THE MINISTRY OF THE ECONOMY, LABOUR AND ENTREPRENEURSHIP

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1 THE MINISTRY OF THE ECONOMY, LABOUR AND ENTREPRENEURSHIP 1174 Pursuant to Article 3, point 5 of the Gas Market Act (Official Gazette 40/2007, 152/08), the Minister of the Economy, Labour and Entrepreneurship hereby issues the I GENERAL PROVISIONS Introduction RULES FOR USE OF THE GAS STORAGE SYSTEM Article 1 These Rules for Use of the Gas Storage System (hereinafter: Rules) govern technical conditions for the operation, management and development of gas storage, interconnection with other parts of the gas system, connection to the transportation system and measurement rules for gas storage. Article 2 These Rules stipulate the conditions that have to be fulfilled by entities in order to obtain access to storage capacities. Definitions and terms Article 3 (1) Terms used in these Rules have the meanings established in the Energy Act, Gas Market Act, General conditions for natural gas supply and Ordinance on the natural gas market organisation. (2) In addition to the terms referred to in paragraph 1 of this Article, certain terms in these Rules have the following meanings: 1. Well a facility connecting the reservoir with overground facilities and enabling injection and withdrawal of gas into and from the reservoir, or functioning as a control or measurement well, 2. Withdrawal capacity a natural gas quantity which can be withdrawn from the working volume of the gas storage system in a unit of time. The withdrawal capacity is variable and depends on the volume of gas in the reservoir, or pressure within the reservoir, technical characteristics of underground and overground equipment and the pressure of the gas system into which gas is delivered. It is expressed as daily withdrawal capacity in m³/day or MWh/day, 3. Injection capacity - a natural gas quantity that can be injected into the working volume of the gas storage system in a unit of time. The injection capacity is variable and depends on the volume of gas in the reservoir, or pressure within the reservoir, technical

2 characteristics of underground and overground equipment and the pressure of the gas system from which gas is received. It is expressed as daily injection capacity in m³/day or MWh/day, 4. Withdrawal curve a graph showing interdependence of the withdrawal capacity and volume of gas stored at a given moment, as well as the pressure of the system into which gas is delivered, 5. Injection curve a graph showing the interdependence of the injection capacity and volume of gas stored at a given moment, as well as the pressure of the system from which gas is received, 6. Maximum allowable storage pressure a maximum pressure within the reservoir, at maximum quantity of gas in the gas storage system, defined by the project documentation and approved by competent bodies, 7. Minimum reservoir pressure a minimum pressure within the reservoir, obtained at the end of the withdrawal curve, when the working volume has been completely withdrawn, 8. Storage service package a storage service including the lease of a working volume and associated injection and withdrawal capacities, 9. Cushion gas the volume of gas in a storage reservoir required for storage management and maintenance of minimum storage pressure, 10. Initial reservoir pressure the initial pressure found in porous formations, at a reference depth, prior to putting the reservoir into operation, e.g. prior to the commencement of production or injection, 11. Ancillary services all services required to enable gas storage system access and operation, 12. Working volume part of the volume of a gas storage system in which natural gas may be injected or from which natural gas may be withdrawn with the aid of installed underground and above ground facilities, excluding the volume of the cushion gas, 13. Available gas storage system capacity part of the technical gas storage system capacities which are not reserved capacities, 14. Gas storage system capacity working volume expressed in m³ or MWh, injection capacity and withdrawal capacity expressed in m³/day or MWh/day, 15. Technical gas storage system capacity total capacity of the gas storage system that the gas storage system operator may offer users, depending on the integrity and technical capabilities of the gas storage system. Gas storage system services Article 4 In a gas storage system intended for seasonal balancing of the gas system, due to physical characteristics of the reservoir, 1 cycle of injection and withdrawal may be realised in the course of a storage year. Article 5 (1) Services offered by the gas storage system operator to the user include injection, storage and withdrawal of gas in accordance with the signed contract.

3 (2) The gas storage system capacity is primarily offered as a "package" including the working volume, daily injection capacity over the period intended for injection and daily withdrawal capacity over the period intended for withdrawal. (3) Daily injection and withdrawal capacities shall be used evenly in the course of 24 hours. Article 6 (1) The maximum injection and withdrawal capacities of individual users shall be determined on the basis of maximum technical injection and withdrawal capacities, and in proportion with the share of the requested working volume in the total storage working volume. (2) The appropriate injection and withdrawal curve for each user shall be included in a contract on gas storage. Article 7 (1) The basic period for gas injection into gas storage system shall begin on the first gas day in April and ends on the last gas day in September. (2) The basic period for gas withdrawal from gas storage system shall begin on the first gas day in October and ends on the last gas day in March. (3) In accordance with the technical capabilities of the gas storage system and contractual obligations, the gas storage system operator shall allow the user to perform gas injection during the withdrawal period and gas withdrawal during the injection period, which will be considered a non-standard service. (4) A minimum amount of time required for the provision of services referred to in the previous Article is 4 hours for the injection-withdrawal transition and 16 hours for the withdrawalinjection transition. (5) The gas storage system operator shall reduce the time referred to in paragraph 4 of this Article whenever it is technically possible. Article 8 Taking into account market requirements and technical possibilities of the gas storage system, the gas storage system operator shall also offer the non-standard service of transfer of contracted capacities among users and in accordance with the rules for trading gas storage system capacities as defined by the Ordinance on the natural gas market organisation. Remaining working volume Article 9 (1) The user must withdraw all injected gas by the end of the contractual deadline. (2) If the user signs a new contract on gas storage prior to the expiry of the contractual deadline, the gas remaining in storage after the expiry of the previous contract shall be considered to be stored under the new contract. (3) If the user fails to comply with paragraphs 1 and 2 of this Article, the gas storage system operator shall offer to the user an opportunity to sell the remaining gas to another user.

4 (4) If the user fails to withdraw the total amount of injected gas by the end of the contractual deadline, sign a new contract on gas storage and accept the opportunity to sell the remaining gas to another user, the gas storage system operator reserves the right to sell the remaining gas and forward the incurred revenue to the user whose gas was sold, retaining a share of the revenue to cover the costs of sale for the remaining gas, outstanding payments from the user, and additional 10% of the sales value of the remaining gas. II TECHNICAL CONDITIONS FOR THE OPERATION OF GAS STORAGE SYSTEM Gas storage system description Article 10 (1) The gas storage system consists of a reservoir for storing gas, gas injection and withdrawal wells, control-measurement gas wells, overground facilities and connection pipelines. (2) The overground facilities include: - a compression station with a specific number of compression units and corresponding equipment designed for the injection of working gas volume during the injection cycle, - facilities for the preparation of withdrawn gas prior to delivery to the transmission system, with the basic functions: separation of water and condensates, pressure reduction, gas dehydration and quantity regulation, - measurement devices for measuring quantities of received or delivered gas, - control management centre for the oversight of gas storage system operation and management of all facilities by monitoring technology parameters. Basic parameters for storage system operation Article 11 (1) Basic parameters for gas storage system operation (storage capacities) are defined by the legal framework and technical documentation for construction. (2) In order to ensure safety of the gas storage system operation, the allowed maximum depression, or difference between the reservoir pressure and dynamic well pressure is stipulated for every well with an injection or withdrawal function, based on the reservoir characteristics and well equipment installed. In this manner, the maximum withdrawal or injection quantities are determined for each individual well. (3) The maximum withdrawal or injection capacity of the gas storage system is the sum of individual maximum withdrawal or injection quantities for all wells. (4) The gas storage working volume is determined by the maximum allowable reservoir pressure which is equal to the initial reservoir pressure. Depending on the reservoir characteristics, the maximum allowed pressure may be higher than the initial reservoir pressure, which requires an approval from competent institutions. (5) The reservoir pressure shall be calculated on the basis of the pressure measured at the wellhead of the measurement wells.

5 (6) At the end of each injection and withdrawal cycle it is necessary to ensure the required standing time and perform hydro-dynamic measurements in specific wells. The interpretation of these measurements shall serve as a basis for obtaining data required for gas storage system operation parameter check. Gas receipt and delivery Article 12 (1) The gas storage system is connected to the transmission system managed by the transmission system operator. (2) A gas receipt point is the entry-measuring point of the gas storage system, where the gas intended for injection is delivered by the user and received by the gas storage system operator. (3) A gas delivery point is the exit-measuring point of the gas storage system, where the withdrawn gas is delivered by the gas storage system operator and received by the user. (4) The receipt and delivery of gas are performed at the aforementioned points in the manner stipulated by these Rules and a gas storage contract. Article 13 (1) The user must ensure a minimum pressure of 35 bar at the receipt point. If the pressure at the receipt point is lower than specified, the gas storage system operator is not obliged to provide the injection capacity as defined by the contract on gas storage. (2) The gas storage system operator must ensure the pressure required for gas delivery to the transmission system at the delivery point, but no higher than 45 bar. Gas quality Article 14 (1) The gas intended for receipt at the receipt point and delivery at the delivery point by the gas storage system operator must correspond to the characteristics stipulated in the General conditions of natural gas supply. (2) The gas storage system operator may refuse the receipt of gas whose quality does not satisfy the conditions referred to in paragraph 1 of this Article. Gas storage system maintenance Article 15 (1) The gas storage system operator shall maintain and repair the entire gas storage system with the aim of ensuring a safe, reliable and efficient operation. (2) The gas storage system operator is entitled to temporarily limit or interrupt the gas injection and withdrawal services, due to regular maintenance of facilities and installations, required measurements or inspection checks.

6 (3) The gas storage system operator shall create and implement annual maintenance plans, repairs, special measurements and inspection checks, in the manner most appropriate for the user and within the shortest possible time. (4) The scheduled interruption dates shall be published on the gas storage system operator's website no later than one month prior to the beginning of the storage year, reviewed monthly and confirmed to the user no later than 48 hours prior to the interruption. (5) Due to the performance of hydro-dynamic measurements referred to in Article 11, paragraph 6 of these Rules, the gas storage system operator is entitled to interrupt the injection and withdrawal services twice a year for duration of 96 hours. The gas storage system operator shall perform the aforementioned measurements in agreement with the user, but no later than 15 days from the termination of the injection or withdrawal cycle. Article 16 (1) The gas storage system operator is entitled to temporarily limit or interrupt gas injection and withdrawal services for the purpose of repairing faults or damage to facilities or installations. (2) The gas storage system operator shall notify the user within the shortest possible time of the commencement and expected duration of the temporary interruption of gas injection or withdrawal. (3) The gas storage system operator shall do its utmost to repair the faults within the shortest possible period of time. Article 17 In the event of limited gas injection or withdrawal service, the gas storage system operator shall proportionally reduce the service to all users. Article 18 (1) Upon completion of activities referred to in Article 15 and 16, the gas storage system operator shall immediately notify the user of the readiness to resume gas injection or withdrawal services. (2) The user must confirm to the gas storage system operator the readiness for gas delivery or receipt. Article 19 The gas storage system operator is not responsible for the failure to fulfil contractual services or any damage caused by the limitation or interruption of gas receipt or delivery, if the limitation or interruption is caused by regular maintenance or fault repair activities. Own gas consumption and losses Article 20 (1) The gas storage system operator is entitled to procure gas for the operation of compressors, technology consumption, cover of losses and replenishment of cushion gas. (2) The gas storage system operator may procure the gas from the user at the entry or exit point.

7 (3) The gas storage system operator shall measure the amount of procured gas by an auxiliary measurement device fulfilling the conditions from Article 34, paragraph 2 of these Rules. The manner of calculation and conditions of procurement shall be contained in the gas supply contract. III GAS STORAGE SYSTEM MANAGEMENT Article 21 (1) The gas storage system operator shall manage the gas storage system in such a manner as to satisfy all the conditions stipulated by the approved project documentation in compliance with technical and operational system limitations. (2) The gas storage system operator shall manage the system in such a manner as to ensure the gas injection and withdrawal for the user in accordance with the gas storage contract, except in the situations referred to in Articles 26 and 27 of these Rules. (3) Technical and operational limitations of the gas storage system are based on the maximum allowed reservoir pressure and overground facilities, the minimum reservoir pressure and the pressure of the system to which it is connected. Article 22 (1) The gas storage system operation plan shall be based on gas storage contracts and daily nominations in accordance with the Ordinance on natural gas market organisation. (2) Total quantities of injected or withdrawn gas for each user shall be measured at entry or exit points. (3) The allocation of injected and withdrawn quantities of gas by the user shall be performed on the basis of nominations or renominations. The amount of gas nominated or renominated by the user at the receipt or delivery point shall be considered the injected or withdrawn quantity of gas. (4) The balancing energy put at disposal by the user and used by the transmission system operator shall be considered the quantity of injected or withdrawn gas for this user based on the data obtained from the transmission system operator. (5) The nomination for operational stocks obtained from the transmission system operator shall be considered the quantity of withdrawn gas from the operational stocks. The nomination for injecting gas into the operational stocks obtained from the transmission system operator shall be considered the quantity of injected gas. (6) Based on the data referred to in paragraphs 2 to 5 of this Article, the gas storage system operator shall manage the gas in gas storage system for each user. Article 23 (1) The gas storage system operator must publish all operational information, such as location and means of connection of the gas storage system to the transmission system, technical characteristics and system limitations, as well as information on available capacities. (2) The gas storage system operator shall create and publish the daily, weekly, monthly and annual injection and withdrawal curves for each user.

8 (3) The gas storage system operator shall publish and update the following information on its website: - location of facility and connection point to the transmission system, - services and conditions under which they are provided, including information on tariff items, - other conditions for usage of storage capacities, - an annual plan for the reduction of service capacity or quality due to scheduled maintenance work, - annual and monthly contracted and available storage capacities, - weekly and daily available injection and withdrawal capacities, - standard gas storage contract. Gas storage system management Article 24 (1) The gas storage system operator shall perform continuous oversight of the gas storage system via a management centre. (2) The gas storage system operator must establish the management of nomination processes in the management centre, in compliance with the Ordinance on the natural gas market organisation. (3) The management centre will cooperate and exchange information with the transmission system operator in activities related to nominations, system balancing, cooperation during disruptions in gas storage or transmission and in emergency situations, in compliance with the Network Rules for the Transmission System. Article 25 (1) By 30 March 2010, the gas storage system operator shall develop an appropriate information system for publishing information on the Internet and communicate with the users by electronic means, with the aim of establishing a quick and reliable exchange of required information. (2) In order to maintain contact with the gas storage system operator, the user must have at its disposal the following communication tools and keep them in continuous functional state during each gas day: - a device for receiving and sending fax messages, - a computer with the Internet connection, capable of sending and receiving electronic mail, - continuous telephone connection. Crisis procedures Article 26

9 (1) During a crisis situation, the gas storage system operator shall manage the gas storage system in compliance with the Crisis Plan, in accordance with measures stipulated by the Gas Market Act and Regulation on security of natural gas supply. (2) Depending on technical possibilities and available capacities, the gas storage system operator shall take measures to mitigate the situation in agreement with other entities. Emergency procedures Article 27 (1) If there is a fault or damage to the gas storage system which may disrupt normal system management, the gas storage system operator shall notify the users thereof. (2) For the duration of circumstances in the storage system referred to in paragraph 1 of this Article, the following shall apply: - the gas storage system operator shall control the gas storage system operation via the management centre in compliance with internal instructions and with the aim to overcome the aforementioned circumstances, - the gas storage system operator shall terminate the operation of any equipment which can not be managed via the control system or manually, - the gas storage system operator may request the cooperation from the transmission system operator, which must be provided. IV GAS STORAGE SYSTEM DEVELOPMENT Gas storage system development planning Article 28 (1) The gas storage system operator must plan the gas storage system development in such a manner that its dimensions are appropriate for carrying out contracted or expected gas storage services in full compliance with legal requirements, taking into consideration economic conditions. (2) The gas storage system development shall cover the increase in injection and withdrawal capacity and/or working volume on the existing system, as well as the increase in system safety and reliability and decrease in negative effects on the environment. (3) When creating development plans, the chosen solution must fully satisfy all technical criteria and be in accordance with the minimum cost principle. (4) The gas storage system development plan must be in compliance with the energy strategy for the Republic of Croatia, taking into consideration economic conditions. V INTERCONNECTION OF GAS STORAGE SYSTEM WITH OTHER PARTS OF GAS SYSTEM Cooperation of interconnected systems operators

10 Article 29 In order to ensure a safe and reliable interconnection of gas systems, the system operators shall jointly determine the process of controlling technical conditions for equipment at entry and exit points, technical conditions for the reconstruction of gas equipment at entry and exit points, the information exchange process and all other activities stipulated by the Network Rules for the Transmission System and other subordinate regulations. VI GAS STORAGE SYSTEM ACCESS Article 30 In accordance with the principle of regulated third party access, the gas storage system operator shall enable access to storage capacities to all legal and natural persons fulfilling the criteria stipulated by the Gas Market Act and these Rules. Article 31 In order to obtain access to storage capacities, a request for reservation of a gas storage system capacity must be submitted in compliance with the Ordinance on the natural gas market organisation. Article 32 (1) When considering the request, the gas storage system operator shall proceed in compliance with the Ordinance on the natural gas market organisation. (2) Upon allocation of a capacity, the gas storage system operator and user shall sign a gas storage contract in compliance with the General conditions of natural gas supply. VII MEASUREMENT RULES Gas measurement Article 33 (1) Gas measurement is a process of establishing the quantity of gas at gas storage system entry and exit points. (2) The gas storage system operator shall measure gas at its own measurement point simultaneously for all users, and based on nominations and renominations, add or deduct gas quantities for each user. The quantities of gas injected or withdrawn for all users in a gas day shall correspond to the quantity measured at the measurement point. (3) The quantity of gas obtained by measurement, expressed in m³ at a temperature of 15ºC (288,15 K) and absolute pressure of 101,325 kpa, is converted into MWh by using specific conversion coefficients.

11 Measurement devices Article 34 (1) The gas storage system operator is responsible for the measurement of injected and withdrawn quantities of gas, as well as procurement, installation and maintenance of the measurement system. The setup and characteristics of the measurement equipment shall be determined by the gas storage system operator pursuant to these Rules and the Network Rules for the Transmission System. (2) According to the Metrology Act, the measures are defined by law, and thus must comply with metrology regulations, be tested, approved and marked with recommended labels, or have a valid certificate of attestation. VIII TRANSITIONAL AND FINAL PROVISIONS Article 35 These Rules shall be published in the Official Gazette and shall enter into force on 1 November Class: /08-01/79 Reg. No.: / Zagreb, 9 April 2009 Deputy Prime Minister and Minister of the Economy, Labour and Entrepreneurship Damir Polančec, m.p.

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