Madrid, 1st April 2008

Proposal for the commercialisation of

existing and committed capacity at the

cross border point of Larrau between

France and Spain

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Background

ENAGÁS and TIGF have committed to put in operation by 2009 new capacities in both directions at the cross border point of Larrau, and have agreed ERGEG’s South GRI proposal of evaluating shipper’s interest in existing (non-allocated) capacities and in new capacities at this point, and to allocate the referred capacities through an Open Subscription Period (OSP), which will take from 2008.

The competent regulatory authorities in both countries have committed to adapt the regulatory framework in force in order to allow the proposed OSPs to take place under the general principles agreed between the TSO and regulators.

The object of this document is to announce to the market the intention to hold a OSP in 2008 to allocate capacities from 1st November 2009 to 31st March 2013, and the basic rules under which the OSPs will be conducted.

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Main updates of the previous documents

1. Review of “sample capacities to be offered”.

2. Setting of same ending date for capacity in both directions (31/03/2013).

3. Review of allocation rules.

4. Tentative calendar of OSPs.

5. Other comments.

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1. Technical capacities The table of capacities to be offered under the OSP have been

modified taking into account:

The update of the analysis on technical capacities made by TIGF and Enagás in January 2008 and presented in the 6th Implementation Group of the SGRI on 11th February 2008.

Last available date on booked capacities. Due to new requests for long-term capacity, the capacity available for the OSP from France to Spain has been reduced, and there will be no capacity available until November 2009. This might have an impact on the timing of the OSP.

Capacities might be subject to revision, depending on availability and the progress of the works of the new facilities. The capacities offered under each OSP will be published in each OSP procedure, and it will be detailed whether they are subject to any restriction.

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1. Committed infrastructure and capacity added

Capacity

GWh/d Exit TIGF Entry

Enagás Common

Value Exit Enagás Entry TIGF Common

Value 1Q-2008 Max: 103 Max: 87 0 0 0

4Q-2008 CS Zaragoza Max: 103 Max: 87 0 0 0 Pipeline Barcelona - Arbós (duplicate)

Min: 50 (W); 40 (S)

Min: 50 (W); 40 (S)

2Q-2009 CS Navarra Max: 165 Max: 100 0 0 0

4Q-2009 Max: 165 Max: 100 0 0 0

Reinforce CS Haro 4Q-2010 Max: 165 Max: 100 W: 30 W: 110 W: 30

S: 50 S: 100 S: 50 (51 bar at Mont)

4Q-2012 Max: 165 Max: 100 165 W: 110 W:110 S: 100 S:100

CS Villar de Arnedo (51 bar at Mont) 4Q-2012 Max: 165 Max: 165 165 165

France Spain Spain France

87 (59 bar at Villar de Arnedo) 87 (59 bar at Villar de Arnedo) 100 (45 bar at Navarra)

Min: 50 (W); 40 (S)

Min: 30 (W); 20 (S)

Min: 30 (W); 20 (S)

Min: 60 (W); 40 (S)

Min: 60 (W); 40 (S)

Min: 50 (W); 40 (S)

100 (45 bar at Navarra) Pipeline Tivissa -

Castelnou (duplicate) and Reversibility of flow in TIGF network

Pipeline Tivissa - Paterna (duplicate)

100 (45 bar at Navarra)

Pipeline Lemona - Haro (duplicate)

165 (51 bar at Mont)

(*): Under study, not yet decided

165 (45 bar at Navarra)

Min: 0 (W); 0 (S)

Min: 0 (W); 0 (S)

Pipeline Lussagnet - Lacq (*) and CS Mont (*)

Current Status (with Pipeline Falces - Irurzún)

S: summer capacity (July and August are not considered) W: winter capacity

Min: 0 (W); 0 (S)

Min: 0 (W); 0 (S)

Pipeline Zarza de Tajo - Villar de Arnedo

100 (45 bar at Navarra)

Min: 0 (W); 0 (S)

Min: 0 (W); 0 (S)

6th Implementation Group of the SGRI on 11th February 2008

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Capacities in GWh/day

April-Oct 09

Nov 09 - March 10

April-Oct 10

Nov 10 - March 11

April-Oct 11

Nov 11 - March 12

April-Oct 12

Nov 12 - March 13

ENAGÁS -> TIGF Summer Winter Summer Winter Summer Winter Summer Winter

Technical capacity EXIT ENAGAS

0,00 0,00 0,00 0,00 50,00 30,00 50,00 30,00

Booked capacity EXIT ENAGAS

11,98(*) 0,00 0,00 0,00 0,00 0,00 0,00 0,00

Capacity considered EXIT ENAGÁS

0,00 0,00 0,00 0,00 50,00 30,00 50,00 30,00

Technical capacity ENTRY TIGF

0,00 0,00 0,00 0,00 100,00 110,00 100,00 110,00

Booked capacity ENTRY TIGF

0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00

Available for FCFS 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00

Capacity considered ENTRY TIGF

0,00 0,00 0,00 0,00 100,00 110,00 100,00 110,00

Capacity offered under the OSP (common value)

0,00 0,00 0,00 0,00 50,00 30,00 50,00 30,00

OSP 2008 (LTC) 0,00 0,00 0,00 0,00 40,00 24,00 40,00 24,00

OSP 2008 (STC) 0,00

Future OSPs (STC) 0,00(**) 0,00(**) 0,00(**) 10,00(**) 6,00(**) 10,00(**) 6,00(**)

ENAGAS -> TIGF

(*) In April 2009 15 GWh/day are booked, whereas the capacity booked from May 2009 to October 2009 amounts to 11.98GWh/day.

(**) Short term capacities from 1st November 2009 will be sold yearly, in later OSPs, performed a year before their starting day. E.g. STC from 1st November 2009 to 31st October 2010 will be offered during the OSP to be hold in 2009.

1. Sample capacities to be offered (I)

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Capacities in GWh/day

April-Oct 09

Nov 09 - March 10

April-Oct 10

Nov 10 - March 11

April-Oct 11

Nov 11 - March 12

April-Oct 12

Nov 12 - March 13

TIGF -> ENAGÁS Summer Winter Summer Winter Summer Winter Summer Winter

Technical capacity EXIT TIGF

87,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00

Booked capacity EXIT TIGF

87,00 87,00 87,00 87,00 87,00 87,00 77,52 77,52

Capacity considered EXIT TIGF

0,00 13,00 13,00 13,00 13,00 13,00 22,48 22,48

Technical capacity ENTRY ENAGÁS

103,00 165,00 165,00 165,00 165,00 165,00 165,00 165,00

Booked capacity ENTRY ENAGÁS

73,25(***) 73,25(***) 73,25(***) 73,25(***) 73,25(***) 73,25(***) 73,25 73,25 Capacity considered ENTRY ENAGÁS

29,75 91,75 91,75 91,75 91,75 91,75 91,75 91,75

Capacity offered under the OSP (common value)

0,00 13,00 13,00 13,00 13,00 13,00 22,48 22,48

OSP 2008 (LTC) 0,00 10,40 10,40 10,40 10,40 10,40 17,98 17,98

OSP 2008 (STC) 0,00

OSPs (STC) 2,60(**) 2,60(**) 2,60 (**) 2,60 (**) 2,60 (**) 4,50(**) 4,50(**)

TIGF -> ENAGAS

(**) Short term capacities from 1st November 2009 will be sold yearly, in later OSPs, performed a year before their starting day. E.g. STC from 1st November 2009 to 31st October 2010 will be offered during the OSP to be hold in 2009.

(***) “Booked capacity” does not include capacity requested but not yet subscribed.

1. Sample capacities to be offered (I)

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2. OSP ending dates (I)

TIGF and ENAGÁS strongly support the modification included by the CRE and the CNE to establish the same ending date for the capacity services allocated under the OSP in both directions (31/03/2013).

ENAGÁS, TIGF and GRTgaz have already started contacts to settle the basis of the OS(s) to build and allocate new interconnection capacity between their systems. An issue raised during these preliminary contacts has been that a number of OSPs and OSs are planned during the next few years between and within the systems of these TSOs and, in order to facilitate a better coordination between them where possible, it would be desirable to fix the same ending date for capacity services in both directions (France > Spain and Spain > France ) in this OSP.

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2. OSP ending dates (II)

A preliminary analysis, taking into account the estimated dates for entering into operation of certain infrastructures, suggests that the ending date for the OSP between ENAGÁS and TIGF systems should be around late 2012 or early 2013. This might prevent holding two different OSs in the future to build and allocate new capacity, simplifying the coordination between TSOs, and might also facilitate the coordination with other OSPs and OSs.

Therefore, in the context of the proposed OSP, ENAGÁS and TIGF agree with the CRE and the CNE to establish a common ending date for the capacity services to be allocated under the proposed OSP in both directions, which could be 31/03/2013. This would allow allocating capacity services under the potential OS under study from 01/04/2013, in coordination with the subsequent OSP between ENAGÁS and TIGF, and possibly in coordination with other OSPs/OSs in within France.

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3. Allocation rules

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4. Tentative calendar of OSPs (I) TIGF and ENAGÁS propose to:

shorten the period between the allocation of short-term capacity and the starting date of the service, in order to allow shippers to better estimate their needs and therefore to encourage requests from shippers.

allow shippers to make their requests for STC once the LTC has been allocated. STC is frequently a way to meet flexibility needs for shippers with capacity already contracted on a long-term basis.

Given that there will no be capacity available until November 2009, TIGF and ENAGÁS recommend not to allocate STC in the OSP to be hold in 2008. It would be advisable to wait until the OSP to be hold in 2009 for the allocation of STC (it is proposed to hold OSPs in spring each year from 2009 on).

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4. Tentative calendar of OSPs (II)

Communication to the market June 2008

Publication of OSP procedures (LTC & STC) September 2008

OSP starting date (LTC) 1st October 2008

OSP closing date (LTC) 10th Oct 2008

Initial allocation of capacities (LTC) 17th Oct 2008

Closing date Withdraw of requests (LTC) 22nd Oct 2008

Final allocation of capacities (LTC) 28th Oct 2008

Communication of final allocation (LTC) 4th Nov 2008

OSP starting date (STC) 5th November 2008

OSP closing date (STC) 14th Nov 2008

Initial allocation of capacities (STC) 20th Nov 2008

Closing date Withdraw of requests (STC) 26st Nov 2008

Final allocation of capacities (STC) 30th Nov 2008

Communication of final allocation (STC) 4th Dec 2008

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4. Tentative calendar of OSPs (III)

Communication to the market During April of each year

OSP starting date First working day of May.

OSP closing date Ten (10) working days after the starting date.

Initial allocation of capacities The thirteenth (13th) working day.

Closing date Withdraw of requests The sixteenth (16th) working day.

Final allocation of capacities The last working day of May.

Communication of final allocation Five (5) working days after the last working day of May.

Tentative calendar of OSPs to allocate STC in the future

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4. Calendar of future OSPs

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5. Other comments

The current proposal, as the former ones, includes the allocation of LTC from Spain to France. However, this capacity will only be available from April 2011. Given that the capacity will be offered two years and a half in advance, and for a period of two years, TIGF and ENAGÁS doubt that shippers will be interested in making any commitment to book this capacity in 2008.

Whether this capacity will or not be offered in a future OSP must be clarified before the OSP takes place. Otherwise, it will be only possible to offer the referred capacity on a first-come, first-served basis after the first OSP.).

Thank you for your attention