Gas Regional Initiative North West Region Capacity Project

Gas Regional Initiative – North West Region Capacity Project – C 1 Interconnection points Blaregnies / Taisnières Medelsheim / Obergailbach Project leader - Betsy ANNEN Capacity Day - Bonn 28 April 2009

Agenda 1. Presentation of the project 2. TSOs proposals and implementation review 3. Conclusion Capacity Project – C 1 – Interconnection points BT / MO Bonn, 28 April 2009 2

Objective and context § Optimizing and expanding capacity ð Capacity seen as a major priority by stakeholders ð Ultimate goal: easy access to capacity for transport across the region § Pilot interconnection points ð Bonn Workshop in Feb. 2007, focus on 2 IPs: MO and BT ð Concrete improvement of functioning and access to capacity ð First set of proposals: 2 nd IP meeting in Feb. 2008 - Identification of obstacles (questionnaires, roundtables) Concrete proposals from TSOs Capacity Project – C 1 – Interconnection points BT / MO Bonn, 28 April 2009 3

The two interconnection points TROLL pipeline Quévy H Taisnières H / L SEGEO pipeline Blaregnies L Blaregnies H Medelsheim (GDFDT) MEGAL pipeline Medelsheim (EGT) Obergailbach (GRTgaz) Capacity Project – C 1 – Interconnection points BT / MO Bonn, 28 April 2009 4

Strong interdependencies with other projects § § A project plan at the confluence of other initiatives o Coordination issues in open season CRE o Transparency on capacity availability and gas flows OFGEM o Enhancement of compatible products ONTRAS o Study on Fluxys’ interruptible product, ONTRAS o Lessons learnt from the implementation of a day-ahead capacity trading platform at BOS DERA TSOs contribution Project plan supported by the voluntary work of the participating network operators - Five involved TSOs EGT, Fluxys, GDFDT, GRTgaz, GTS - Technical expertise & proposals Capacity Project – C 1 – Interconnection points BT / MO Bonn, 28 April 2009 5

Agenda 1. Presentation of the project 2. TSOs proposals and implementation review 3. Conclusion Capacity Project – C 1 – Interconnection points BT / MO Bonn, 28 April 2009 6

Project plan – strategic rationale § Challenges ð Improvement of the access to capacity at the IPs concerned and possibility to get access to equal capacity on each side of the IPs ð Improvement of the interoperability of adjacent networks ð Improvement of the gas transit § Scope (1) Capacity products and service offered (2) Allocation rules and booking procedures (3) Congestion management procedures (CMP) (4) Capacity “increase” (5) Transparency Capacity Project – C 1 – Interconnection points BT / MO Bonn, 28 April 2009 7

Summary of TSOs proposals AREAS (1) Capacity products and services offered (2) Allocation rules and booking procedures (3) CMP (4) (5) PROPOSALS Blaregnies / Taisnières Medelsheim / Obergailbach Interruptible transit product Fluxys - Short term firm daily capacity GRTgaz Booking notice and implementation term of contracts Fluxys GDFDT Day-ahead capacity trading platform at BOS - EGT (GRTgaz / GDFDT) Coordinated open season Fluxys / GRTgaz EGT / GRTgaz Reverse flow H gas GRTgaz - Improvement of existing information on products and CMP Fluxys - New website - GDFDT New publications - EGT Capacity increase Transparency Capacity Project – C 1 – Interconnection points BT / MO Bonn, 28 April 2009 8

(1) Capacity products Blaregnies / Taisnières New interruptible product by Fluxys ð Identified need in Feb. 08: Differences between capacity products and services offered at each side of the border are a matter for shippers ð New interruptible product under 1 year contracts - ð “Web Track Metering Transit” - 5% interruption probability based on historical capacity use New transparency tool Hourly data on natural gas flows at the interconnection point on which the shipper is active (pressure, volume, energy etc. ) More compatibility between capacity products Capacity Project – C 1 – Interconnection points BT / MO Bonn, 28 April 2009 9

(1) Capacity products Both IPs Short-term firm daily capacity by GRTgaz ð Identified need in Feb. 08: The lack of firm capacity is a barrier to active market and new entrants ð GRTgaz proposed to consider implementing the same firm daily product sold on D-2 in Oltingue P Principle: creation on a short notice of a firm capacity through netting of flows (reverse flows) P Only in case of contractual congestion and for limited amount of flows P Requires predictability of reverse flows Currently, insufficient reverse flow and/or forward subscriptions to justify daily capacity at both IPs Capacity Project – C 1 – Interconnection points BT / MO Bonn, 28 April 2009 10

(2) Allocation rules and booking procedures Both IPs Improvement of booking notice and implementation term ð Identified need in Feb. 08: Booking timeframe should be consistent on both sides so that shippers can book exit and matching entry at once and carry out short-term arbitrages. ð Internal process by Fluxys to improve booking procedure P Shortening of booking timeframe to two days maximum P Still manual procedure ð Operational progress by GDFDT P Reducing of the implementation term of contracts from a maximum term of 10 days to 3 days Capacity Project – C 1 – Interconnection points BT / MO Bonn, 28 April 2009 11

(3) Congestion management procedures Medelsheim / Obergailbach Lessons learnt from the implementation of a day-ahead capacity trading platform in Bunde Oude / Statenzijl ð Identified need in Feb. 08: a liquid and well-functioning secondary market at cross-border points ð If successful, study of the opportunity of transposing the experience conducted at BOS to MO ð Pilot launched in early 2007. Possible to trade secondary firm capacity via online platforms P Extension of the project to the IP Ellund (Danish-German border) in Feb. 09, Danish side in May 09 P In last few months, considerable increase of liquidity on the German trac-x platform Next step, extending the service to Medelsheim / Obergailbach Capacity Project – C 1 – Interconnection points BT / MO Bonn, 28 April 2009 12

(4) Capacity increase Blaregnies / Taisnières 1 st coordinated Open Season between GRTgaz and Fluxys ð Identified need in Feb. 08: enabling participants assessing service on adjacent systems through the selling of compatible products, offered in the framework of coordinated timetables and processes. ð Main lessons learnt in terms of coordination: - Good cooperation and sharing of information between TSOs and NRAs Definition of consistent timeframes Coordinated capacity allocation: shippers not exposed to the risk of capacity mismatch Process coincides with the conclusion of the open season conducted by GTS, the Dutch TSO Effective coordination. More reflection needed on the reliability of the first phase and on short term capacity on top of the requested capacity Capacity Project – C 1 – Interconnection points BT / MO Bonn, 28 April 2009 13

(4) Capacity increase Blaregnies / Taisnières Deodorization plant by GRTgaz ð Identified need in Feb. 08: interest of shippers in physical firm transmission capacity for reverse flow of H gas from France to Belgium depending on the price of the service ð Project part of the remedies to guarantee competition submitted to European Commission in the framework of the merger between Gaz de France and Suez First experiment in the world but still at a pilot stage Capacity Project – C 1 – Interconnection points BT / MO Bonn, 28 April 2009 14

(5) Transparency Both IPs Improvement of existing information and new publications ð Identified need in Feb. 08: Access to information on available network capacity and on procedure is key to enabling shippers to flow gas across IPs ð Improvement of the general level of information at both IPs - Better information on existing products and CMP by Fluxys New website by GDFDT giving new publication of hourly flows without access code and information on interruptions with monthly update EGT publishes new network data (historic gas flow database ; hourly publication of interrupted capacities…) Every commitment taken fulfilled – Transparency project led by Ofgem and E. ON Capacity Project – C 1 – Interconnection points BT / MO Bonn, 28 April 2009 completed by the 15

Other initiatives § Launch of a secondary platform ð ð § Capsquare: joint initiative by Fluxys and GRTgaz Launch for early December 2008 To foster liquidity in the secondary market for capacity in their networks Electronic platform to buy or sell in the networks of Fluxys and / or GRTgaz and GDFDT study product harmonization ð Identification of potential bundled products P Consistent allocation methodology P Consistent capacity level ð Both TSOs to investigate implementation requirements Capacity Project – C 1 – Interconnection points BT / MO Bonn, 28 April 2009 16

Agenda 1. Presentation of the project 2. TSOs proposals and implementation review 3. Conclusion Capacity Project – C 1 – Interconnection points BT / MO Bonn, 28 April 2009 17

Positive outcomes PROPOSAL TSO IMPLEMENTATION & COMMENTS Interruptible transit product Fluxys Short-term firm daily capacity GRTgaz Booking notice and implementation term of contracts Fluxys; GDFDT Day-ahead capacity trading platform at BOS Coordinated open season EGT (GRTgaz / GDFDT) Fluxys / GRTgaz Not application due to current flows and subscription Possible extension to Medelsheim / Obergailbach IP in the next months Reverse flow H gas GRTgaz Improvement of existing information on products and CMP Fluxys New website GDFDT New publications EGT Capacity Project – C 1 – Interconnection points BT / MO Bonn, 28 April 2009 Still at a pilot stage 18

Conclusion § Project conceived as a pilot project targeting very concrete improvements § Real progress in a year on both interconnection points ; TSOs commitments done in February 2008 fulfilled § During the year, many aspects have been specifically developed in other projects § Project considered as finished Next steps if necessary: What do stakeholders (users / TSOs) need at these two cross-border points now? Capacity Project – C 1 – Interconnection points BT / MO Bonn, 28 April 2009 19

Thank you for your attention ! Project leader: Betsy ANNEN betsy. annen@cre. fr + 33 1 44 50 42 44 Capacity Project – C 1 – Interconnection points BT / MO Bonn, 28 April 2009 20