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Central European Gas Hub ERGEG 30th, 2009

Central European Gas Hub ERGEG 30th, 2009. How to serve commodity trading. Trading along the Amber Road. Trading along the Silk Road. First documented Trading took place in Africa. Trading along the Hanse Route. 2005 AD CEGH Gas Hub. DEVELOPMENT OF COMMODITY HUBS. 2003 AD TTF Gas Hub.

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Central European Gas Hub ERGEG 30th, 2009

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  1. Central European Gas Hub ERGEG 30th, 2009

  2. How to serve commodity trading Trading along the Amber Road Trading along the Silk Road First documented Trading took place in Africa Trading along the Hanse Route 2005 AD CEGH Gas Hub DEVELOPMENT OF COMMODITY HUBS 2003 AD TTF Gas Hub 1999 AD APX Gas Hub 1994 AD NBP Gas Hub 1792 AD Exchange in New York PHYSICAL & VIRTUAL TRADING 1771 AD Exchange in Vienna 1720 AD First Crash 1602 AD Exchange in Amsterdam & First Share 1554 AD Exchange in London 1540 AD Exchange in Nürnberg PHYSICAL TRADING 1409 AD First Exchange in Brugge 1200 AD Trading along the Hanse Route 100 AD Trading along the Silk Road 3000 BC Trading along the Amber Road 140000 BC First documented Trading 140 000 BC 2000 AD 1200 AD 1700 AD 100 AD 3000 BC

  3. Hanse - Success

  4. CEGH: one additional trading point

  5. HUB landscape in Europe Zeebrugge DONG NBP GUD TTF EGT CEGH PEG PSV CDG Future potential Hubs

  6. PricewaterhouseCoopers: ordered by ERGEG in the course of the SEE Region Initiative Almost 100% of respondents are currently trading at the CEGH Hub in Baumgarten: When it comes to volume of trade, 57% of traders said that the CEGH has the best chance of becoming the most important hub in CEE/SEE and would be best suited as regional trading platform. Furthermore 75% of respondents would like to have a regional price index where one would be technically and economically viable.

  7. Development of OTC - Trade • Increasing trading activities: • Increasing churn rate • Increasing number of customers • Increasing number of nominations

  8. Basic nominations per gas day Appr. 2000 nominations per day

  9. Herfindahl Index

  10. Broker based trading at CEGH Dimensions of bubbles are indicating volume of trade

  11. Price quotations in Baumgarten are reflecting the market environment PSV Bid – Ask spread

  12. OTC Market Making - Baumgarten • Products: • Day Ahead • BOM • 2-3 Front months • 2 Quarters • 2 Seasons • 1 Yearly contract • Quantities: • 10 / 30 MWh/h • Bid/Ask Spread: • Maximum: 1,0 EUR / MWh (1,5 for seasons/ yearly contracts)

  13. Development from the physical to thefinancial services OTC Clearing Futures Spot Physical Balancing Merit order list Backup / back down service Services CEGH Multi Trading (CMT) / Dispatching services/Allocation/Invoicing CEGH Multi Trading (CMT) Dispatching Physical balancing via online bulletin board Online bulletin board No notice storage service Wheeling service Title tracking service Web based online gas auctioning 2009 2008 2007 2006

  14. Exchange project: CEGH - WBAG technical legal AG foundation10/ 2008 Evaluation of IT – Systems 2008 Shareholder agreement11/ 2008 Selection IT – Systems 11/ 2008 Contractual setup11/ 2008 IT implementation Approval FMA (basic concept)11/ 2008 IT interfaces to WBAG Pre notification submitted 12/ 2008 IT integration customer Operation agreements Customer agreements Interface implementation OTC dispatching Simulation start Go life 2009

  15. Physical Trade - OTC € t Remote Member Clearing Agent € (Bank) CCP. A Central General Clearing t Member (GCM) Counterparty Direct Clearing Member (DCM) Austria Non Clearing Member (NCM) Non Clearing Member (NCM) Non Clearing Member (NCM) Non Clearing Member (NCM) OeKB Settlement bank OTC TRADING EXCHANGE TRADING Day of Delivery -1 Supply & Demand Exchange Trader 1 Exchange Trader 2 CLEARING & SETTLEMENT (RISK MANAGEMENT)

  16. GasExchange

  17. Physical Transfer - OTC € t Remote Member Clearing Agent (Bank) CCP. A Central General Clearing Member (GCM) Counterparty Direct Clearing Member (DCM) Austria Non Clearing Member (NCM) Non Clearing Member (NCM) Non Clearing Member (NCM) Non Clearing Member (NCM) OeKB Settlement bank OTC Transfers EXCHANGE TRADING Day of Delivery -1 Supply & Demand Exchange Trader 1 Exchange Trader 2 CLEARING & SETTLEMENT (RISK MANAGEMENT) € t

  18. Contractual frameworks Ministry of finance WAG 2007: Wertpapier Aufsichtsgesetz Börsegesetz (exchange law) Austrian Financial Markets Supervisory Agency CEBS Committee of European Banking Supervisors MiFID Market Infinancial Instrument Directive Derivative market Department of commerce Spot market Energie – Control GmbH OTC market Interconnection Agreement (OBA)

  19. Three pillars for liquidity Sufficient primary capacities OTC Exchange Flexible services Use it or lose it interruptible Trading platform Capacity utilization Storage Harmonized Environment

  20. Market maker in OTC trade in cooperation with ICAP Bricks for Hub construction Standard-isation Trans-parency Firmness Liquidity Partnership with GAZPROM, VSE, CENTREX prenotified to DG - Comp IT in place legal Cooperation with HEREN & EFET Gas exchange Back up/ down in cooperation with EFET Interconnection agreement / OBA

  21. Thank you for your attention

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