYUpdate. CBPs implementation in Spain • Harmonization of Units (cont.)???? • Network code and protocols to be revised: • NGTS-05: measure (Ministerial Order) • PD-01: measure (Resolution) • PD-05: Procedure to calculate energy unloaded from ships (Resolution) • Other national legislation to be changed: • Royal Decree 949/2001 (art. 26.5) • Ministerial Orders which regulate tariffs

20. V. PRIORITY 2. INTEROPERABILITYUpdate. CBPs implementation in Spain • Harmonization of the Nomination and Matching Process • CURRENTLY Gas day from 00:00 to 00:00 • CBPs Gas day from 06:00 to 06:00 • Harmonization of process also required • Areas affected: • Software of communication and planning equipments • SL-ATR (logistic IT) • Operation protocols • Measures procedures • Interconnections with non European countries (Tarifa interconnection, Medgaz) • Combine cycles and other clients with regard to maximum consumption, tariffs

21. V. PRIORITY 2. INTEROPERABILITYUpdate. CBPs implementation in Spain • Harmonization of the Nomination and Matching Process (cont.) • Network code and protocols to be revised: • NGTS-04: Nomination (Ministerial Order) • NGTS-06: Matching (Ministerial Order) • NGTS-07: Balancing (Ministerial Order) • PD-01: Measure (Resolution) • PD-05: Procedure to calculate energy unloaded from ships (Resolution) • PD-07 and PD-08: planning and nomination of transmission and distribution facilities (Resolution) • Future PD-11: Nomination for satellite plants belonging to the consumer (Resolution) • Rest of the CBPs already harmonized

22. V. PRIORITY 2. INTEROPERABILITYUpdate • CONCLUSIONS

23. VI. Further actions • Next IG meeting: • Next SG meeting: