Madrid Forum VI 31 10 2002 Technical Barriers

Madrid Forum VI 31. 10. 2002 Technical Barriers to Gas Trade and Interoperability 9/26/2020 2002315 PW_Madrid VI - 1

Mission from Madrid Forum V 21. The Forum welcomed GTE’s initiative to establish, in co-operation with Edig@s and in consultation with other industry associations and network users, a new open association called EASEE-gas (European Association for Streamlining of Energy Exchange - gas) with the objective of developing and promoting common practices to simplify and streamline business processes that will contribute to an efficient and effective European gas market. EASEE-gas will be established no later than 1 April 2002. The Forum stressed the importance of rapid and tangible solutions to concrete technical obstacles to interoperability of different networks and gas qualities and invited GTE in liaison with EASEE-gas and all relevant stakeholders including upstream gas producers, to set out a work plan and a timeschedule for solving issues in relation to technical interoperability and to present progress during the next meeting of the Madrid Forum. 9/26/2020 2002315 PW_Madrid VI - 2

Presentation Madrid V GTE towards Interoperability • GTE committed itself to play a leading Role in the EASEE-gas WGs GTE members lead various EASEE-gas WGs: – – – 9/26/2020 IT Communication Network Real Time Data Exchange Edig@s Message Codification & Maintenance Business Rules Harmonisation of Units Message Specifications 2002315 PW_Madrid VI - 3

Presentation Madrid V GTE towards Interoperability • GTE committed itself to play a leading Role in the EASEE-gas WGs • Preparatory Works would be done anticipating on EASEE-gas starting its Activities • Concrete Results would be available for next Madrid on the following Topics : 9/26/2020 OBAs Business Rules Harmonisation of Units Gas Specifications 2002315 PW_Madrid VI - 4

GTE towards Interoperability • GTE committed itself to play a leading Role in the EASEE-gas WGs • Preparatory Works would be done anticipating on EASEE-gas starting its Activities • Concrete Results would be available for next Madrid on the following Topics : 9/26/2020 OBAs Business Rules Harmonisation of Units Gas Specifications 2002315 PW_Madrid VI - 5

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OBAs Achievements • Inventory of Allocation Principles with description of Pro's and Con's • GTE-map with Inventory of Operational Procedures at Cross-border Interconnection Points 9/26/2020 2002315 PW_Madrid VI - 7

1 A Zeebrugge ZPT Gassco 4 NOMINATION 4 MATCHING 4 SCHEDULE Y Y H/H 4 ALLOCATION OBA 4 FLOW CONTROL 4 MEASUREMENT 9/26/2020 Fluxys Y Y 2002315 PW_Madrid VI - 8

Existence of OBA or SBA In 75% of the IPs Balancing Agreements (SBA or OBA) exist 9/26/2020 2002315 PW_Madrid VI - 9

OBAs Recommendations & Next Actions Recommendations Implement at each IP – Matching Processes – Balancing Agreements Next Actions • Develop a Standard Template for the OBA to be gradually used by the TSOs in the future 9/26/2020 2002315 PW_Madrid VI - 10

GTE towards Interoperability • GTE committed itself to play a leading Role in the EASEE-gas WGs • Preparatory Works would be done anticipating on EASEE-gas starting its Activities • Concrete Results would be available for next Madrid on the following Topics : 9/26/2020 OBAs Business Rules Harmonisation of Units Gas Specifications 2002315 PW_Madrid VI - 11

Business Rules Recommendations • Use a Standard Gas Day: from 6 to 6 Local Time • Implement a Synchronised Nomination Scheme for Nominating gas through Europe WHY ? Up to now Sequential Nomination from Downstream to Upstream - Too long Cycles in case of Long Distance Tpt - Problem in case of Bidirectional Flows 9/26/2020 2002315 PW_Madrid VI - 12

Business Rules Synchronized Nomination Scheme START END Exchange of 3 types of Messages • Shipper's Nomination Notice • Transporter's Matching Notice • Transporter's Confirmation Notice Day D - 1 6 h 13 h 18 h 6 h Could be reduced a. o. by using Standard Communications Basic GTE Proposal submitted to EASEE-gas 9/26/2020 2002315 PW_Madrid VI - 13

Business Rules Next Actions • Final Recommendation for the initial Nomination Scheme by the end of 2002 and determination of Target date for Implementation (EASEE-gas) • Further harmonization on other issues (renominations, allocation rules and process, communication, treatment of constraints, hub practices and rules) • Review of standard Template for OBAs and active Promotion of further Implementation of Balancing Agreements (GTE) 9/26/2020 2002315 PW_Madrid VI - 14

GTE towards Interoperability • GTE committed itself to play a leading Role in the EASEE-gas WGs • Preparatory Works would be done anticipating on EASEE-gas starting its Activities • Concrete Results would be available for next Madrid on the following Topics : 9/26/2020 OBAs Business Rules Harmonisation of Units Gas Specifications 2002315 PW_Madrid VI - 15

Harmonisation of Units Achievements & Recommendations • Based on the Inventory of the presently used Units at Western European level, determination of – the Most frequently used Units – the Implications of moving to those Units at European level • Recommended Units: – Pressure : bar – Energy : k. Wh – Volume : m³(n) – Gross Calorific Value : k. Wh/m³(n) [25°C as reference temperature] 9/26/2020 2002315 PW_Madrid VI - 16

Harmonisation of Units Next Actions • Reaction of EASEE-gas WG on Harmonisation of Units (representatives of producers, shippers and transporters of gas) change of Contracts and Legislation can start • Use recommended Units in agreements between TSO’s (unless legal restrictions make this impossible) • Implement the possibility to use recommended Units when new Equipment or Software is installed • Propose ISO to change the recommended combustion reference temperature for the GCV from 15°C to 25°C 9/26/2020 2002315 PW_Madrid VI - 17

GTE towards Interoperability • GTE committed itself to play a leading Role in the EASEE-gas WGs • Preparatory Works would be done anticipating on EASEE-gas starting its Activities • Concrete Results would be available for next Madrid on the following Topics : 9/26/2020 OBAs Business Rules Harmonisation of Units Gas Specifications 2002315 PW_Madrid VI - 18

Gas Specifications : Three Categories • Combustion Properties Wobbe Index and specific Parameters (SI, ICF, H 2) • Gross Calorific Value (GCV) • Additional Components Total Sulphur, H 2 S, COS, Mercaptans, HC Dewpoint, H 2 O Dewpoint, O 2, CO 2, Impurities… 9/26/2020 2002315 PW_Madrid VI - 19

Gas Specifications Basic Criteria • Not to affect the Safety for the Pipeline Operators from Upstream to Downstream • Be acceptable for End-consumers (safety, burners, processes) • Not imply huge Investment for the Producers • Not to have a detrimental Impact on the Current “Image” of the Natural Gas • To provide a Tolerance towards the actual measured Values (avoid frequent discussion about off-spec gas) 9/26/2020 2002315 PW_Madrid VI - 20

Gas Specifications : Three Categories • Combustion Properties Wobbe Index and specific Parameters (SI, ICF, H 2) • Gross Calorific Value (GCV) • Additional Components Total Sulphur, H 2 S, COS, Mercaptans, HC Dewpoint, H 2 O Dewpoint, O 2, CO 2, Impurities… 9/26/2020 2002315 PW_Madrid VI - 21

Gas Specifications Combustion Properties • Type of Parameters: Wobbe, SI, ICF, H 2 , … Safety related parameters • Up to now, interoperability assured thanks to : – Investment in flexible burner Broad Band – Investment in blending – Adoption of a Narrow Band policy • Recently, some problems appear: – Connection UK-Continent è Narrow Band óBroad Band – Unbundling of integrated companies è Difficulties for TSOs to manage a stable Quality for End Users (don't have purchase contracts at their disposal) 9/26/2020 2002315 PW_Madrid VI - 22

Gas Specifications Combustion Properties : Recommendations A more consistent Approach permitting use of available gas Sources (area by area) allowing Cross-Border Transfer – Use of flexible Burner – Blending where feasible – Setting of updated and compatible Limits for the Parameters describing the Combustion Properties (Wobbe, SI, ICF) Taking into account • Safety & Economic Considerations • Fulfillment of existing Commitments (also those made by authorities) • Possibilities practically available to various Market Participants in the changing Environment 9/26/2020 2002315 PW_Madrid VI - 23

Gas Specifications : Three Categories • Combustion Properties Wobbe Index and specific Parameters (SI, ICF, H 2) • Gross Calorific Value (GCV) • Additional Components Total Sulphur, H 2 S, COS, Mercaptans, HC Dewpoint, H 2 O Dewpoint, O 2, CO 2, Impurities… 9/26/2020 2002315 PW_Madrid VI - 24

Gas Specifications GCV • Current Situation – Limitation mainly due to Billing Practices (Rules set to protect Customer Right on GCV invoicing) – Issue if same Distribution Network fed by more than 2 Gas types • Recommendation Review of Restriction in the GCV range that restrict Interoperability (respecting consumer rights and choice of supply) 9/26/2020 2002315 PW_Madrid VI - 25

Gas Specifications : Three Categories • Combustion Properties Wobbe Index and specific Parameters (SI, ICF, H 2) • Gross Calorific Value (GCV) • Additional Components Total Sulphur, H 2 S, COS, Mercaptans, HC Dewpoint, H 2 O Dewpoint, O 2, CO 2, Impurities… 9/26/2020 2002315 PW_Madrid VI - 26

Gas Specifications Additional Components Current Situation – Contractual and Legal ranges different from Country to Country (for historical reasons) – Might be aligned more closely without compromising on Safety 9/26/2020 2002315 PW_Madrid VI - 27

Gas Specifications Additional Components Recommendation – Tot Sulphur 30 mg/m 3(n) – H 2 S (+COS) 5 mg/m 3(n) Subject to – Mercaptans 6 mg/m 3(n) • Further Contact and Investigation with all – HC Dewpoint -2 °C (0 -69) barg Stakeholders from Upstream to Downstream – H 2 O Dewpoint -8 °C @ 69 barg • Change of Contractual / Legislative Framework – O 2 1000 ppm – CO 2 2 to 3% – Impurities Clause 9/26/2020 2002315 PW_Madrid VI - 28

Gas Specifications Additional Components: HC Dewpoint Recommendation – Promotion of a Standard using Automatic Measuring Method through ISO – Elaboration of Guidelines for concrete Operational Rules at Border Points (GTE) 9/26/2020 2002315 PW_Madrid VI - 29

Gas Specifications Next Actions • GTE Recommendations to be discussed with other gas stakeholders – Combustion Properties : consistent Approach – GCV Restrictions : review Billing Arrangements – Additional Components : Agreement on common Values First check has been made awaiting start-up EASEE-gas ad-hoc WG • Based on the EASEE-gas Recommendations, – Change of Legal framework in the various Countries (+ Fulfilment of existing Commitments incl. those made by Authorities) – Changes in Supply & Transport Contracts (from upstream to downstream) 9/26/2020 2002315 PW_Madrid VI - 30

Conclusions • Goals assigned by Madrid V mainly achieved • A set of concrete Recommendations is available for further Actions by the various Stakeholders through EASEE-gas • For some Topics Tangible Results have been reached and a first set of Actions could be already taken by the various Stakeholders (including Authorities) 9/26/2020 2002315 PW_Madrid VI - 31