Madrid, 13 th November 2009 10th SG Meeting South Gas Regional Initiative

Madrid, 13th November 2009

10th SG Meeting

South Gas Regional Initiative

2

10th SG meeting S-GRI- Agenda

I. Opening

I.1 Welcome

I.2 Approval of the agenda and last meeting minutes (for approval)

II. Results of the Open Season for the development of new gas interconnection capacity between Spain and France in 2013 ( for explanation by TSOs and Regulators)

III. Follow up of the last steps of the open season 2013

IV. Preparation of the open season 2015

V. Other aspects in relation with the Open Seasons ( for information)

VI. AOB

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RESULTS OF THE BINDING CAPACITY REQUESTING

PERIOD

• Participation of 8 different business groups

• 33 companies, from 11 different countries, showed

their interest in the process (OS 2013 and OS 2015)

• 12 application forms received

II. Results of the Open Season 2013

Capacity requesting

period

4

PRELIMINARY CAPACITY ASSIGNEMENT INCLUDING LARRAU AND IRÚN

(based on requested capacity)


3 Cap. Offered Cap. Requested Cap. Assigned

GWh/day 138,000 45,840 30,772

% referred to cap. offered

33,22% 22,30%

4 Cap. Offered Cap. Requested Cap. Assigned 2 Cap. Offered Cap. Requested Cap. Assigned

GWh/day 237,980 115,000 115,000 GWh/day 204,000 327,337 186,635


48,32% 48,32%% referred to cap. offered

160,46% 91,49%


GWh/day 117,980 69,000 69,000 GWh/day 180,000 361,637 180,000



200,91% 100,00%España

GRTgaz South

TIGF

GRTgaz Nord

NORTH

SPAIN

SOUTH

TIGF

South → North

1

2

North → South

5 5 1

24

3 3

4

NORTH

SPAIN

SOUTH

TIGF

South → North

1

2

North → South

5 5 1

24

3 3

4

5

CAPACITY ASSIGNEMENT WITHOUT IRÚN

(based on requested capacity)


NORTH

SPAIN

SOUTH

TIGF

South → North

1

2

North → South

5 5 1

24

3 3

4

NORTH

SPAIN

SOUTH

TIGF

South → North

1

2

North → South

5 5 1

24

3 3

4

3 Cap. Offered Cap. Requested Cap. Assigned

GWh/day 138,000 45,840 26,790


0,332 19,41%


GWh/day 237,980 115,000 115,000 GWh/day 204,000 327,337 149,451


0,483 48,32%% referred to cap. offered

1,605 73,26%

TIGF5 Cap. Offered Cap. Requested Cap. Assigned 1 Cap. Offered Cap. Requested Cap. Assigned

GWh/day 69,980 69,000 69,000 GWh/day 132,000 361,637 131,999


0,986 98,60%España


2,740 100,00%

GRTgaz South

GRTgaz Nord

30,8 GWh/d (22,3%) with Irún

186,6 GWh/d (91,5%) with Irún

180 GWh/d (100%) with Irún

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Capacity assigned in case of not building Irún

Capacity assigned with only Larrau

Capacity not assigned due to lack of invetsments in Biriatou

7

INVESTMENT REQUIRED (according to joint TSOs’ investment plan-March 2008)

FRANCE

GRTgaz-TIGF Interconnection Point jul-07 dic-08

2008 Captieux-Castillon 1002008 CS Lussagnet 50

2008-2009 CS Sauveterre 692011 CS Chazelles+ met 1042011 Lussagnet-Captieux 632011 EC Lussagnet 492011 EC Sauveterre 24

459LARRAU

2009 Reversibilidad flujo TIGF 42010 Lussagnet-Lacq 642010 CS Mont 38

106BIRIATOUDesp. 2010 Arcangues-Coudures 2 y 3 78

TOTAL FRANCE 643

420 550

mill. €

TOTAL FRANCE after 2009

SPAIN

LARRAU jul-07 dic-082007 Falces-Irurzun 192008 EC Zaragoza 232008 Duplicación Barcelona-Arbos 962009 EC Navarra 502010 Duplicación Tivissa-Paterna 2072009 EC Haro 122009 Lemona-Haro 232010 Duplicación Tivissa-Castelnou 472012 Zarza de Tajo -Villar de Arnedo 1992012 EC Villar de Arnedo 51

727

BIRIATOU2010 Vergara-Irun 702009 BBG 1.200.000 552009 Lemon-Haro 122009 EC Haro 232013 EC Irun 50

210TOTAL SPAIN 936

TOTAL SPAIN after 2009 679 679

mill. €


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IG held on October 27th

Objective: to discuss the results of the Open Season and to agree

on the capacity allocation of the capacity for 2013 in the French-

Spanish interconnection

Participants agreed on the fact that the process had been a

success for the S-GRI, with a high degree of participation

showing the market interest in these infrastructures

Main point of discussion: the need to validate capacity

allocations only at Larrau interconnection, or at both existing

interconnections, Larrau and Irún .


9


IG held on October 27th (cont.)

CRE’S ECONOMIC TEST TO VALIDATE INVESTMENTS IN FRANCE

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ARGUMENTS AGAINST BUILDING IRÚN (CRE, TIGF and French Ministry)

Rules stated in the Information Memorandum contains a test stating

that capacity allocated to shippers, adding both directions of the

interconnections, should be 250 GWh/day or above before going into

discussion of development of Irún. For the credibility of the past

process and of the coming open season 2015, the predefined rules

have to be complied with. Should the rules be changed during the

allocation phase, it is to be feared that shippers will not be ready to

commit on the long term in the next open seasons

11



ARGUMENTS AGAINST BUILDING IRÚN (CRE, TIGF and French

Ministry)

There is a risk of legal claims by shippers if rules are not respected. For instance, an end consumer could claim that he would be exposed to higher transmission tariffs because of excessive investment.

The need for strong arguments to invest in France since gas demand is not foreseen to increase was also underlined.

12



ARGUMENTS IN FAVOR OF BUILDING IRÚN (CNE, ERSE, Spanish TSOs and

Spanish Ministry)

Great interest showed by market’s agents (requested 200% of the capacity offered adding both interconnections at the Spanish-French border, from Spain to France, and 58% in reverse flow; on average, allocated capacity would be approximately 84% of the total capacity offered in both interconnections and in both directions)

In the other Open Seasons launched in Europe capacity reserved 100% in only one direction has been sufficient to justify investment.

The relevant importance of these interconnections for strategic purposes and for Security of Supply reasons, not only for the Iberian Peninsula, but also for Europe, as well as the benefits these interconnections would bring for the European single market.

13


IG held on October 27th (cont.)ARGUMENTS IN FAVOR OF BUILDING IRÚN (CNE, ERSE, Spanish TSOs and

Spanish Ministry)

Not allocating the capacity of Irún means not allocating some capacity available between TIFG and GRTgaz South and between GRTgaz South and GRTgaz North. This may negatively affect investment recovery involving higher tariffs.

Not building the capacity initially offered would create uncertainty among shippers, in particular, for future Open Seasons. Building Larrau and Irún allows allocate only 50% of capacity requested in the direction Spain-France. If Irún is not built, this figures drops to 36,5%, which may seriously affect shippers’ business.

Recovery EU plan subsidies (245 mill. € for Africa-Spain-France and Western axis) to these infrastructures made the project more attractive for TSOs, implying that less market requests are needed to recover the investment.

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CONCLUSIONS:

Meeting participants were not able to reach an agreement on Irún

development, so only Larrau capacity will be allocated to

shippers by TSOs, being also the only investment analyzed by

French TSOs that should take the decision to invest by January

2010.

So the S-GRI will proceed following the rules previously

established in the Information Memorandum

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First phase of OS 2013: publication of results

( www.enagas.es) NORTH

SPAIN

SOUTH

TIGF

South → North

1

2

North → South

5 5 1

24

3 3

4

NORTH

SPAIN

SOUTH

TIGF

South → North

1

2

North → South

5 5 1

24

3 3

4

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III. Last steps of the Open Season 2013

Decision-making step

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III. Last steps of the Open Season 2013

In 15 days, TSOs will provide Regulators with the following

information regarding OS 2013:

Detailed list of infrastructures to be built related to OS 2013

Estimation of the starting operation date of every infrastructure

Estimation of updated cost associated to every infrastructure

Building status records, once cpmpleted, for every infrastructures,

in order to be loaded on ERGEG’s website

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IV. Preparation of the Open Season 2015

RESULTS OF THE NON-BINDING CAPACITY REQUESTING PERIOD

H Cap. Offered Cap. Requested G Cap. Offered Cap. Requested

GWh/día 281,980 225,520 GWh/día 264,000 82,640


79,98%% referred to cap. offered

31,30%

GWh/día 160,000 225,512 GWh/día 80,000 82,632


140,95%% referred to cap. offered

103,29%

F Cap. Offered Cap. Requested E Cap. Offered Cap. Requested

GWh/día 144,000 62,520 GWh/día 184,000 88,352


43,42% TIGF % referred to cap. offered

48,02%

D B C ACap. Offered Cap.Solicitada Cap. Offered Cap. Requested Cap. Offered Cap. Requested Cap. Offered Cap. Requested

GWh/día GWh/día GWh/día GWh/día GWh/día GWh/día GWh/día GWh/día

144,000 61,520 144,000 38,000 184,000 101,531 184,000 55,992



55,18% 30,43%

GRTgaz Nord

GRT gaz Sud

Spain

CD AB

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First phase of OS 2015: publication of results

(www.enagas.es)

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OPEN SEASON 2015: CALENDAR

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NEXT STEPS REGARDING 2015 OS

• Principles to decide on network scheme design:

Interconnection capacity between Enagas and TIGF, and Enagas and GRTgaz (different capacity products: A and C, plus B and D

Interconnection capacity between Enagas and only one French TSO (2 different capacity products: A-B or C-D

• Amount of capacity to be sold

• Criteria for defining investments: Economic test

• Detailed calendar for 2010

• Documentation required for the binding phase

Information memorandum,

Application forms,

Allocation rules, other

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As soon as possible, TSOs will provide Regulators with the

following information regarding OS 2015:

List of infrastructures to be built related to OS 2015

Estimation of starting operation date of every infrastructure

Estimation of investments associated to every infrastructure

Documents

Madrid, 13 th November 2009 10th SG Meeting South Gas Regional Initiative