TRANSGAZ THE NATIONAL GAS TRANSMISSION COMPANY FROM ROMANIA

1. TRANSGAZ THE NATIONAL GAS TRANSMISSION COMPANY FROMROMANIA Headquartes: Constantin I. Motaş Street; No 1 551018 Mediaş City Sibiu County,Romania Tel +40/269/803333 Fax +40/269/839031 www.transgaz.ro

2. SNTGN TRANSGAZ SAThe National Gas Transmission Company General Information • Established in April 2000, as a result of the legal unbundling of the former vertically integrated national gas company “Romgaz”; • Operates the National Gas Transmission System, which is state owned, based on a long term Concession Agreement; • Main activities: • Gas transmission • International Gas Transit • Dispatching • Research and Design in the Field of Natural Gas Transmission

3. SNTGN TRANSGAZ SAThe National Gas Transmission Company Ownership: 75% - The Romanian State represented by the Ministry of Economy and Finance 15% - The “Proprietatea” Fund 10% - Free float traded on BSE TRANSGAZ was firstly rated BB+ with positive perspectives by Standard & Poor’s on March 2007 and since February 2008 has been rated BBB- fact which places Transgaz within the category of companies with the “investment grade” .

4. SNTGN TRANSGAZ SAThe National Gas Transmission Company Historic Landmarks • First gas pipeline was built in 1912 – 1914 in Transylvania; • 1912 - Establishment of the first company in Europe specialized in gas transmission: “The First Transylvanian Company for the Transmission of Earth Gas”; • 1928- The first gas compressor station in Europe, at Sarmasel (Mures County). • 1956 –The basis of the National Gas Transmission System is set, having a radial shape, from the center to the extremities of the country.

5. MISSION AND RESPONSIBILITYMaintain the functionality of the National Transmission System; Provide gas transmission services under reliable and safe terms;Securing transparent, non-discriminatory and fair access conditions to all market participants TRANSGAZ’S MAIN ACTIVITIES • Domestic gas transmission –regulated activity • TRANSGAZ operates NTS under a concession agreement valid until 2032, signed with National Authority for mineral Resources and based on the licenses granted by the National Energy Regulatory Authority (“ANRE”). • For using the NTS, TRANSGAZ pays a 10 % royalty fee per year of the total income obtained from its transport (recognized in tariff) and transit activities. • ANRE sets the transmission tariffs according to “revenue cap” methodology. • International gas transit through dedicated pipelines –non-regulated activity • Prices set based on bilateral agreements

6. FINANCIALOVERVIEW

7. ROMANIAN GAS MARKET OVERVIEW PRODUCTION TRANSPORTATION DISTRIBUTION S.N.G.N. ROMGAZ S.A. ~ 6 bcm RESIDENTIAL AND DOMESTIC CONSUMERS (POPULATION) SC. PETROM SA ~ 5,24 bcm LICENSED AND AUTHORIZED NATURAL GAS DISTRIBUTORS TRANSGAZ S.A. NATURAL GAS TRANSPORTATION NATIONAL COMPANY (Transportation system operator) OTHERS PRODUCERS ~ 1 bcm (areas in concession) INDUSTRIAL CONSUMERS NATURAL GAS IMPORT SUPPLIERS ~ 6 bcm Natural gas flow Cash flow Regulated Market Competitive Market Competitive Market

8. THE NATIONAL TRANSMISSION SYSTEM (NTS) GAS CONSUMPTION VERSUS GAS TRANSPORTED (2005- 2007)- BCM

9. 13.110 km of transmission pipelines and gas supply joints, including over 560 km of international transit pipelines with diameters of 1000 and 1200 mm (42’’ and 48’’) and working pressure between 6 and 40 bars; 21 valve control stations and/or technological nodes; 961 regulating, metering- delivery stations of the gas supplied; 2 import gas metering stations; 6 gas metering stations on the gas transit pipeline; 6 gas compressor stations located on the pipeline route; 857 cathodic protection stations of the gas transmission pipelines; 575 gas odoration stations. THE INFRASTRUCTURE OF THE NATIONAL NATURAL GAS TRANSMISSION SYSTEM (NTS) The NTS transport capacity is around 40 BCM per year;Around 8,400 km of the network’s total length have useful life of more than 25 years

10. TRANSIT ACTIVITY – PIPELINES & CAPACITIES TRANSIT CAPACITY (bcm/year) • The transit activity is a non-regulated activity being carried out through dedicated pipelines • Transgaz provides gas transit through 3 pipelines with total capacity of approximate 28 billion cubic meters as of 2005 • 2 contracts on transit were concluded with GAZPROM Export, one with maturity in 2011 and the other with maturity in 2023. Both contracts contain clauses which give the possibility to prolong their maturity with successive 5 year periods. • 1 contract is concluded with BULGARGAZ with maturity in 2011

11. Existing Interconnections THE NATIONAL TRANSPORTATION SYSTEM – MAP Mediesu Aurit Interconnection Pipeline Szeged – Arad New Projects Isaccea NABUCCO Russe – Giurgiu Pipeline

12. SNTGN TRANSGAZ SAThe National Gas Transmission Company Implementation of European Energy Policies Romania – EU member state - member of the Energy Community of South - East Europe The implementation of the European energy regulations is mandatory for the achievement of the European internal energy market. TRANSGAZ’ actions in this regard: - restructuring process for the unbundling of the regulated activities from the non-regulated activities. - implementation of a network code ensuring the implementation of the transparency and non-discrimination provisions of regulation 1775/2005. TRANSGAZ is a member of Gas Infrastructure Europe

13. SNTGN TRANSGAZ SAThe National Gas Transmission Company Considering the background defined by the regulatory framework and the development tendencies at European level, TRANSGAZ envisages the following development priorities: • Rehabilitation and modernization of the national gas transmission system: • reconsidering the main pipelines system and replacement of old transmission pipelines; • modernization of gas metering and regulating stations; • rehabilitation and modernization of gas compressor stations; • implementation of a SCADA system • reduce pollution and assure the environmental protection by complying with the European environmental norms 2. Development of the transmission system in new consumption areas;

14. SNTGN TRANSGAZ SAThe National Gas Transmission Company • Development of the transit activity and of new interconnections with the neighbouring systems: The main condition for achieving the internal European energy market is to interconnect the national networks TRANSGAZ is aiming to implement the following transit/interconnection projects: - The NABUCCO project; - Interconnection between Hungary and Romania - Interconnection between Bulgaria and Romania - Interconnection between The Ukraine and Romania

15. Nabucco pipeline project, gas bridgebetween Asia and Europe RWE

16. SNTGN TRANSGAZ SAThe National Gas Transmission CompanyGeneral Data about the NABUCCO Project • Expected off-take in Transit countries : 12.0 – 15.0 bcm/y • Total capacity to Austria-Baumgarten : 13.5 – 16.0 bcm/y • Main potential sources : Caspian basin, Iraq, Egypt (Arab Gas Pipeline), Iran • Total Investment (CAPEX) for plateau level (costs 2008): 7.9 billion EUR • Expected investment in Romania (costs 2008) : 1.32 billion EUR • IRR target of the project: 13% after tax • Debt /Equity ratio: 70:30 • FEED Design: 2008-2010 • Expected construction start-up : 2010 • Expected operations start-up : 2013

17. Technical data of the Nabucco project • Pipeline length 2.841 km (main line without feeders) 223 km Georgian feeder (42 inch) 218 km Iranian feeder (56 inch) Turkey 1.558 km (main line without feeders) Bulgaria 392 km Romania 457 km Hungary 388 km Austria 46 km • Main pipeline diameter56 inch (1400mm) • Steel gradeX70 according API 5L • MAOP90 bar • Compression6 or 12 compressor stations (depending on scenario)total installed power 266-529 MW • Transport capacity25,5 bcm ( base case) - 31 bcm (high case), excluding fuel gas

18. Nabucco pipeline route description –Romanian section • Total length on Romanian territory: 457 km • A series of obstacles will have to be overcome namely:59 rivers (including three majors: Danube,Jiu,Mureş),8 national roads,22 county roads,29 dirt roads,8 railways • The pipeline will be fitted with the following AGI-s: • one compressor station with installed power of 31-37 MW • two gas import stations (inCraiova & Arad-Nadlac areas) • one custody transfer metering station (in Arad-Nadlac area) • 2 “pig” launching/receiving stations

19. Nabucco Project current status • Concluding a contract with Penspen Ltd from Great Britain as owner engineer – December 2007 • Accesion of RWE Germany as a new shareholder in Nabucco Project – February 2008 • Starting the tender procedure for selecting of the local engineers – April 2008 • Cooperation with the new financial consultant- HSBC from Great Britain in order to elaborate a the new updated financial – economic model – in the view of obtaining financing for Nabucco Project • Actual market Survey which shows huge demand for Nabucco capacities – August 2008

20. Nabucco Project – activities in progress • To be concluded an Intergovernmental Agreement • The Regulatory Authorities have granted the Exemptions from EC Dir. 2003/55/EC and the next step is to submit them for EU approvals • The establishing of Nabucco National Companies • Open season Process for capacity allocation- will start after the legal framework (IGA and Exemptions) is finally established

21. SNTGN TRANSGAZ SAThe National Gas Transmission CompanyRoute of the NABUCCO Pipeline

22. Benefits of Nabucco project for the Romanian gas industry • Diversification of gas supply sources; • Balancing of the Romanian gas transport system through the intakes performed via the two import points; • Stimulation of the competition on the internal gas market; • Enhancing of the supply security; • Access to low production cost gas reserves; • Strengthening the role of Romania as transit country for major energy corridors; • Important revenues for Transgaz from dividends & internal transportation tariff; • Stimulation ofhorizontal industrieswhich will contribute to the realisation of the project.

23. SNTGN TRANSGAZ SAThe National Gas Transmission Company Interconnection of the Hungarian - Romanian Transmission Systems; (The Szeged – Arad pipeline) Main Features: • Designed capacity: 1.5 – 2.0 bcm/year • Diameter: 700 mm Total length: 108 km On July 2008 a joint development agreement have been concluded between the FGSZ Natural Gas Transmission Company, as the owner and operator of the Hungarian high pressure natural gas pipeline system and Transgaz, as the operator of the Romanian transmission system.

24. SNTGN TRANSGAZ SAThe National Gas Transmission Company The Interconnection of the Ukrainian and Romanian Gas Transmission Systems; (The Cernăuţi – Siret Pipeline) Main Features: - Designed capacity: 1.5 bcm/year - Diameter: 600 mm - Total length: aprox. 30 km

25. SNTGN TRANSGAZ SAThe National Gas Transmission Company The Interconnection between the Bulgarian and Romanian Transmission Systems; (The Russe – Giurgiu Pipeline) Main Features: - Designed capacity: 1.5 bcm/year - Diameter: 500 mm - Total length: aprox. 8 km

26. Conclusions • The Romanian gas market generally follows the trend of the European gas market; • The increase of domestic consumption is similar with the increase in the European markets and is registered in the same time with the decrease of domestic production and increase of imports; • Unlike the states of the EU which can project part of their gas consumption increase based on LNG imports, Romania will remain dependant of onshore pipelines imports; • This dependence, can be a medium and long term impediment for the durable development of the economy; • For Romania in particular and for the European Union in general, it seems obvious that a diversification of the gas supply sources would be beneficial; • The major gas reserves of the Caspian and Middle Eastcan become accesible through the development of the Nabucco project.

27. SNTGN TRANSGAZ SAThe National Gas Transmission Company Thank you for your kind attention !