INFRASTRUCTURE USERS WHAT DO THEY NEED Steinar Solheim

INFRASTRUCTURE USERS: WHAT DO THEY NEED Steinar Solheim, Vice President, Yara International

Yara Ammonia Production Sites in Europe Sluiskil 1. 8 BCM Billingham (JV) 0. 55 BCM Porsgrunn LPG 0. 45 BCM Ince (JV) 0. 35 BCM Zeebrugge Hull 0. 3 BCM Le Havre 0. 45 BCM Brunsbüttel Heavy Fuel Oil +/- 0. 75 BCM Tertre 0. 4 BCM Ferrara 0. 7 BCM Terni 0. 1 BCM Pardies 0. 15 BCM Date: 2008 -10 -01 - Page: 2

SOME CHARACTERISTICS OF THE EUROPEAN GAS MARKET l Demand driven § § Domestic production will be reduced Growth in consumption l EU will be more and more dependent on import l The market is controlled by a handful number of powerful producers (Statoil. Hydro, Gazprom, Sonatrach) and incumbents (eg Eon Ruhrgas, ENI, Gdf-Suez) l Limited competition l The energy market is far from liberalized. l The 3 rd Gas Directive will not improve the competition significantly. Date: 2008 -10 -01 - Page: 3

NEW PIPELINE PROJECTS Date: 2008 -10 -01 - Page: 4

NEW PIPELINE INVESTMENTS NECESSARY IN ORDER TO SECURE SUPPLY AND ENHANCE COMPETION, BUT……… l Nabucco § l South Stream § § l Gas from Azerbadjan likely, but not sufficient. Iran not possible due to restrictions made by US and EU. Gas from Turkmenistan? Will this be gas from new fields in Russia or will the gas be diverted from the Ukrainian transit? If this is the case, it will not increase supplies to Europe. This project will be in competition with Nabucco. North Stream § Uncertain how much gas will come from new fields and how much will be diverted from the Ukrainian transit. Date: 2008 -10 -01 - Page: 5

PRESENT GAS TRANSPORTATION REGIME IS NOT CUSTOMER FRIENDLY!! l l l Interconnection capacity should be increased to avoid crossborder congestion. Lack of transparancy. Cross border flows should be available electronically (like in UK terminals). Present system makes it easy for big players to block unused capacity in order to hamper competition. Transportation rules should be harmonised in EU in order to facilitate cross border flows. Daily balancing in all countries in Europe. There are still some countries (eg the Netherlands) with hourly balancing. Booked capacity in pipelines and LNG terminals not used, should be made available to other shippers. We suport EU Comission’s proposal to establish an Agency in order to ensure a consistent approach by. TSO’s with the aim of increased competition. Date: 2008 -10 -01 - Page: 6