The Interconnector GreeceItaly IGI Project a New Gas

The Interconnector Greece-Italy (IGI) Project: a New Gas Import Route to EU and Italy

Summary n A look to the European gas Market Dynamics n The IGI Project

The Growing European Gas Demand Europe (EU + Norway + Switzerland + Romania + Bulgaria + Turkey) will evidence a significant growth of its gas consumptions from around 550 bcm in 2005 to around 800 bcm in 2020 (CAGR +2, 5%) Consumption 800 bcm residential industrial 320 bcm power 550 bcm Declining domestic gas production will boost the need of new import infrastructures both LNG and pipe. Approx 320 bcm of additional import capacity will be required to satisfy Europe gas need in 2020 Import Capacity (280 bcm) + 230 bcm 280 bcm Domestic Production (310 bcm) 2005 200 bcm 2020

The Growing European Gas Demand Several Major Infrastructures are currently under development to cope with the increasing European gas requirements Additional Import Capacity announced or under development/construction LNG approx: 170 bcm Pipeline approx: 140 bcm Even considering credible the scenario in which all the infrastructures under development are realised, Europe may still need more import infrastructures to sustain its consumption growth.

Italy as a Transit Country Several import project (LNG and pipe), having an overall capacity above 110 bcma, are currently being developed. This additional import capacity widely exceed the effective Italian gas requirements. FRANCE GERMANY Norway & Netherlands AUSTRIA, SLOVENIA CROATIA HUNGARY Russia HUB The development of new Import infrastructures will enhance the role of italy as transit country versus north and central Europe. Qatar LNG Algeria LNG Caspian + LNG The Italian Energy Authority (AEEG) is considering regulations to incentive transits through Italy in order also to facilitate the development of European a gas hub in north Italy Algeria Libya

Summary n A look to the European gas Market Dynamics n The IGI Project

Interconnection Turkey-Greece-Italy (ITGI): Project Description ITG CAPACITY: approx. 12 bcm/y RU SS IGI CAPACITY: 8 - 10 bcm/y IA The Interconnection Greece-Italy (IGI Project) is developed, since 2002, by Edison and Depa in cooperation with Botas (Turkish natural gas state company), with the aim to connect the huge Caspian and Middle East gas resources to the European market. ITG AZERB IGI N IRAQ Under Construction IRA EGYPT Existing Under Development AIJAN q Unique opportunity to diversify domestic gas supply both in terms of sources and routes q Only pipeline project capable of importing gas from several producing countries, allowing an upstream competition q Considered by EU as one of the 5 priority axis for the development of EU gas The IGI project is considered highly strategic for the development of the Turkish, Greek and Italian Energy Markets. Indeed, the 4 th of November The Italian and Greek Governments will execute an Intergovernmental Agreement to support the development of the IGI Project. At the signature ceremony will participate the Turkish Minister for Energy to whom the Agreement will be extended

Required Upgrades on the Turkish Grid § The assessment of the required upgrades on the Turkish systems have been calculated on the assumption that the domestic gas demand would reach 42 bcm/y by 2012 § Based on the above assumption, the Turkish gas grid will require looping for approx 600 km and additional compression power. Loops to transfer 3 bcm/yr to Greek/Turkish border Loops to transfer additional 8 bcm/y to Greek/Turkish border

ITG Project: The Status of Development Turkish Section Length: 200 Km Diameter: 36“ Greek Section Length: 85 Km Diameter: 36“ Progress to date of Greek part: Phase 1 approaching completion, Phase 2 to start 1 Q 2006 Capacity to Turkish/Greek Border: 3, 6 bcm/y @ Start up (early 2007) NOTE: Will be increased to 12 bcma with 2 additional Compressor Stations when IGI Project will enter in to operations Progress to date of Turkish part: Awarded Construction of pipeline and border metering station Tender package for HDD of Evros/Meric river under preparation

IGI Project: The Status of Development Edison and Depa have finalised the feasibility study, which has benefited of an EU financing, and have decided to initiate the pre-feed and authorisation activities. The Feasibility Study included the following activities: q q Part 1: Technical Feasibility § Gas flow simulation study for the entire system (from Turkey to Italy) § Project Design Basis § Definition of system routing § Pre-Basic Engineering of IGI system § Capex and Opex assessment § Preliminary environmental impact assessment § Project impact on the Italian Gas Grid Part 2: Economic and Financial Feasibility § Definition of the project business plan (unlevered version) § Finalisation of the net-back analysis and assessment of the project economic viability § Definition of the optimum corporate, commercial and financial structures § Development of the project financial plan § Confirmation of project financial feasibility

IGI Project Configuration Kipi ITG Onshore Section Length: 592 Km Diameter: 36“ Compression: 175 MW Capex: 600 M€ Investment to be sustained by DEPA ITG I. T. G. Offshore Section IGI offshore section IGI onshore section comp. station Capacity to Italy : 8 bcm/y NOTE: Can be increased to 10 bcma (Total transported to Greece: 11. 6 bcm) with 2 additional Compressor Stations. Length: 212 Km Diameter: 32“ Depth: 1450 m Capex: 350 M€ Investment to be realized by a SPV (Poseidon Co) participated by Edison and Depa on an equal basis

Project Competitiveness q Transportation tariffs have been calculated allowing: 1) fixed remuneration of net invested capital; 2) recovery of assets depreciation; 3) recovery of fixed and variable operating cost q Transportation cost magnitude has been agreed with Botas and Depa The Netback analysis, performed starting from the AGIP prices (Average German Import Prices), demonstrates that the IGI Project can sustain the expected gas prices at Turkish eastern border. The feasibility study demonstrates that the cost structure of the IGI Project is § In the range of the most competitive LNG Projects to Southern Europe; and § Significantly more competitive then LNG supply from Caspian and Middle east area to South Europe

Commercial Structure Edison, Depa and Botas respective role in the development of the IGI Project will be as follows: Edison: § Principal shipper within the IGI system (securing at least 80% of the Long term capacity) § Shareholder in Poseidon Co. Depa: § Shipper within the IGI system for 20% of the capacity § Sharehoder in Poseidon Co § Carrier within the Greek Section Botas: § Carrier through the Turkish grid § Potential shareholder in Poseidon

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