NET4GAS Asset Strategy

Thomas Kleefuß, CEO

European Economic Congress 2011Katowice, May 17th 2011

With Nordstream, OPAL and Gazelle Gazprom will be able to bypass Ukraine as the major transit country

Current gas flows

Gazelle

White Stream / GUEU

Nabucco / South StreamTauern pipeline

OPAL

Nord Stream

Lanzhot - Baumgarten

Shift of gas flowsexpected from

2011

Major Russian gas flows will be shifted from the Southern Russian onshore transit route to Nord Stream / OPAL / NEL.

The first branch of the offshore Russian transit highway will be used earliest in 2011. The second line will be completed not before 2013.

In order to benefit from the new/planned infrastructure in Southern Europe (e.g. LNG, Caspian gas) starting not before 2012, access to Baumgarten is essential.

Pipeline Project Gazelle is necessary for extension of Nord Stream/OPAL and GE contract (shift to entry point Hora Svate Kateriny).

Project “Lanzhot – Baumgarten connection” is necessary in order to capitalize on infrastructural developments in the South East of Europe.

Future gas flows

3

The Moravian Loop project will foster the interconnection with Poland

3 business opportunities are envisaged: Gazsystem connection for

extending the supply zone achieved with Stork I project

Yamal connection for long distance transports in Poland to provide Caspian gas also to remote Polish areas

Moravian Loop will offer PGNIG the possibilities to market LNG gas outside of Poland into direction of Baumgarten (fostering of Baumgarten development due to additional non-Russian gas)

The Moravian Loop will enhance the national transport system and provide transit opportunities with Poland

Moravian Loop

LNG Terminal

Swinoujscie

Moravian Loop

4

The business case for this project is based on expected regulatory requirements. The project ensures N4G’s first mover position against WAG extension.

N4G North-South-corridor to Poland is already reflected in the European Investment plans (#1). (Moravia Project)

N4G now tries to include Oberkappel connection in the regional and European investment plans (#2)

Connection to Oberkappel will support an EU-North-South corridor and serve as a backbone for a trading region CZ-A-SK-HU

Oberkappel connection

Interconnection point Compressor stationUGS

Oberkappel connection

1

2

Baumgarten

Eustream

5

The shift of flows from Lanzhot to Brandov is already reflected in the transit contracts

E X

E X

E X

E X

In 2011: The GE contract is running

from Lanzhot to Waidhaus Exit to Germany in HSK plays

a role, however compared to the classic East-West flow it is of minor importance

In 2020: Gas from Brandov to

Waidhaus is delivered according to the GE contract

Potential upside may be provided by Nabucco on Lanzhot Entry and Waidhaus and Cesky Tesin Exit.

The remaining border points are of minor importanceMajor flow in 2011

Major flow in 2020

Brandov Sayda/Olbernhau

Cesky Tesin

Lanzhot

Waidhaus

All figures in mcm/day

Transit contracts and upsides for N4G

Contracts Nabucco High caseNabuco Low case

E X

20112020

20112020

-101030507090

110130150

20112020

20112020

010203040506070

20112020

20112020

02468

101214

020406080

100120140

20112020

20112020

0

40

80

120

160

6

Connect OPAL in Q3 2011 with NET4GAS grid

Completion Czech-Polish connection in Q3 2011

Build and connect Gazelle till the end of 2012

Connect Czech grid with Baumgarten either LBL or Nabucco

Develop Moravian Loop as part of North South Corridor depending on

capacitiy demand beyond 2017 from Poland and local market (also

Nabucco volumes should be transported)

Develop the Czech-Austrian (Oberkappel) connection around 2018 as

competitive answer towards WAG extension or E.ON Bohemia WAG

connection and as significant contribution to Target Regions (CR-AT-SK-

HU)

Overview of Key Strategic Measures

Strategy Paper 20117

Trading Region AB = Cross-border entry/exit system including all nominated points on the transmission systems of countries A and B

End-user Zone = National balancing zone for national final customers, no matter the system (distribution or transmission) they are connected to

Virtual point of the trading region serving as the sole marketplace of the trading region and all attached end-user zones. Shifting of gas between trading region and end-user zone is done by nominating a virtual exit on the VP.

A trading region allows shipper to bundled their purchase portfolios but not the supply portfolios of the countries inside

Storages and indigenous productions of the countries inside the region are linked to the VP

The trading region model reduces the requirements of legal conditions between participating countries for establishing of cross-border markets as much as possible

Trading Regions enable i.e. faster establishment of functioning wholesale markets

Trading Region model at a glance

,

-

E or X contract X contract

Country A Country B

Trading Region AB

End-userZone A

End-userZone B

Final customers (A) Final customers (B)

VPVP

NB: Trading regions can be developed also for more than two countries and don’t hamper the establishment of full merged markets later

8

N4G enables a functioning market in Central Europe by forming a trading region with Austria, Slovakia and Hungary

One investment to Austria just required (Vodňany <> Oberkappel would be (probably) necessary in order to establish a trading region (one wholesale market) together with A, SK, HUN and maybe SLO

One common VP and gas exchange Hub-to-Hub capacity products to all

neighbouring markets and maybe beyond

National distribution zones remain substantially unaffected

Expected benefits are (a) shift of unused transit capacities to required intra market capacities, (b) reduction of pipe-to-pipe competition and (c) continuing eye-level TSO cooperation/ avoiding RSO

Trading Region in Central Europe

PL-Hub

ROM-HubPSV

(CEGH+)

NCG

Gaspool

9

N4G follows clearly defined steps to build a turntable between CEE and NWE markets

East

-Wes

t tra

nspo

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with

suffi

cien

t re

vers

e flo

w p

ossi

bilit

es in

pla

ce

Gas

turn

tabl

e in

Cen

tral

Eur

ope

Regulatory aspects

As of today 2020

Austria connected with adequate tariff in 2014

Interconnection with Austria: Oberkappel in

2018 (South)

Interconnection with Poland in 2011

(North)

Bundled products in place with all

adjacent TSO in 2012

GATRAC is used as a core for VP2VP

products in Europe

Trading region A-SK-CZ-HU established in

2018

Asset aspects

2011-2013 2014-2017 2018-2020