Central European Gas Hub 16 10 2009

Central European Gas Hub 16. 10. 2009

CEGH – Monthly Title Tracking Volumes OTC DEVELOPMENT CEGH – Churn Rate Number of daily Nominations Number of Customers 2600 nominations / day including intraday operations Volumes Traded in July 2009: 1. 78 bcm Churn rate in 2009 at 2. 91 on average 92 customers registered with July 2009, 71 members active 1475 nominations per day necessary to complete matching (stated July 2009) Development of spreads Adaption of existing IT systems 2009 Allocation process prepared for OBA Technical implementation of ITAB Interface to Exchange systems Enhancement of BUBD functionalities Billing functionalities for exchange trades Deals brokered via ICAP

Price quotations in Baumgarten are reflecting the market environment

Exchange: contribution to trade Globalizing trading activities Across regions Across industries and businesses Standardizing trading activities Anonymous trade Price quotation (anonymous) Standardized contracts ( interchangeable with other exchanges) No risk exposure for traders Traders not utilizing EFET term sheets can easily participate trade OTC - clearing

EXCHANGE STRUCTURE Authorities Contractual Operational CEGH Market Operations & Analysis CEGH Agreement European Federation of Energy Traders Helpdesk Back. Up/Back. Down. Services Co-operation Contract Trading License Trading Workshop i. Access Brokernet Trading Systems Connectivity Agreement European Regulators Group for Electricity and Gas -Premium Access -Combined Access -i. Access -Brokernet Margining Billing Co-operation Contract Quantitiy Report Trade Report Nomination Trading Rules Market Maker Contract Clearing Agreement General Clearing Member ID, Name, GCM Trade Report Market Participation Rules Financial Market Authority Austria Federal Financial Supervisory Authority Germany General Clearing Member Billing Fee Matrix Co-operation Contract Member Database Trade Report Exchange Participant Membershipagreement Clearing-&Settlement Rules Federal Ministry of Economy, Family and Youth Austrian Federal Competition Authority Pre m Com ium bine d Matching Nomination CEGH Dispatching Service Level Agreement General Clearing Agreement Matching Nomination OMV Gas Gmb. H Operating Balancing Agreement EUStream TAG Gmb. H Interconnection Agreement BOG Gmb. H

Rough concept IT data flows Frankfurt any where Vienna Leipzig Vienna any where 4 Anywhere 85 traders Vienna TSOs

HUB as trading point between many transportation and storage systems eustream c c c Storage MAB HAG TAG WAG Regulatory Zone Austria

CEGH Activities 2009/09 2600 Nominations per day

Partner

Clearing volumes ( energy) in € 2008

ECC Clearing across products and across exchanges Power Natural Gas Spot Derivatives Emissions Spot Derivatives

Benefits of integrated clearing Netting of cash flows Daily Cash Flows / Variation Margin [€] Sample Portfolio 25 MW Sell Powernext Base load Contract 25 MW Buy EEX Base load Contract Separated Clearing Integrated Clearing Jan Source: ECC Feb Mar Apr May Jun Jul 12

Margin system to cover counterparty risks • ECC bears the counterparty risk for all cleared exchange and OTC-transactions. • To cover the potential insolvency of one or more Non-Clearing Members, ECC calculates and calls margins from the Clearing Members. • Clearing Members pledge margins in cash or securities. • Clearing Members are obliged to call margins from Non. Clearing Members in at least the same amount. ECC 14 Mio. € Clearing Fond 117 Mio. €â Clearing Member 3… 28 Bn. € Margin 3… 657 Mio. € Clearing Member/ NCM Variation Margin 0… 145 Mio. € Source: ECC 13

Non-Clearing Members 2 5 3 3 24 207 Non-Clearing Members 19 Countries 18 3 7 73 1 7 5 23 3 13 2 4 7 1 Source: ECC as of January 2009

CEGH Customers 1 … CEGH Customers 1 88 Customers 2 10 16 Countries 1 9 3 2 9 14 4 4 1 1 Source: ECC / CEGH 25 as of January 2009 / June 2009

Clearing volumes in € 2008

Clearing volumes in € including ICE Brent 2008

Clearing volumes in € including LCH 2008

Result

Correlation long term – short term

Back UP

OTC TRADING Physical Trade - OTC Day of Delivery -1 EXCHANGE TRADING Supply & Demand Exchange Trader 1 Exchange Trader 2 CLEARING & SETTLEMENT Remote Member (RISK MANAGEMENT) Clearing Agent (Bank) General Clearing Member (GCM) Non Clearing Member Clearing Non (NCM) Member (NCM) Direct Clearing Member (DCM) € € t t

Gas. Exchange

OTC Transfers Physical Trade - OTC Day of Delivery -1 EXCHANGE TRADING Supply & Demand Exchange Trader 1 Exchange Trader 2 CLEARING & SETTLEMENT Remote Member (RISK MANAGEMENT) Clearing Agent (Bank) General Clearing Member (GCM) Non Clearing Member Clearing Non (NCM) Member (NCM) Direct Clearing Member (DCM) € € t t

What to clear is what to trade Geographical spread Seasonal spread Commodity spread

Gas price development

RE-CONCILIATION PROCESS? t+1 t 09: 00 am 05: 00 pm Start of exchange trading End of exchange trading 07: 00 pm 06: 00 am Scheduling t+2 Start physical delivery 06: 00 am Final allocation Physical interruption 1. Re. Nomination Lines of Defense 2. Backup / Back down ? 3. Reconciliation or cash adjustments?

Price quotations in Baumgarten are reflecting the market environment

Trading Day Gas Spot Market Pretrading Posttrading MAIN TRADING PHASE Continuous Trading 09: 00 until 17: 00 Opening auction Closing auction Call 8: 00 until 8: 59 1 min Call max. 15 sec 1 min … random end Source: WBAG max. 15 sec 17: 01 until 17: 45

Rough concept IT data flows Frankfurt any where Vienna Leipzig Vienna any where 4 Anywhere 85 traders Vienna TSOs

SCHEDULING OF PHYSICAL DELIVERIES t+1 t 09: 00 am 05: 00 pm Start of exchange trading End of exchange trading 06: 00 am Start physical Delivery 05: 30 pm Final matching run ≤ 06: 00 pm Final confirmation 12: 30 pm First matching run ≤ 01: 00 pm Confirmation ( Deliveries to Italy!) t+2 06: 00 am

Trading Day Gas Spot Market Pretrading Posttrading MAIN TRADING PHASE Continuous Trading 09: 00 until 17: 00 Opening auction Closing auction Call 8: 00 until 8: 59 1 min Call max. 15 sec 1 min … random end Source: WBAG max. 15 sec 17: 01 until 17: 45

MARKET MAKERS • OBLIGATIONS: “ … during 50% of trading hours providing simultaneously buy and sell quotes for Spot Day. Ahead products with a minimum size of 30 MWh and a maximum spread of 0. 5 €/MWh …” § 50% of trading hours? § But at least 2 hours in the morning § 30 MWh minimum size? § Maximum spread: § Threshold value = 5. 0 € § If last price < 5. 0 € absolute spread = 0. 5 €/MWh § If last price >= 5. 0 €/MWh relative spread = 2 - 5%? § INCENTIVES: § x% rebate on trading fees

FINAL MAIN CONTRACT SPECIFICATIONS - SPOT MARKET: § Spot Exchange start with Day Ahead Product ONLY! § Physical delivery: delivery on 06: 00 am (t+1) to 06: 00 am (t+2) § Gas product type: Base load § 2 Delivery points: Virtual point Baumgarten + Oberkappel § continuous trading from 09: 00 am to 05: 00 pm § Price units: EUR/MWh § Minimum price increment: 0. 025 EUR / MWh § Minimum trade size: 10 MW § single sided nomination – initial nomination by CEGH for customers and no re-nomination by customers