ERGEG GRI South, 4th IG Meeting Madrid, September 17, 2007

1. CRE proposal on how to allocate capacityaccording to the Joint Enagas, TIGF and GRTgaz investment plans Dominique JAMME Director, Gas Infrastructure and Networks Directorate Commission de Regulation de l’Energie ERGEG GRI South, 4th IG Meeting Madrid, September 17, 2007

2. Introduction • The TSOs’ joint investment plans to to 2010/2011 and 2015 include a number of large projects • How will the capacity resulting from these projects be allocated? • Investments that have been approved and still need to be approved call for different processes

3. Contents • Investments that have been approved • Investments that have not been approved • Timeline

4. Guyenne phase 1 • This project will increase capacity between TIGF and GRTgaz South zones • Investment is already underway and will be completed by end 2008 • Winter capacity will increase as shown below (in GWh/d) * GRTgazS +240 +15 TIGF *summer capacity will also increase but is not shown in order to keep the diagram as simple as possible – the same technique is used on subsequent diagrams

5. Larrau phase A and B • This project will increase capacity between Spain and France at Larrau • Almost all investments required are on the Spanish side and have been approved • Small investment needed on French side – likely to be approved this year • Physical winter capacities created by the project are shown below (in GWh/d) • Capacity will become available in 2009/10 +18..5 +110 TIGF Enagas

6. Publication of information memorandum Open subscription period: all bids considered simultaneous Capacity allocation and signature of contracts Residual capacity sold on FCFS basis t=0 How to allocate capacity - process • No approval process needed: capacity can be sold right away; this process is linked to the reduction in the number of balancing zones in France • In France, process used is called an “Open Subscription Period” • OSP will be used to market Guyenne 1 capacity • We propose that OSP also be used for Larrau A and B • Joint OSP by Enagas/TIGF based on joint memorandum • Two bundled entry/exit products in Spanish and French direction • Bids capped at common Enagas/ TIGF capacity value • Pro-rata mechanism in case demand >available capacity

7. How to allocate capacity - timing • Guyenne 1 capacity must be marketed in December 2007 • Already announced in CRE consultation for the 2009 tariff • Capacity must be allocated well ahead of start of 2009 new access regime • Larrau A/B OSP also in December 2007? • Would help shippers book capacity all the way from Spain to GRTgaz South • But OSP will require a lot of preparation • Guyenne and Larrau products are different • Guyenne 1 will be sold in 4-year bundles – is Spain prepared to market Larrau A/B capacity under the same form? • We think an OSP in March April 2007 would be more realistic • But we have nothing against December 2007 if TSOs can work quickly enough

8. How to allocate capacity - planning • If the Larrau A/B OSP is to start on time, meetings must be set up immediately to tackle key issues: • A possible timeline is proposed in CRE’s paper • Several meetings may be necessary on each issue • Are there legislative issues to tackle?

9. Contents • Investments that have been approved • Investments that have not been approved • Timeline

10. Guyenne phase 2 and 3 • This project will further increase capacity between TIGF and GRTGaz South • It will require investments in France that have not yet been decided by the TSOs nor approved by CRE • The winter capacity in GWh/d created by the project is shown below • This capacity could come online in 2009/2011 GRTgazS +240 +65 TIGF

11. Larrau phase C • This project will further increase capacity between Spain and France at Larrau • The project will require investments in Spain that have been decided but also investments in France that have not yet been decided • The winter capacity in GWh/d created by the project is shown below • This capacity could come online in 2011 +65 TIGF +55 Enagas

12. + 230 + 180 Midcat • This project could further increase capacity between France and Spain via • the reinforcement of the French Artère du Rhone • the creation of a new interconnector to the east of Larrau • The investments required in Spain have been approved subject to approval of investments in France • The investments required in France have not yet been decided • The winter capacity created by the projectis shown below (in GWh/d) • This capacity would come online in 2015 Potentially, intermediate compression stations and debottlenecking north of Artère du Rhone could create even more capacity (Midcat phase 2)

13. How to allocate capacity - process • To approve substantial investments like the ones mentioned in this section, CRE needs to be confident that there will be demand for the underlying infrastructure • In France, this is done via an open season as described in the GGPOS Investment approval based on economic test Capacity allocated, contracts signed Consultation with users Publication of information memorandum Bidding period t=0 Can be seen as a « conditional » OSP Main difference relative to an OSP process Particularly useful as product is new

14. How to allocate capacity – timing and planning • Larrau C: after the Larrau A/B OSP, which we see as a test • Guyenne 2/3: in parallel with Larrau C so that shippers can book capacity from Spain all the way to GRTgaz South • Long term commitments for shippers: bidding period must be at least 2-3 months • Bidding could start in mid April 2008, with contracts signed in July 2008 • Midcat: must first see results of Larrau C + Guyenne 2/3 OS • Midcat OS could start in 2S 2008 and be run in parallel with OS for additional GRTgazS-N capacity

15. Contents • Investments that have been approved • Investments that have not been approved • Timeline

16. Timeline • A possible timeline for the period up to July 2008 could be: • Option. Larrau A, B, C plus Guyenne 2-3 together: April-June 2008