Proposal for the commercialisation of existing and committed

Proposal for the commercialisation of existing and committed capacity at the cross border point of Larrau between France and Spain Madrid, 1 st April 2008

Background § ENAGÁS and TIGF have committed to put in operation by 2009 new capacities in both directions at the cross border point of Larrau, and have agreed ERGEG’s South GRI proposal of evaluating shipper’s interest in existing (non-allocated) capacities and in new capacities at this point, and to allocate the referred capacities through an Open Subscription Period (OSP), which will take from 2008. § The competent regulatory authorities in both countries have committed to adapt the regulatory framework in force in order to allow the proposed OSPs to take place under the general principles agreed between the TSO and regulators. § The object of this document is to announce to the market the intention to hold a OSP in 2008 to allocate capacities from 1 st November 2009 to 31 st March 2013, and the basic rules under which the OSPs will be conducted. 2

Main updates of the previous documents 1. Review of “sample capacities to be offered”. 2. Setting of same ending date for capacity in both directions (31/03/2013). 3. Review of allocation rules. 4. Tentative calendar of OSPs. 5. Other comments. 3

1. Technical capacities § The table of capacities to be offered under the OSP have been modified taking into account: § The update of the analysis on technical capacities made by TIGF and Enagás in January 2008 and presented in the 6 th Implementation Group of the SGRI on 11 th February 2008. § Last available date on booked capacities. Due to new requests for longterm capacity, the capacity available for the OSP from France to Spain has been reduced, and there will be no capacity available until November 2009. This might have an impact on the timing of the OSP. Capacities might be subject to revision, depending on availability and the progress of the works of the new facilities. The capacities offered under each OSP will be published in each OSP procedure, and it will be detailed whether they are subject to any restriction. 4

1. Committed infrastructure and capacity added 6 th Implementation Group of the SGRI on 11 th February 2008 5

1. Sample capacities to be offered (I) ENAGAS -> TIGF (*) In April 2009 15 GWh/day are booked, whereas the capacity booked from May 2009 to October 2009 amounts to 11. 98 GWh/day. (**) Short term capacities from 1 st November 2009 will be sold yearly, in later OSPs, performed a year before their starting day. E. g. STC from 1 st November 2009 to 31 st October 2010 will be offered during the OSP to be hold in 2009. 6

1. Sample capacities to be offered (I) TIGF -> ENAGAS (**) Short term capacities from 1 st November 2009 will be sold yearly, in later OSPs, performed a year before their starting day. E. g. STC from 1 st November 2009 to 31 st October 2010 will be offered during the OSP to be hold in 2009. (***) “Booked capacity” does not include capacity requested but not yet subscribed. 7

2. OSP ending dates (I) § TIGF and ENAGÁS strongly support the modification included by the CRE and the CNE to establish the same ending date for the capacity services allocated under the OSP in both directions (31/03/2013). § ENAGÁS, TIGF and GRTgaz have already started contacts to settle the basis of the OS(s) to build and allocate new interconnection capacity between their systems. An issue raised during these preliminary contacts has been that a number of OSPs and OSs are planned during the next few years between and within the systems of these TSOs and, in order to facilitate a better coordination between them where possible, it would be desirable to fix the same ending date for capacity services in both directions (France > Spain and Spain > France ) in this OSP. 8

2. OSP ending dates (II) § A preliminary analysis, taking into account the estimated dates for entering into operation of certain infrastructures, suggests that the ending date for the OSP between ENAGÁS and TIGF systems should be around late 2012 or early 2013. This might prevent holding two different OSs in the future to build and allocate new capacity, simplifying the coordination between TSOs, and might also facilitate the coordination with other OSPs and OSs. § Therefore, in the context of the proposed OSP, ENAGÁS and TIGF agree with the CRE and the CNE to establish a common ending date for the capacity services to be allocated under the proposed OSP in both directions, which could be 31/03/2013. This would allow allocating capacity services under the potential OS under study from 01/04/2013, in coordination with the subsequent OSP between ENAGÁS and TIGF, and possibly in coordination with other OSPs/OSs in within France. 9

3. Allocation rules 10

4. Tentative calendar of OSPs (I) § TIGF and ENAGÁS propose to: § shorten the period between the allocation of short-term capacity and the starting date of the service, in order to allow shippers to better estimate their needs and therefore to encourage requests from shippers. § allow shippers to make their requests for STC once the LTC has been allocated. STC is frequently a way to meet flexibility needs for shippers with capacity already contracted on a longterm basis. § Given that there will no be capacity available until November 2009, TIGF and ENAGÁS recommend not to allocate STC in the OSP to be hold in 2008. It would be advisable to wait until the OSP to be hold in 2009 for the allocation of STC (it is proposed to hold OSPs in spring each year from 2009 on). 11

4. Tentative calendar of OSPs (II) 12

4. Tentative calendar of OSPs (III) Tentative calendar of OSPs to allocate STC in the future 13

4. Calendar of future OSPs 14

5. Other comments § The current proposal, as the former ones, includes the allocation of LTC from Spain to France. However, this capacity will only be available from April 2011. Given that the capacity will be offered two years and a half in advance, and for a period of two years, TIGF and ENAGÁS doubt that shippers will be interested in making any commitment to book this capacity in 2008. § Whether this capacity will or not be offered in a future OSP must be clarified before the OSP takes place. Otherwise, it will be only possible to offer the referred capacity on a first-come, first-served basis after the first OSP. ). 15

Thank you for your attention