Open Season 2007 Introduction Market parties and studies indicate that there is a need for more gas transmission capacity between the Continent and the . Given the possibilities to expand the BBL pipeline the partners of BBL Company recently decided to investigate market interest through an Open Season. This document provides a general introduction to the expansion project and marks the formal start of the Open Season. The aim is to inform the market and to establish the level of interest for the expansion of the transmission capacity in the BBL. It is anticipated by the partners of BBL Company to take a final investment decision at the earliest date late 2007, provided there is a positive business case based on firm commitments from shippers. Market parties are requested to sign a Confidentiality Agreement in order to start discussions with BBL Company.

BBL Company V.O.F. BBL Company V.O.F. (BBL Company) is a joint venture (a limited partnership) of three stakeholders (partners): BBL B.V. (60%), E.ON Ruhrgas BBL B.V. (20%) and Fluxys BBL B.V. (20%).

Gasunie BBL B.V. 60%

Fluxys BBL B.V. 20%

E.ON Ruhrgas BBL B.V. 20%

BBL Company was established on 9 July 2004 in order to design, construct, operate and exploit the BBL pipeline for the transmission of from Balgzand in the to Bacton in the United Kingdom. The approval of the project by partners was based on three long term transmission agreements with the launching shippers GasTerra (the Netherlands), E.ON Ruhrgas () and Wingas (Germany). The construction of the BBL has taken almost two years and the latest technology was used. The pipeline and installations meet the highest standards on safety and environment.

BBL facilities to date

BBL Company is the owner and operator of the BBL facilities, consisting of:

„ Onshore section in the Netherlands; BBL „ Compressor station at Anna Paulowna; GTS „ Onshore pipeline 5 km; Bacton „ Dune crossing and landfall Dutch coast.

„ Offshore pipeline to Bacton, 230 km, 36 inch diameter;

„ Landfall at Bacton;

„ Receiving facilities at Bacton (Shell terminal); „ Measuring of quantity; „ Flow control and heating of gas. BBL in operation On 1 December 2006 BBL Company started commercial operations by transporting natural gas from the Dutch mainland to the United Kingdom. Since the start date flows through the BBL contribute significantly to the security of supply in the United Kingdom. The BBL foresees in 15% of the total UK gas supplies. Apart from the three long term transmission agreements additional monthly capacity was sold during two Open Seasons in 2006 as shown in the graph below. Remaining free capacity in 2007 is sold on a first come first served basis.

Daily Delivery into the UK BBL Firm Capacity 2007

300.000.000 20.000.000

18.000.000 250.000.000 16.000.000

200.000.000 14.000.000 12.000.000

150.000.000 10.000.000 kWh kWh/h

8.000.000 100.000.000 6.000.000

50.000.000 4.000.000 2.000.000

0 0 July May April June March August January October February November December September 24-11-06 08-12-06 22-12-06 05-01-07 19-01-07 02-02-07 16-02-07 02-03-07 16-03-07 30-03-07 13-04-07 27-04-07 11-05-07 For Sale (FCFS) Open Season Launching shippers time BACTON BBL UK gas supply-demand situation As reports from National Grid clearly indicate, the current supply-demand situation is not as tense anymore as the last two winters. Although the UK gas production is still strongly decreasing new supplies have come available through new pipelines bringing Norwegian gas (Langeled), Dutch gas (BBL) and Belgian gas (expansion of IUK) and new LNG-terminals.

In the future the UK will be faced with growing import requirements, growing from 50% import requirements in 2011 to almost 90% in 2016. The market has responded to this future import needs in both the recently added import capacity and plans for more import capacity, both through pipelines and LNG-terminals (see graph).

UK Supply and demand versus import capacities source: National Grid 10 Year Statement

300

250

200

150 [bcm/year]

100

50

0 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16

2006 UKCS Forecast Norway existing Interconnector & BBL LNG existing LNG under construction Norway proposed LNG proposed Demand The question is not anymore, will there be enough infrastructure to supply gas to the market. The question is which gas will respond to the gas price signals of the UK market. Although it is possible to provide the UK market with all the gas it needs from indigenous, Norwegian and LNG sources, the latter can be very expensive and also more uncertain considering the worldwide competition for limited liquefaction capacity. Norwegian and Continental supplies tend to be in the lowest cost range.

The Dutch market is connected with cheaper gas resources, be it indigenous Dutch gas, surplus Norwegian Gas in Emden or future Russian gas through the . The Dutch TTF market is rapidly growing, and considered to be one of the more liquid Continental hubs. Based on Gasunie's long history of gas supplies to Europe, the TTF has one of the highest degree of interconnections with Europe, enabling many trading opportunities with markets which lie further upstream or downstream. The Dutch gas grid transports about 95 billion m3 per year. Indeed, the recently approved investment plan of € 1,1-1,8 billion even further enhances the transit possibilities of the Dutch grid.

Another consequence of the decrease of the UK gas production is the decreased swing which is offered. Currently in the UK only 5% of the yearly consumption is covered by gas storages, whereas import dependent countries typically have covered 20-25% by storages. This enormous need for swing could be provided by a mixture of swing from import pipelines, including the BBL, and diversion of LNG cargoes, but typically producers would prefer baseload deliveries. The Dutch geography is ideally suited for new gas storages, there are a lot of depleted gasfields that can accommodate the growing need for seasonal storage in northwest Europe. An example is provided in the past where the Belgian IUK has provided swing from the continent equivalent to the size of the biggest UK gas storage (Rough).

Transmission capacity in adjacent systems Shippers are themselves responsible for contracting entry and exit capacities in the adjacent systems.

Parties reacting to the BBL Open Season should be aware of the fact that transmission capacity for exiting the GTS system at Julianadorp or entering the GTS system at Julianadorp is scarce. In the development picture of the GTS transmission grid, as presented by GTS in March 2007, GTS will as part of their expansion program increase entry/exit capacity in the Balgzand/Julianadorp area, so making available transport capacities in this region to feed the BBL.

Existing pipelines Completed in 2009

Completed in 2010 Emden

After 2010 ( under study) Compressor station Increase of entry/exit capacity Grijpskerk Compressor station N Midwolda Oude Statenzijl

Assen

Julianadorp

Wieringermeer

Flevocentrale N Reduction station Lelystad Ommen

Hattem „ About 450 km new pipelines „ Mainly along existing pipeline routes Den Haag „ Two new compressor stations

LNG Reduction station Angerlo Compressor station „ Doubling entry capacity North East of Wijngaarden Reduction station Beuningen

Compressor station Ravenstein ‘s-Hertogenbosch the Netherlands „ Capacity increase on borders of South Middelburg Netherlands Reduction station Westerschelde „ Increase gas capacity to power plants

Zelzate „ Capacity increase to industries in South Netherlands

Schinnen

Bocholtz

‘s-Gravenvoeren Regulatory The regulatory framework for the BBL follows from the national implementation of the second EU Gas Directive, which was adopted in 2003. This new legislation defines the legal and regulatory aspects of network access conditions. One of these aspects is the possibility (subject to conditions) to exempt certain new gas infrastructure from the requirement to offer access on the basis of regulated tariffs. BBL Company received exemptions from regulated tariffs from the Dutch Ministry of Economic Affairs and Ofgem in the United Kingdom. The exemption has been approved by the European Commission.

Services The BBL pipeline was built to transport gas from the Netherlands to the United Kingdom based on firm commitments by the market and exemptions from the authorities. BBL Company will offer interruptible services, both forward flow and non physical reverse flow. Given the market drivers the outlook for increasing the physical forward flow looks good. Depending on firm market interest BBL Company intends to expand the forward capacity of the BBL pipeline as follows: „ Option 1: 4th compressor, total capacity: approximately 3 BCM/year; „ Option 2: 4th compressor + new pipeline, total capacity: approximately 8 BCM/year. Other options can also be considered.

Indicative timeline Q2 2007 Start of the Open Season by informing market parties of BBL's intentions via this brochure. 1-7-2007 Closure of the Open Season. Parties who express their interest and did sign the Confidentiality Agreement will be added to a list of candidates. Q2/Q3 2007 Discussion with customers that have signed the Confidentiality Agreement, leading to the Heads of Agreement. 1-11-2007 Signing of transport agreement with binding capacity bookings. Late 2007 Earliest date of a final investment decision by BBL Company. 2010 - 2012 Transmission capacity available to the market, depending on the different options.

Further information and contacts If you are interested in participating in the Open Season, please download the relevant Confidentiality Agreement from our website: www.bblcompany.com. Please return it in twofold, signed by an authorized person within your organization before 1 July 2007, to the address listed below. Upon receipt we will return one fully signed copy to you.

Only parties that sign the Confidentiality Agreement will be added to the list of candidates that will be invited for further discussion on their future capacity requirements within the scope of the Open Season. If you require any additional information or have any questions in relation to this document, please contact:

Mr Hans Boersma (+31 50 521 3542) or Mrs Jacqueline Baron (+31 50 521 2752)

BBL Company V.O.F. P.O. Box 225 9700 AE Groningen The Netherlands

Email [email protected]

Internet www.bblcompany.com Disclaimer No rights may be derived from the contents of this publication. The information in this document is indicative and BBL Company may change the process at its own discretion. BBL Company has taken all reasonable steps to ensure that the information was correct at the time of publication. BBL Company accepts no liability of any kind for acts, consequences, losses, et cetera, arising from the information or from the inaccuracy, incompleteness, or omissions in the contents of this publication. Open Season 2007