Hard at work or hardly working GTEERGEG workshop on transit

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Hard at work or hardly working?GTE-ERGEG
workshop on transit

• Brussels, January 24, 2007

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Overview

• Market environment
• Basic outline
• Transportation capacity development
• Market development
• The contribution of OMV Gas GmbH
• Current challenges for the european gas market
• The way forward The OMV Gas approach

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Market environment / Basic outline

• Relationship domestic versus transit
  quantitiesin 2006 15 85
• Consequently this market structure is reflected
  in the new Austrian Gas Act (GWG III ?
  Amendment to the Gas Act of the year 2000,
  pursuant to the Federal Law Gazette of 27 June
  2006) ?set of specific stipulations for transit

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Market environment / Transportation capacity
development (in bcm/year at 0C)
Precondition for further investmentssound and
stabile investment climate?no additional
regulatory risk
5
Market environment / Market development (in
number of concluded contracts/year)
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Market environment / The contribution of OMV Gas

• Continuous investment in transportation capacity
• Customer satisfaction survey
• Online Capacity Booking System
• Fee Calculator
• Capacity publication on hourly basis
• Bulletin board for capacity trading
• one-stop shop
• Change of gas day from 800 a.m. to 600 a.m.
  according to EASEE gas-recommendations (common
  best practices)
• Interconnection Agreements with balancing
  accounts (some under discussion)
• General Terms and Conditions (currently under
  approval by authority)
• Standard transportation contracts
  (firm/interruptible)
• Tariff model (currently under approval by
  authority)

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Tariff model main features

• OMV proposed to E-Control a harmonized tariff
  methodology fully compliant with Section 31h of
  Austrian Gas Act. Section 31h states the
  stipulations for the payment for cross-border
  transportation.
• The tariff is calculated as a base tariff taking
  into account existing committed capacities and
  already planned expansion investments for booked
  capacities. These include capacities in reverse
  direction ? rolled in approach
• The tariff will be applied to long-term contracts
• The tariff is split into two tariff elements
• distance related
• non-distance related
• Benchmarking of 14 EU member states illustrates
  that OMV tariffs are in line with EU average

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Current challenges for the european gas market

• Hindering aspects
• Wide disparity within the EU 27 is going to
  spread
• High speed regulation creates market imbalances
• Decreasing willingness to invest
• Accelerating aspects
• Increase in competition
• Increase in investments in pipeline
  infrastructure
• Increase in transparency

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The way forward The OMV Gas approach

• Consolidation of gas markets within EU based on
  results of recently carried out assessments
• Additional rules only after roughly the same
  level has been achieved by all member states
• The achievements of OMV Gas demonstrate that it
  is hard at work contrary to
• High speed regulation risks changing a hard
  working TSO into a hardly working TSO (leading
  to a hardly working gas market)