10-year Development Statement - GRTgaz · • RAB increases faster than available entry capacity • The period 2009/2012 is impacted by combined environment and fluidity investment

10-year DevelopmentStatementPeriod 2008 - 2017

Meeting of June 23, 2008

10-year Indicative Investment Plan Period 2008 - 2017 - 2 -

The main transmission systemEntry points (capacity at 01/01/08)

Taisnières H 590 GWh/d

Taisnières B 230 GWh/d

Obergailbach 430 GWh/d

Dunkerque 570 GWh/d

Montoir 360 GWh/d

Fos-sur-Mer 200 GWh/d

TIGF 10 GWh/d

___________________________________

Total entry capacity 2,390 GWh/d

Exit points

Oltingue 223 GWh/d

Larrau et Biriatou 100 GWh/d

Transported energy

700 TWh paFos-sur-Mer

Montoir

Larrau

DunkerqueTaisnières

Oltingue

Obergailbach

Ratio of

Transported Energy----------------------Entry Capacity

= 293 days


The main core transmission system in FranceThe main core system

A meshed network

Gas can flow in both directions

Contributes to capacity at allinterconnection points

• North• Marches du Nord-Est• North-East• Seine• Vexin• Beauce• Vendomois• Burgundy• Berry• Centre• Centre-East• Guyenne• Rhône

• Midi• Gascogne (Gascony)

Nord

Marches du Nord-Est

Bourgogne

Midi

Rhône

Guyenne

Berry

Seine

Est-Lyonnais

Centre

Vexin

Guyenne

Gascogne

Beauce

Centre-Est

SologneVendomoisNord-Est

3,900 km

Value as new # €7,800 million

Entries + Exits # 2,700 GWh/d

Cost ratio # 3 M€/GWh/d


Interconnections on the main system

Interconnections:Hauts de France

Marches du Nord-Est

North-East

Maine

Normandie (Normandy)

Hauts de France

Nord-Est

Marches du Nord-Est

Normandie

Maine


Market design restructuring

4 GRTgaz zones

1 TIGF zone

3 zones « inseries »

2008

2009

Simplified access to the market

Broadened access to the consumers through one entrypoint

More arbitrage possibilities

New Gas Exchange by theend of 2008. Common project with POWERNEXT


Unrestricted entry-exit zones

GRTgaz is developing anunrestricted entry/exit system.

Each user is supplied whatever the distribution offlows between the different entry points in the zone they belong to.

N

S


Projects - Key events 2008The LNG terminal projects which emerged in 2007 (Dunkerque, Antifer, Le Verdon, Montoirextension) are ongoing

A project for a third LNG terminal at Fos has been confirmed: Fos FASTER

Two Open Seasons have been launched at borders:• At the Belgian border, in coordination between GRTgaz and

FLUXYS• At the German border, initiated by Eon Gas Transport

Work by the South GRI on the development of the interconnection with Spain, is approaching fruition• Shared understanding• Open Season planned for 2008/2009

Multiple projectsFuture very open


Key events 2008 (cont.)The merger of the zones in the North and the progress in the interconnection between TIGF and GRTgaz zones, lead now tofocusing expectations on the South zone

Development of CCGT plants faster than expected

Engineering costs rocketing


Nozay : 2 x 11 MWAuvers : 2 x 11 MW

65km, DN900, 68 bar

Evry : 2 x 8 MWDierrey : 2 x 8 MW

85km, DN600, 80 bar

Fluidity-Investments currently underwayDebottlenecking of the North, East and West zones

Two new links per pipeline (partial looping of the Beauce pipeline + Mâconnais pipeline)

3 compressor station upgrades (Evry, Dierrey, Auvers)

Creation of a new compressorstation (Nozay)

Commissioning: 2009/2010


Fluidity - Investments currently underway Border interconnections - Germany

Obergailbach• Open season conducted

in 2005

• In progress

+190 GWh/d for 2009

i.e. 620 GWh/d in 2009

Reinforcement of theObergailbach – Morelmaison interconnection

North-East pipeline

Laneuvelotte compressor station

Obergailbach


Fluidity - Investments currently underway Terminal Interconnections - Fos CAVAOU

FOS CAVAOU +200 GWh/d

• Terminal commissioning: 2009• Coordinated transmission

system development between GRTgaz and TIGF

• Connection and reinforcement of the Fos/Saint-Martin interconnection

• Core system developmentGuyenne pipelineTransit facilities provided by TIGF to GRTgaz, to carry gas within the GRTgaz South zoneFos- Cavaou


Dierrey

Investments over the period

-Obergailbach-Fos-Merger northern zones

€545 million

Fluidity - Ongoing investments

LarrauMidcat

Evry-Gregy

Cuvilly (terminé)

LaneuvelotteAuvers

Nozay


LNG Regaseification Plants (1)

• Dunkirk : 9 bcm/y• Antifer : 9 bcm/y• Montoir (expansion) : +2,5 bcm/y• Le Verdon : 9 bcm/y• Fos Faster: 9 bcm/y

Interconnections• Belgium :

Open season with FLUXYS

Physical reverse flow at Taisnières

• Germany : Open season Eon Gas Transport

• Spain : Interconnection development under consideration with GRI Sud avec TIGF et ENAGAS

Port-de-Larrau to reinforce

Est-Pyrénées to create

• Switzerland: Open Season with ENI CHunder consideration

Fluidity – New projects

(1) Mentionned capacities are only indicative,announced as a first step by the managers of theLNG plants projects.


Summary of capacity

Capacity evolution

293

256

184

2000

2500

3000

3500

4000

4500

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Tota

l ent

ries

GW

h/d

150

170

190

210

230

250

270

290

310

Rat

io T

rans

port

ed e

nerg

y / E

ntry

cap

acity

Almost 80%

more entry

capacity overthe period

Not included Le Verdon and Fos Faster


Fluidity - New projectsImpact on the core system in the North zone

New Entry Capacity >

350 GWh/d

The system must be able to carry gas from west to east (entry/exit model)

Indicative upgrades required• New pipeline Cuvilly – Dierrey – Voisines• New pipeline Dierrey - Chemery• Taisnières, Cuvilly, Voisines stations• Looping Beauce and North-East pipelines

Estimated cost # €1,700 million

Increase in entries > 350 GWh/d (at least two projects out of Taisnières, Dunkirk LNG, Antifer LNG )


Fos-sur-MerLarrau

Midcat

Gas need to be flowed through the whole South zone (inparticular towards Lyon)

Indicative upgrades required

• New Rhône pipeline, East-Lyonnais pipeline

• Compressor stations Etrez, St-Avit, St-Martin-de-Crau

• Compressor station Chazelles

Estimated cost # 1080 M€

Increase in capacities ≤ 550 GWh/d(such as Midcat and/or Fos LNG plant)

Le Verdon

Fluidity - New projectsImpact on the core system in the South zone

New Entry Capacity <

550 GWh/d


Dierrey

St Avit

Etrez

Southern Core# 200 km pipelinesand compression

€800 million

Northern Core#700 km pipelines and compression

€1,700 million Interconnections# 200 km pipelinesand compression

€800 million

Fluidity – New projectsPossible impact on the core system

LarrauMidcat

Chazelles

St Martin-de-Crau

Not included Le Verdon and Fos Faster


Fluidity – New projects

Indicative investment scenario• It is an assumption to give an idea on possible investments and impact on

tariffs

• It is not a binding plan, nor a decision, as fluidity GRTGaz projects will entirely depend on external demand and external decisions, such as new LNG plants

Indicative scenario 2008 - 2017• Not all the projects will be implemented and/or not at the same time. New

projects will likely emerge

• Assumption that 60% of the new projects will be implemented

Indicative assumption: Spending on Fluidity enhancement: €2,000 million over the period


Environment: almost €500 million on NOxpollution control

Reduction of NOx emissions to standards (air quality law)• Replacement of compressors

Full review of installations

Compressor Stations• Cherré• Saint-Avit• Courthezon• La Bégude• Taisnières B• Evry-Gregy• Fontenay• Saint-Victor• Saint-Clair-sur-Epte• Vindecy• Beynes ligne

Fos-sur-Mer

Montoir

Larrau

DunkerqueTaisnières

Oltingue

Obergailbach

Spending on Environnement€490 million over the period


Connections, assumption almost €300 million

Currently very rapid development of CCGT power plants• 11 projects for which connection contracts have been signed

• 9 very active projects

• Around thirty prospects

Development of natural gas on large industrial sites• Shift to gas to reduce CO2 emissions

Gross spending on Connections €280 million over the period


Public Service Obligations. Reduction in peak demand Reduced investment in the regionalsystem

Analysis of winter 2007/2008• Indicates a 3% reduction in 1-in-50

peak-day demand compared with2005/2006 winter (as 2006/2007 « warm » winter not relevant)

• Sensitivity of households to energy prices and/or to the Grenelle de l’Environnement process?

Reduced assumptions for volume consumption trends• Residential Service consumption growth

assumption down to 0.3%, as against1.1% a year earlier

• CCGT assumption => 58TWh/y in 2017

• Refinery assumption => + 10TWh over the period

AAGR *** 2007/08 2017/18

2007/08 2010/11 2015/16 2017/18

Gas year* (bn kWh) 1.7% 481 520 560 571TOTAL P2** total (GWh/d) 1.4% 3866 4142 4405 4456

P2 firm (GWh/d) 1.5% 3710 3984 4253 4307Public Gas year (bn kWh) 0.4% 315 320 326 327distribution P2 total (GWh/d) 0.4% 3031 3084 3142 3151

P2 firm (GWh/d) 0.3% 2983 3031 3082 3088Gas year (bn kWh) 4.0% 163 196 230 240

Direct clients P2 total (GWh/d) 4.6% 817 1042 1245 1286P2 firm (GWh/d) 5.4% 710 938 1154 1201

GRTgaz own Gas year (bn kWh) 0.7% 4,1 3,8 4,2 4,4consumption P2 total (GWh/d) 0.7% 17,0 15,9 17,5 18,3

P2 firm (GWh/d) 0.7% 17,0 15,9 17,5 18,3

*** Average annual growth rate

May 2008 assumptions

* Gas year: from November 1 of the year N to October 31 of year N+1er

** P2: 1-in-50 peak-day demand for gas

Spending on PSOs (peak demand)€460 million over the period


Safety and Obsolescence.

Safety• Introduction of the

New Safety RegulationsAnalysesProtection

• Pipeline inspection programmeChecksRepairs, replacements

Obsolescence• Interconnection grids, steep price rises

expected• Pressure reduction stations

Spending€1080 million over the period


Economic impact of the indicative scenarioSynthetic indicator RAB*/Entry capacity• Indicative scenario: Investment assumption of €5,000 million at current values over 10 years

• RAB increases faster than available entry capacity

• The period 2009/2012 is impacted by combined environment and fluidity investment

• Tricky to deduce average price, as this is very sensitive to other major factors:Tariff structure

Level of subscriptions compared with available capacity

Operating costs depend on energy costs and regulatory changes

*RAB: Regulated Asset Base

2009 2012 2017

RAB € millions 5,938 7,025 9,371

Entry capacity GWh/d 2,730 2,860 3,515 of which assumed: 60%

Ratio RAB: Entry capacity 2.18 2.46 2.67

Changes over the period 2012/2009 12.9% i.e. 4.3% per year 2017/2009 22.6% i.e. 2.8% per year2017/2012 8.5% i.e. 1.7% per year


Other projects


Fluidity - North <> South linkCase 1 / Analysis + 200 GWh/dNorth > South 230 GWh/d 430 GWh/d

Assumption Case 1• No prior upgrade relating to

interconnection development

Indicative upgrades required• New Cuvilly-Dierrey link• Reinforcement of the North, North-East, Seine,

Beauce, Burgundy, Rhône pipelines• Adaptation and upgrade to the Cuvilly, Dierrey,

Voisines and Etrez compressor stations, andenhancement to interconnection stations

# 750 km of pipelines,many of them with a 1,200 diameter.Pipeline compressor and interconnection stations.

2015 ?


Assumption Case 1• No prior upgrade relating to the



Beauce, Burgundy, Rhône pipelines• Adaptation and upgrade to the Cuvilly, Dierrey,

Voisines and Etrez compressor stations, andenhancement to interconnection stations

Estimated investment of some€1,650 million at 2008 values

Indication of price for the linkfrom €200 per MWh/d per year in 2009, to around €700 per MWh/d per year

Fluidity - North <> South linkCase 1 / Analysis +200 GWh/dNorth > South 230 GWh/d 430 GWh/d


Assumption Case 2• Prior upgrade relating to interconnection

development triggered byLNG terminal in the NorthSpain Eastern Route interconnection or LNG terminal in the South

Indicative upgrades required• Reinforcement of the North and Burgundy

pipelines• Reinforcement of the Etrez compressor station

Estimated investment of some€410 million at 2008 values

Indication of price for the linkfrom €200 per MWh/d per year in 2009, to around €260-300 per MWh/d per year

Fluidity - North <> South linkCase 2 / analysis + 200 GWh/dNorth > South 230 GWh/d 430 GWh/d


Assumption Case 3• No prior upgrades relating to



Beauce, Burgundy, Est-Lyonnais and Rhône pipelines

• Reinforcement of the Cuvilly, Dierrey, Voisines,Etrez, Palleau, St Avit compressor stations andenhancement to interconnection stations

1,000 km of pipelines,many of them with a 1,200 diameter.Compressor and pipelineinterconnection stations.

2017 ?

Fluidity - North <> South linkCase 3 / Analysis single GRTgaz zoneNeed for additional physical transit capacity of more than 400 GWh/d


Assumption Case 3• No prior upgrades relating to



Beauce, Burgundy, Est-Lyonnais and Rhône pipelines

• Reinforcement of the Cuvilly, Dierrey, Voisines,Etrez compressor stations and enhancement tointerconnection stations

Estimated investment of some€2,400 million at 2008 values andloss of revenues from links

Approximate doubling of:

- entry and exit prices at the PIR

- exit prices from the main system



Assumption Case 4• Prior upgrades relating to interconnection

development triggered byLNG terminal in the NorthSpain Eastern Route interconnection or LNG terminal in the South

Indicative upgrades required• Reinforcement of the North, Burgundy and Est-

Lyonnais pipelines• Reinforcement of the Dierrey, Voisines, Etrez,

Palleau, St Avit compressor stations

Estimated investment of some€1,000 million at 2008 values andloss of revenues from links

Some +40% to +50% rises in the:

- entry and exit prices at the PIR

- exit price from the main system



Conclusions

Numerous development projects in the portfolio• Favourable to the development of the wholesale market

• Entailing major investment

• Responsive to market demand, for projects outside GRTgaz

• Risky in terms of medium-term/long-term demand for gas

Feasibility• Heavy pressure on the engineering market > risk on costs and timeframes. Not everything

can be managed simultaneously, as limits do exist on industrial potential (procurement, contractors, machines availability) and acceptability by local environment.

• Investment/tariff simulations are needed, but tricky because of multiple scenarios

• Need for commercial and financial regulatory transparency for the investor regulatory framework


Moving forward

GRTgaz wishes to develop the dialog with the market on development and investment

Today (23th of June)• Information meeting

• « 10-year Development Statement » release

Tomorrow• Consultation through a questionnaire (Sent July Response September)

• Workshop by the end of October 2008


Thank you for your attention

Documents

10-year Development Statement - GRTgaz · • RAB increases faster than available entry capacity • The period 2009/2012 is impacted by combined environment and fluidity investment