Madrid, 2 nd Nov 2011

1. 17thIG Meeting South Gas Regional Initiative VI. MIBGAS Madrid, 2nd Nov 2011

2. VI. MIBGAS VI.1 Proposal to achieve an integrated market

3. VI.1 Proposal to achieve an integrated market • Regulators common position concerning the priorities for MIBGAS development • ERSE and CNE approved a common position document concerning the priorities for MIBGAS development • This common position document was sent to the Portuguese and Spanish Governments on 27 September • This common position document was triggered by the Memorandum of Understanding signed by the European Commission, the European Central Bank, the International Monetary Fund and the Portuguese Government , where it is stated that “In the gas market, the Government will take measures to accelerate the establishment of a functioning Iberian market for natural gas (MIBGAS), in particular through regulatory convergence. Take up political initiatives with Spanish authorities with the aim of eliminating the double tariff. [Q3-2011]”.

4. VI.1 Proposal to achieve an integrated market • Regulators common position concerning the priorities for MIBGAS development • The priorities identified are foreseen in the South Gas Regional Initiative Work Plan 2011-2014 • 4 priorities were identified: • CAM harmonization between Spain and Portugal • Proposal for the harmonization of the access tariffs applied in the interconnections between Spain and Portugal, towards the elimination of pancaking effects • Proposal for the harmonization of the balancing mechanisms between Portugal and Spain • Proposal of models for the integration of the Spanish and Portuguese gas markets into an Iberian Natural Gas HUB

5. VI.1 Proposal to achieve an integrated market • Regulators common position concerning the priorities for MIBGAS development • CAM harmonization between Spain and Portugal • Approval by the Regulators (ERSE and CNE) of a common Capacity Allocation Mechanism to be applied in the interconnections between Portugal and Spain in a harmonized way by the TSO’s (REN and ENAGAS) in line with the ACER framework guidelines. TSO’s have presented to the regulatory authorities a CAM proposal for public consultation. (Conclusion: January 2012) • Development of a common Congestion Management Procedure to be applied to the interconnections between Portugal and Spain. (Conclusion: January 2013)

6. VI.1 Proposal to achieve an integrated market • Regulators common position concerning the priorities for MIBGAS development • Proposal for the harmonization of the access tariffs applied to the interconnections between Spain and Portugal, towards the elimination of pancaking effects • Presentation by the Regulatory Authorities (ERSE and CNE) of an action proposal for the harmonization of the access tariffs in the interconnections between Portugal and Spain that enhance and facilitate market development avoiding tariffs pancaking effects on cross border flows. Taking into account the dispositions foreseen in the directives these tariffs and/or the methodologies for their calculation shall be approved and implemented by the National Regulators. (Conclusion December 2011)

7. VI.1 Proposal to achieve an integrated market • Regulators common position concerning the priorities for MIBGAS development • Proposal for the harmonization of the balancing mechanisms between Portugal and Spain • Presentation by the Regulatory Authorities (ERSE and CNE) of an action proposal for the harmonization of the balancing mechanisms applied in the natural gas infrastructures, on the available flexibility to suppliers in each infrastructure, on the available balancing information and on the role of the market, the users and the TSO’s on the resolution of the unbalance situations. This proposal has to be in line with 3rd Package developments and a roadmap should be also presented, in line with the other actions necessary to the implementation of MIBGAS. (Conclusion: June 2013)

8. VI.1 Proposal to achieve an integrated market • Regulators common position concerning the priorities for MIBGAS development • Proposal of models for the integration of the Spanish and Portuguese gas markets in an Iberian Natural Gas HUB • Presentation by the Regulatory Authorities (ERSE and CNE) of an analyses of the possible models for the integration of the Spanish and Portuguese gas markets in a common Iberian Natural Gas HUB (National Market Areas, Regional Market Zones or Supra National Market), analyzing the advantages and drawbacks, the regulatory harmonization requisites for its implementation and a proposal roadmap for its entry into force. (Conclusion: December 2013).

9. VI. MIBGAS VI.2 Update of the ERSE-CNE study on cross border tariffs between Portugal and Spain

10. Assessment of case studies based on the supply of a CCGT/industrial cons. from a MIBGAS entry point (LNG terminal/interconnection). For each case study: Entry costs into the transmission network are assessed as well as regasification costs Transmission costs include one country or two countries depending on the origin and destiny of the supply Costs for using underground storage or for balancing purposes are not considered Coherence check with the Target Model and the FGs under discussion Discussion on CBT target scenario and consultation on interim steps VI.2 Update of the ERSE-CNE study on cross border tariffs between Portugal and Spain

11. Completing the study and submission to public consultation Stakeholders will be asked to identify most needed developments to cross border transit tariffs NRAs will issue a proposal on short term measures to foster market integration through cross border tariff harmonization Long term European target model for market integration will provide guidance for short term developments VI.2 Update of the ERSE-CNE study on cross border tariffs between Portugal and Spain Next steps