Update on the NETS Concept A new, value creating, cross-border business Initiative

4th IG MeetingVienna

8th April 2008

Proposal to unite Central and South-Eastern Europe’s gas pipeline networks within a new and independent regional natural gas transmission company

Significantly higher value for shareholders than operating separate systems

Would be well positioned to leverage international capital markets to finance major infrastructure development projects

Consumers would also enjoy the benefits of an integrated platform for natural gas supply and a greater overall security of supply

Potential Member Countries of New Europe Transmission System (NETS)

Austria

Czech Republic

Italy

Hungary

Slovakia

Greece

Romania

Bulgaria

Turkey

Bosnia

Germany Ukraine

Moldova

Croatia

Slovenia

Serbia

Albania

Montenegro

Poland

Macedonia

Source Company Information

Review: NETS – The Concept

Status Report of NETS

Timing Action/Event Deliverables

15 November – 7 December, 2007

Bilateral technical discussions with TSOs of the reginon

(Phase I)

Briefing of NETS:

- Famililarization of the concept

7 December, 20007 Official Announcement of NETS

21 January, 2008 ERGEG GRI, Prague Overview of the NETS Concept -presented by Péter Horváth

14 January – 6 March, 2008 Bilateral technical discussions with TSOs of the reginon

(Phase II)

- Organization of Roundtable for TSOs

- Proposed workstreams to be discussed in a Roundtable of TSOs

11 February, 2008 Central European Natural Gas Summit 2008, Warsaw

Gas supply security challanges of New Europe – presented by Lajos Alács

5 March, 2008 FLAME, Amsterdam Establishing a regional unbundled infrastucture company – presented by Lajos Alács

13-14 March, 2008 1st Roundtable of TSOs co-organized with and hosted by Transgas SA, in Bucharest, Romania

- Alternatives of common operation in the future

- Proposed workstreams

June, 2008 Next proposed meeting of TSOs, in Siófok, Hungary

- Discussion of workstream meetings’ achievements

Participants of the 1st Roundtable of TSOs in Bucharest on 14-13th March, 2008

From left to right: Dabris Bucanac - Director of Corporate Functions, Plinacro, CroatiaVlad Pavlovschi - Transgaz SA, Director of Resources, Engineering and Regulation Division, RomaniaSasa Ilic - Acting General Manager, JP Srbijagas, SerbiaGoran Francic - Plinacro Director of Development Division, CroatiaBranko Radosevic – President of the Board, Plinarcro, Croatia Nadzina Ninkovic – BH-GAS, Executive Managaer, Bosnia-HercegovinaJános Zsuga – Chief Executive Officer,FGSZ Földgázszállító Zrt., HungaryVidmantas Jankauskas - Project Ambassador, Expert on Regulatory Issues, REKK, HungaryIoan Rusu – General Manager, Transgaz SA, RomaniaLászló Varró – Chief Economist, MOL GROUP, HungaryMichael Woltran – Managing Director, OMV GAS, AustriaMarko Ilersic - Head of Commerce and Finance, Geoplin Plinovodi, SloveniaIain Smedley - General Manager, Morgan Stanley – LondonOlivier Silla – Representative of DG TREN, EU

Issues Presented on the 1st Roundtable of TSOs in Bucharest

1. NETS: A Broader Perspective – by László Varró, Chief Economist, MOL GROUP

2. Case Study – Creation of Snam Rete Gas – by Domenico Siniscalco, Morgan Stanley

Dealing with financial and structural Issues

3. Alternatives of Common Operation – by Ian Smedley, Morgan Stanley

Proposed structure of workstreamsStudy company considerations

4. Businesss Strategy and Vision – by János Zsuga, CEO, FGSZ Zrt., MOL GROUP

Business visionBusiness strategy and objectivesAnalysis of synergy potential

5. Regulatory Issues – by Vidmantas Jankauskas, International Expert on Regulatory Issues

Review of possible regulatory stragegiesProposed regulatory frameworkLong term regulatory vision

6. Energy Policy and Public Affairs – by Ian Smedley,Morgan Stanley Governmental dialogue and external dimensionsManaging stakeholder communicationsPublic buy-in through public relations

7. Financial and Structural Aspects - by Ian Smedley,Morgan Stanley 8. Next steps to be taken - by László Varró, Chief Economist, MOL GROUP

Steering Committee

Business Vision and Strategy

Regulatory Energy Policy and Public Affairs

Financial and Structural

Company Representative Company

[ ] BH-Gas

[ ] Geoplin Plinovodi (?)

[ ] FGSZ Natural Gas Transmission, MOL GROUP

[ ] OMV Gas (?)

[ ] Plinacro

[ ] Srbijagaz

[ ] Transgaz SA

Achievements: Participants* mutually agreed to investigate NETS’ feasibility by establishing a Steering Committee and delegating representatives in the 4 proposed Workstreams as follows

POTENTIAL WORKSTREAM ORGANIZATION

Participants*: BH-Gas, FGSZ Natural Gas Transmission Zrt. - MOL GROUP, Plinacro, Srbijagaz, Transgaz SA

Summary of the Event: Common press release in 40 different local and regional media

At the end of the meeting Transgaz’s CEO Ioan Rusu stated: “This has been a tremendously successful meeting and a move forward for NETS, this one-of-a-kind initiative in Europe. It demonstrates the high level of business cooperation our companies are capable of, as well as the commitment to competitiveness we are aiming to achieve in the context of an integrated European energy market”.“It is a great honor for BH-Gas and me personally to attend today’s meeting. This event is of great importance for both BiH and BH-Gas, taking into account that the natural gas field in BiH is still developing compared to other companies in the region. The NETS initiative may lead to launching and implementing important development projects for us. Our plans focus on the development of gas infrastructure, in order to increase the capacity of existing transmission systems. At the same time we also concentrate on diversifying the transmission routes and supply sources as well as on constructing underground gas storage. By accomplishing such projects, BiH would increase the natural gas share in the energy mix from the present 7% to the forecasted level of 15% by the end of 2020” said Nadzida Ninkovic, Executive Manager BH-Gas, Bosnia-Herzegovina’s gas transmission company.“This is a great step forward for NETS, as seven of the regions’ leading companies have today said that they support the concept in principle and are interested in working together to see how it can best be turned into reality”, commented Dr János Zsuga, the CEO of MOL Natural Gas Transmission Plc. He added.““Plinacro supports the initiative for cooperation, interconnection and joining of TSOs in the region with the aim to find the answer to question and challenges which are to come. We have discussed possible concepts and models of cooperation and interconnection. We think this is an extremely demanding and ambitious project and that today we have made the first step in the right direction. We agree to establish working groups to deal with all aspects from their respective fields in a professional manner and give the exact data as well as the pros and cons, on the basis of which we may bring adequate decisions and propose solutions to our owners. Plinacro will participate in this project and will bring its contribution to it”, said Branko Radošević, President of Plinacro Board, the Croatian gas transmission company.“The meeting in Bucharest confirmed that NETS concept, that aims establishing an independent regional natural gas transmission company is extremely attractive for all participants. It woud help increase the efficiency of existing capacities, bringing benefits that could make each of the markets more reliable in terms of security of supply and growth. Of course, we are at the beginning of a long and challanging harmonisation process of national gas transmission systems, but we believe that the NETS project is feasible. Srbijagas will actively take part in the future steps connected to the NETS project”, said Sása Ilić, General Manager of Srbjgas.The meeting was honored by MrOlivier Silla from the European Commission Directorate for Energy and Transport, who stated: “The Commission supports this project, which provides increased co-operation between TSOs (Transmission System Operators) in a region which is a critical crossroad of many energy markets”. He added, “The Commission’s consideration and support for the project is based on two advantages inherent in the NETS concept: firstly, it is a concept that linking together EU members with not-, or future-EU members and secondly, that NETS can provide the necessary scale for infrastructure development which will enhance competition and security of supply at the same time”.