Lessons from developments in the past ten years – GB experience

Alison Kay – National Grid, Transmission Commercial Director

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Contents

Influential developments in the GB gas market

What changes have these developments brought?

Lessons from our experience to date

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Influential Developments on the GB market

Declining UK gas production

Rising demand

Establishment of competition

Full ownership unbundling

Globalisation of the gas market

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Bacton

Theddlethorpe

Easington

St Fergus

Teesside

recent projects & investment

Isle of Grain

BBL

IUK

Milford Haven

DragonSouth Hook

New Southern Basin storage developments

New Continental link

Barrow

New Norway

West of Shetland

future investment

potential new projects

GB marketFLAGS

Langeled

5

0

20

40

60

80

100

120

140

00/01 02/03 04/05 06/07 08/09 10/11 12/13 14/15 16/17

Sup

ply

/ Dem

and

(bcm

/y)

UKCS Norw ay Continent LNG UK Demand exc IUK

Actuals Forecast

Base Case Annual Supply Forecast

What physical changes have these developments brought?

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Bacton

Theddlethorpe

Easington

St Fergus

Barrow

Teesside

Frigg (Norway)North-South Flow

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Bacton

Theddlethorpe

Easington

St Fergus

Barrow

Milford Haven

New Norway

New Southern Basin storage developments

Teesside

Isle of Grain

Milford Haven

Tampen

Langeled

BBL

DragonSouth Hook

New Continental link

West of Shetland

IUK

Multi-directional Flow

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What commercial changes have these developments brought?

Approximately 70 shippers active on the system

Liquid hub for trading gas

Sophistication of commercial arrangements Reform driven by market players Market based planning, with long term user commitments key High levels of transparency

Increasingly European-wide legislation

Increased focus on Security of SupplyUniform

Network

Code

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Lessons learned from experience to date

An understanding of our role as market facilitator Providing a reliable and accessible service, information required by

the market, ensuring a level playing field The need to work with market players to provide information

and make improvements in our regime The importance of making timely and appropriate investments The importance of being up to date with, anticipate and

influence developments The requirement to foster relationships on both a national and

international level

However we need to be cautious of over complicating the commercial regime

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Conclusion

There have been extensive changes in the past ten years to both commercial and physical aspects of the GB regime

We are likely to see as many, if not more, changes over the coming years

The European dimension will be increasingly influential and important

National Grid looks forward to working with the other European TSOs and stakeholders to further this in

the most beneficial manner to the European market