Joint EC – WEC Seminar Gas Supply Crisis Rrussels, 20 02 009

1. Joint EC – WEC Seminar Gas Supply Crisis Rrussels, 20 02 009 Gerald Kappes, 20 02 2009

2. Agenda Austria Romania OMV/Petroms Initiatives Lessons Learned - Suggestions

3. Austria - Gas supply 2007

4. Mastering the Crisis – Austria • Co-ordination with ministries and regulator • Maximum level of indigenous production • Usage of storages and available transport capacities • Co-operation with the industry • Co-ordination of gas industry on European level (Eurogas) • Delegation of experts to the EU monitoring group • Technical optimization and usage of flexible gas flow in the major pipelines (esp. reverse flow) • Usage of available transport capacities for solidarity deliveries of other companies through Austria

5. Romania – Gas Supply 2007 Sources of Natural Gas Total consumption: 16.4 bcm(incl. technological up-stream consumption)

6. Mastering the Crisis – Romania Good Luck Jan 2009 “typical” Jan Domestic Gas Production 34 mcm 32 mcm Withdrawal from Storage 25 mcm 25 mcm Imports - 13 mcm TOTAL CONSUMPTION max 59 mcm 70 mcm TOTAL CONSUMPTION real 50-55 mcm Crisis Management Government: Situatia de Urgenza Petrom´s Role as Integrated Producer Stop fertilizer production Max Production of Heavy Fuel Oil Maximise Gas Production

7. OMV‘s initiatives to cope with the challenges • Enhance gas production • Further development of underground gas storages • Diversification of the portfolio of suppliers • Projects to diversify the transportation routes • Nabucco Gas Pipeline Project • LNG LNG (Gate) Baumgarten WAG TAG South Stream LNG (Adria) Blue Stream Caspian Gas Iraqi Gas Arab Gas Pipeline

8. Lessons Learned: AT Market mechanisms have functioned. State measures should be the last alternative, since they are inefficient from an economic point of view. Coordination and fine-tuning among all parties concerned were crucial. Supply disruptions should be managed by the market for as long as possible and handled on the basis of contracts between the relevant parties (suppliers, traders, infrastructure operators, customers).

9. Lessons Learned: RO (and SEE) Storages and transport capacities were readily available – but not sufficient in several countries! Granting of incentives for the construction of further storage facilities is necessary (EU Recovery Plan!) Avoid Supply Islands - further infrastructure (esp. interconnectors between countries in SEE) has to be developed. For SEE projects like Nabucco, LNG, storage,… will contribute to avoid shortage again. The right incentives for such investments have to be immediately provided by the legislation. Political support should be granted.

10. Lessons Learned – Increase Storage Level Share of storage in relation to the gas consumption (in %) Source: A.T.Kearney 2009 (2007 figures)

11. Lessons Learned: RO (and SEE) Storages and transport capacities were readily available – but not sufficient in several countries! Granting of incentives for the construction of further storage facilities is necessary (EU Recovery Plan!) . Avoid Supply Islands - further infrastructure (esp. interconnectors between countries in SEE) has to be developed. For SEE projects like Nabucco, LNG, storage,… will contribute to avoid shortage again. The right incentives for such investments have to be immediately provided by the legislation. Political support should be granted.

12. Lessons Learned Romania – Avoid Supply Islands Further infrastructure (esp. interconnectors between countries in SEE) has to be developed. No pipeline connections from Romania to Bulgaria: ongoing topic, no solution Serbia: request for support Hungary: Szeged(HU) – Arad (RO) To be finalized in 2010 (?) No reverse flow foreseen full market liberalization necessary

13. Lessons Learned: RO (and SEE) Storages and transport capacities were readily available – but not sufficient in several countries! Granting of incentives for the construction of further storage facilities is necessary (EU Recovery Plan!). Avoid Supply Islands - further infrastructure (esp. interconnectors between countries in SEE) has to be developed. For SEE projects like Nabucco, LNG, storage,… will contribute to avoid shortage again. The right incentives for such investments have to be immediately provided by the legislation. Political support should be granted.

14. Europe faces a gas shortage in future – Opening of the South-East Corridor is of utmost importance Gas demand of EU-25 Gas demand of EU-25 Gas reserves in bcm 700 640 600 500 44,650 bcm Russia 217 500 4,740 bcm North Europe 400 bcm 307 300 308 200 100 193 115 0 2007 2 2020 82,860 bcm Caspian Region Middle Eastand Egypt Indigenous production 1 Imports contracted 2 Supply gap 3 4,520 bcm North Africa Sources: 1 EU Scenarios May 2006 2 Eurogas 2007 preliminary figures 3 Eurogas Vision paper Reserves: BP Statistical Review 6/2008

15. Lessons Learned: Do not go on holidays in that period…