gasterra gas storage presentation 2016-17

STORAGE YEAR 2016/2017

GASTERRA GAS STORAGE SERVICES

• Contractual Structure & Framework

• Products

• Auctions & Pricing

• Daily Operations

CONTENT

INTERCONTINENTAL EXCHANGE 2

CONTRACTUAL STRUCTURE & FRAMEWORK

• Per Storage Year roughly 19 TW of storage capacity is offered, in the form of 13,229,456 Standard Bundled Units (SBUs)

• On 20 November 2013 ICE Endex sold 4,130,555 SBUs for the Contract Period 2014/2019.

• The remaining 9,098,901 SBUs for the Contract Period 2016/2017 will be divided over two auctions via a fixed price mechanism.

CONTINUATION COOPERATION GASTERRA – ICE ENDEX


• GasTerra (principal) offers via ICE Endex (mandatory) certain gas storage services

– ICE Endex acts in its own name, but for the risk and account of GasTerra

– ICE Endex will not be a physical storage operator, but will aggregate Customer’s nominations

• Contractual structure:

• Should ICE Endex no longer be a party to a Cooperation Agreement with GasTerra:

– GasTerra undertakes to provide for a replacement independent and neutral entity, and ICE Endex will

transfer all contents to such entity

CONTRACTUAL STRUCTURE


• Services provided by ICE Endex

– Auction administration

– Order handling and dispatching (storage operation)

– Invoicing, settlement, credit control

– Facilitating secondary trading

• Purpose of ICE Endex’s involvement is to secure anonymity of Customers vis-à-vis GasTerra:

– ICE Endex will not disclose identity or any other commercially sensitive

information regarding Customers to GasTerra

ROLE OF ICE ENDEX


• Auction Rules

– Prerequisite for participation in an auction

– Sets forth the rules for qualification and participation

– Commitment by Customer to sign a Storage Service Agreement when being allotted SBUs by auction

• Storage Service Agreement (SSA)

– To be entered into by Customers being allotted SBUs

– Sets forth rights and obligations between parties, e.g.

• The product

• Payments and collateral

– Governs procedures in connection with the storage operation

• Operating Agreement (OA)

– Annex to the SSA

– Outlines detailed process flows and messaging protocols in connection with the storage operation

CONTRACTUAL FRAMEWORK


• Timeline:

– Wednesday 4 November 2015 17:00 LET: receipt of Qualification Documents by

ICE Endex

– Before the auction ICE Endex will organize a test auction (16 November)

– Wednesday 18 November 2015: Auction of 4,549,451 SBUs for the Contract Year

2016/2017

– Wednesday 10 February 2016: Auction of 4,549,450 SBUs plus the possible

remainder of the 18 November auction, for the Contract Year 2016/2017

• Parties qualified for the November auction are automatically qualified for the February 2016 auction

• Parties that did not qualify for the November auction and want to participate in the February 2016 auction have to submit the Qualification Documents ultimately 27 January 2016 17:00 LET.

QUALIFICATION FOR NOVEMBER AUCTIONS


• Qualification requirements (Article II of the Auction Rules):

– TTF shipper license

– Power of Attorney + certified copy of signatories’ passports

– Registered Party data Sheet: contact details

– Representations and Commitment Statement: amongst others, a firm commitment

to acquire SBUs if successful in the Auction

– Further Qualification Documents:

• Extract of chamber of commerce (or similar) not older than 6 months

• Additional documents / information evidencing that signatories are duly authorized

• Articles of association

• Annual accounts of the two most recent years

• List of beneficial owners

QUALIFICATION FOR NOVEMBER AUCTIONS


PRODUCTS

• One year product: Contract year from gas day 1 April 2016 up to and including gas day 31 March 2017

• Available storage space: 1440 kWh

• Injection capacity: 0.3333 kWh/h

• Injection factor: 1.0

• Withdrawal capacity: 1.0 kWh/h

• Withdrawal factor: depends on the actual amount of Gas-in-Storage at the end of Hour H-1 as follows:

– Between 0 kWh and 864 kWh Gas-in-Storage the Withdrawal Factor increases linearly from 0.6 to 1;

– Between 864 kWh and 1440 kWh Gas-in-Storage the Withdrawal Factor equals 1

• Delivery point: TTF

• Gas in store at beginning of Storage Year:

– No volume of gas in store at the contract start date at 06:00 hours (LET), unlessK

– K“Roll-over facility”: option for the Buyer to retain gas in store at the end of the contract of the Storage Year if

sufficient capacity booked for the next Storage Year

– Roll-over facility is also possible between two different Customers

• Conditional Service

CHARACTERISTICS OF A STANDARD BUNDLED UNIT (SBU):


AUCTIONS & PRICING

• The price mechanism is a fixed price mechanism. In the auctions the participant will submit a volume and a price in EUR/SBU.

• Each Auction shall be conducted over at least two Rounds, and a maximum of five Rounds

• The Auction will start at 10.00 hours LET and a Bidding Round will last 20 minutes

• The next Round will start 30 minutes after the closing of the previous Round

• A total of 9,098,901 SBUs will be offered

– Maximum Supply 18 November: 4,549,451 SBUs

– Maximum Supply 10 February: 4,549,450 SBUs plus the possible remainder of the

November auction

THE AUCTION


• Start of Round Price for Round 1 will be zero (0)

• Bidder has to submit at least 1 Bid in the first Round in order to participate in subsequent Rounds. Each Bidder has the possibility to submit a maximum of 3 Bids.

• Each Bid is a firm and irrevocable commitment to acquire SBUs

• Each Bid shall consist of a Price and a Volume in Round 1

• Each Bid is subject to certain conditions for it to be valid, e.g.

– The volume of the Bids of a Bidder combined may not exceed the Bidder Limit (3,307,364 SBUs – conditional on possible allocation for the Contract Period 2014/2019)

– The volume of a Bid will be expressed as a non-negative whole number

– The Price in a Bid will be expressed in EURO per SBU, as a multiple of € 0.01

– The Bid has to be submitted during the opening of the Round

• If a Bidder does not submit a valid Bid in the first Round the Bidder shall not be allowed to participate in the subsequent Rounds

• During the opening of a Round the Bidder may adjust each of its maximum of three Bids. Only the last valid Bid received for each of the maximum of three Bids will be valid

ROUND 1


• The Auction Operators, observed by a notary, shall calculate:

– The Aggregate Demand (sum of all Quantities demanded by Bidders in a given Round)

– End of Round Price (lowest Bid Price equal to or greater than the undisclosed Reserve Price and at or within the Maximum Supply)

– Total Quantity (sum of all Quantities demanded by all Bidders at Price equal to or greater than the End of Round Price)

• There are 2 scenarios possible:

– No Bids in excess of Reserve Price

– At least one Bid in excess of Reserve Price

• Since the Auction consists of at least two Rounds, there will be a second Round

• Together with the results, the settings of the second Round will be communicated via the homepage of the Auction Bidding Website

AFTER ROUND 1


FICTITIOUS EXAMPLE – 4,549,451 SBUS


• Only if a Bidder submitted at least one valid Bid in Round 1 the Bidder is able to participate in the next Round

• Volumes cannot be adjusted in subsequent Rounds

• If the Price of (one of) the Bid(s) submitted in a previous Round is lower than the Start of Round Price of the current Round (i.e. the Bid is out of the market), the Bidder has to submit a new Price greater than the Start of Round Price + €0.05, or else the Bidder is unable to participate with that Bid in the rest of the Auction.

• If the Price of the only or last valid Bid is out of the market and the Bidder does not increase its Bid as stated above the Bidder will be out of the Auction

• If the Price of (one of) the Bid(s) submitted in a previous Round is equal or greater than the Start of Round Price of the current Round, its current Bid will remain valid and the Bidder will be able to participate in the rest of the Auction, until the Start of Round Price will be greater than the current Bid.

• During the opening of a Round, the Bidder can change the Price of its Bid given that the price is greater than the previous Price and greater than the Start of Round Price + € 0.05.

SUBSEQUENT ROUNDS


• There are 4 scenarios possible:

– End of Round Price R1 = 0 and in R2 no Bids in excess of Reserve Price � Auction over; no allocation

– End of Round Price R1 = 0 and in R2 at least one Bid in excess of Reserve Price � Next Round

– End of Round Price R1 > 0 and End of Round Price R2 = End of Round Price R1 � Auction over; all Bids > End of Round Price allocated

– End of Round Price R1 > 0 and End of Round Price R2 > End of Round Price R1 � Next Round

AFTER THE SECOND ROUND


FICTITIOUS EXAMPLE – 4,549,451 SBUS


• There are 2 scenarios possible after Round three and four:

– End of Round Price of Round 3 or 4 = End of Round Price of Round 2 or 3 � Auction over; all Bids > End of Round Price allocated

– End of Round Price of Round 3 or 4 > End of Round Price of Round 2 or 3 � Next Round.

• There is 1 scenario possible after Round five:

– If no preceding Round was declared the Final Round, the fifth Round shall be the Final Round � Auction over; all Bids > End of Round Price allocated

AFTER ROUND 3,4 & 5


• If the Total Quantity demanded by all Bidders at a Price equal to or greater than the End of Round Price is greater than the Maximum Supply, the following allocation rules will be applied:

– Bids with a Price in excess of the End of Round Price will be

allocated their entire Quantity

– If there is one Bid with a Price equal to the End of Round Price,

that Bid shall be allocated the remainder Supply

– If there are more Bids with a Price equal to the End of Round Price,

those Bids will be allocated in proportion of their Quantity

• Pay-as-bid

ALLOCATION


• The Bidder shall receive confirmation by ICE Endex of their allocation via email and ICE Endex shall send a completed Storage Service Agreement that the Bidder will have to sign and send back to ICE Endex in order to become a Buyer.

• If a successful Bidder fails to do so within 15 (fifteen) Business Days following the Auction End Date, ICE Endex shall notify the Dutch competition authority thereof, and such Bidder shall immediately, without further action or formality being required, become liable to ICE Endex for an immediately due and payable penalty in the amount of 5% of the contract sum ensuing from the Auction, with a minimum of €250,000, without ICE Endex having to prove any loss or damage in addition if there are grounds for so doing.

STORAGE SERVICES AGREEMENT


DAILY OPERATIONS

• Once the auction has finished and you are a successful buyer of SBUs

– ICE Endex will send email with required follow up actions

– We will send you a SSA+OA based upon the information sent by

customer in reply

– Bank guarantee or cash deposit

– Signed SSA and appendices received by ICE Endex

– The bank guarantee/cash deposit and signed SSA have to be in

the possession of ICE Endex within 15 business days

– Testing of communications prior to the Storage Year

• If all gates passed successfully �you are ready to start nominating

FROM AUCTION TO OPERATIONS


• D-1 10:00 Storage Availability Notice (SAN)

• D-1 11:00 Storage Request Notice (SRN)

• D-1 12:00 ICE Endex sends aggregate request to GasTerra

• D-1 12:30 GasTerra replies to ICE Endex

• D-1 13:30 ICE Endex sends confirmation to customer (SRRN)

• D-1 13:30 Customer and ICE Endex send Nomination program to GTS

– Single sided nomination used

*time in LET

• ICE Endex OPERATIONS will be available during business days between 09:00 LET and 15:00 LET and all other days between 09:00 LET and 13:00 LET

• Note: in case of irregularities in the process these times might be extended until the problem is deemed solved

DAILY PROCESS TIMELINE


DISCLAIMER

The information contained in this document (“Presentation”) has been prepared by ICE Endex and is subject to

change without notice. Copyright and intellectual property right protection exists in this Presentation and it may not be

reproduced, distributed or published with any third party, in whole or in part, without the express prior written

permission from ICE Endex. All rights are reserved. While reasonable care has been taken to ensure that the

information contained herein is true and accurate, ICE Endex makes no representation to its correctness, reliability or

completeness including likelihood of achievement or reasonableness of any forecasts, prospects, returns or

statements in relation to future matters that may be contained in this Presentation. Neither ICE Endex nor any of its

directors or employees accepts any liability in respect of the information contained in the Presentation or for any loss

arising from the use of this Presentation, its contents or otherwise arising in connection with it. This Presentation does

not constitute an offer, invitation or recommendation to any transaction and neither is it to be taken as any form of

commitment on the part of ICE Endex to proceed with any transaction.
