How the Implementation of the Network Code Does Help Infrastructure Users

1. How the Implementation of the Network Code Does Help Infrastructure Users Vasile FLOREA Director of Commercial Balancing SNTGN TRANSGAZ SA Medias

2. BACKGROUND DATA • The Network Code regulates the conditions and rules for the usage of the National Gas Transmission System (NTS). • The provisions of the Network Code shall apply to TRANSGAZ and to all NTS users. • The Network Code includes responsibilities related to our partners, the Network Users (producers, suppliers, importers, Storage System Operators). • The Network Code was approved by Decision of the ANRE (National Energy Regulatory Authority) chairman and may be amended by ANRE, upon request of the TSOs or NUs. • The Network Code shall enter into force on July 1st, 2009

3. COMMERCIAL BALANCING • Commercial Balancing– the process meant to ensure an accounting balance between the paid-up gas amounts and the gas amounts actually withdrawn by Shippers, taking into account the difference between nominations and allocations. • The commercial balancing is achieved: • As difference between the nominated and the allocated gas amounts on each entry or exit point; • As difference between the amounts allocated on entry and exit points for the same Shipper;

4. BALANCING MODES • Daily balancing – linepack • Seasonal balancing– storage • Emergency balancing– breaking off (interruptible) services and/or storage

5. NTS ENTRY POINTS • An entry point is the point where, under a contract, the Network User delivers gas into the NTS from adjacent systems, and represents the starting point of the gas transmission through the NTS. • The NTS entry points (160), of which: • 2 entry points from import; • 147 entry points from production sectors; • 11 entry points from underground storage facilities (related to the gas withdrawal cycle).

6. NTS EXIT POINTS • An exit point is the point in which, under a contract, the Network User takes over gas, from the NTS into the adjacent systems and represents the ending point of the gas transmission through the NTS. • The NTS exit points (1084), of which: • 848 exit points to distribution systems; • 228 exit points to end consumers; • 8 exit points to underground storage facilities (related to the gas injection cycle).

7. TSO RESPONSIBILITIES • TSO shall publish on their own web pages the following data related to entry/exit points : • Technical capacity; • Contracted firm and interruptible capacity; • Available capacity; • Pressures considered for the determination of the technical and available capacity. • The data are updated at least once a month.

8. ACCESS TO GAS TRANSMISSION SERVICES • TSO ensures a nondiscriminatory access to the whole technical capacity related to the NTS. • TSO allocates the NTS available capacity based on the “first committed, first served” principle. • Priority shall be granted for capacities required in order to fulfill the public service • The necessary capacity for NTS maintenance and operation shall be annually submitted for approval to ANRE, until March 15th.

9. TSO OBLIGATIONS • TSO shall prepare a platform for communication and data exchange with the Network Users. • Upon the Network Users’ request, TSO shall provide assistance with respect to the setting up of the platform and to the relevant training, based on tariffs. • TSO shall publish, on their own web page, identification data of all Network Users meeting the requirements related to the conclusion of the transmission contract.

10. NOMINATIONS • Nominations represent committed information submitted by Network Users to TSO, for approval, before application thereof. • Nominations are achieved by the annual transmission programme, for each month of the gas year. The annual nominations may be amended every month, week and/or day.

11. RE-NOMINATIONS • The Network Users may submit only one re-nomination, for a gas day, until 2:00 p.m., the latest. • In case of complete rejection of a re-nomination, the corresponding approved nomination shall remain valid. • In case the TSO fully approves a re-nomination, such re-nomination shall turn into an approved nomination.

12. ALLOCATION • At each exit point, the TSO shall deliver gas, under the approved nominations, to Network Users. • Allocations shall be made by three methods: • Based on consumer metering; • Based on consumption profiles approved by ANRE; • Based on pro-rata method. • In case the TSO fails to ensure transmission services of over 3% of the approved nomination, such TSO shall pay an under-nomination delivery tariff related to the difference between the above-mentioned threshold and the actual delivered gas quantity.

13. COMMERCIAL UNBALANCEEXCEEDING OF THE BOOKED CAPACITY AND OF THE APPROVED NOMINATIONS One Entry or Exit Point 5%

14. NTS COMMERCIAL UNBALANCE(ENTRY-EXIT) Daily unbalance Aggregated daily unbalance BSA

15. GAS TRANSFER FACILITY (GTF) • The GTF represents the (virtual) gas transfer opportunity from one Network User to another. • The gas exchange may be performed: • For the same entry/exit point – case in which the TSO approval is not required; • Between different points – case in which the TSO approval is required. • Gas transfers may be made for minimum one gas day. • GTF may become effective only from the beginning of the gas day.

16. BALANCING EQUATIONS • THE GENERAL NTS BALANCING EQUATION • THE NETWORK USER BALANCING EQUATION • THE TSO BALANCING EQUATION

17. NETWORK CODE IMPLEMENTATION PLAN • Implementation of the software application (November 2008) • Definition by TSO and approval by ANRE of the consumption profiles related to the Metering Regulation and Delivery Stations. (January 2009) • Application of the Network Code by TSO, Network Users and partners thereof, including the issuance of the invoicing report (without invoice issuance) for each Network User and partner thereof (Producer, Importer, Storage System Operator), in order to: • Check the mode of operation on the software application and on the related IT platforms. • Check the communication with the Network Users and partners thereof and the level of their involvement in the Network Code application; • Identification of potential noncompliance of the Network Code with the gas market functioning mechanisms. • (November 2008) • Analysis of the difficulties resulted from the functioning of the software application within the test period and proposals for the development and adjustment thereof or for the amendment and supplementation of the Network Code, if appropriate.

18. How the Implementation of the Network Code Does Help Infrastructure Users • Increases the safety of gas supply; • Ensures gas supply continuity; • Allows the identification of all Network Users failing to meet their obligations, under the contract, and thereby causing NTS unbalances which might encumber the performance of the transmission services for other Network Users; • Monitors traceability of nominations between various market players by matching; • Manages the Network Users’ own client portfolio by access to daily data.

19. Thank you for your kind attention!