Rs 0.733.134.9 Exchange Of Letters Of January 27/26 February 2009 Between The Swiss Federal Council And The Government Of The French Republic On The Mutual Security Of Natural Gas Supply

Original Language Title: RS 0.733.134.9 Echange de lettres des 27 janvier/26 février 2009 entre le Conseil fédéral suisse et le Gouvernement de la République française relatif à la sécurité mutuelle d’approvisionnement en gaz naturel

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0.733.134.9 exchange of letters of 27 January / February 26, 2009 between the Swiss federal Council and the Government of the French Republic on mutual natural gas supply security entered into force March 1, 2009 (State on March 1, 2009) original text the head of the federal Department of the environment, transport, energy and communications UVEK Bern , February 26, 2009 federal Palace North 3003 Berne A Mr Jean-Louis Borloo Minister of State, Minister of ecology, energy, sustainable development and the planning (MEEDDAT) french Government Mr. Minister of State, I acknowledge receipt of your letter dated January 27, 2009, which reads as follows: "Mr federal councillor, as a result of the discussions that took place between representatives of our two States about our mutual of natural gas supply security." , I have the honour, on instructions from my Government, to offer you that relations between our two States in this area are resolved in the following way: in the preamble, I want to emphasize the importance that the France attaches to co-operation and solidarity between the France and Switzerland in the natural gas sector. The latter has resulted over the years by the many existing links between french operators (gas of France) and Swiss (Gaznat and Gasverbund Mittelland). Both french as Swiss operators were able to design their networks and structure their supply on the basis of this close cooperation achieved by several long-term contractual commitments. Consumers of Western Switzerland thus have access to the french underground storages. The contracts provide that in case of shortage the Swiss part is impose reductions or interruptions comparable to those applied to the public distribution East of the France. Conversely, several French communes are powered only via the Swiss network; the France is therefore also attached, as such, to security of supply.
The evolution of the french regulatory environment resulting from the transposition of the directive 2003-55 on the common rules for the internal market in gas necessitated establishing a third party access to transparent and non-discriminatory underground storage through the provisions of the law of January 3, 2003 and its implementing decree 2006-1034 on August 21, 2006 relating to access of third parties to the storage of natural gas. This regulation is part of a context where the European authorities are particularly vigilant as to the proper functioning of the market and the absence of discrimination, while recognizing the imperatives of security of supply and international solidarity.
In this context, the Swiss and french Governments affirm their will to continue the solidarity and cooperation between the two States in the gas field, while enrolling in the french framework of European requirements. I note that the Decree of 21 August 2006 made refers to agreements between the France and the States members of the Association European of free trade. It is in this context that the present letter, which establishes the principle according to which, in case of shortage, the French authorities would do so that, in case of interruptions or reductions in access to storage, the constraints weighing on consumers Swiss and french concerned are strictly comparable. Regarding situations of shortage, to adopt provisions would fall under an ad hoc situation as review under art. 18 of the Act of 3 January 2003, which opens up the possibility of provisional measures. The principle exposed above, any interruptions or reductions for the Swiss part of access to storage, that they that are the causes, would be strictly comparable to those applied to french consumers.
Although the above suppliers of Swiss consumers do not gas in France market today, they are in fact on the french market, both at the level of transport of storage. Under the terms of the provisions of the Decree 2006-1034 on August 21, 2006, it is possible to ensure access to a volume of storage capacities for the satisfaction of the needs of concerned Swiss consumers, being understood that this volume must be actually booked by the operators. In these circumstances, it is essential that a transparent framework is defined by this agreement, so that the French authorities and Swiss and gas operators can have visibility into these reservations of storage capacities.
Needs under the aforementioned Decree and procedure for the allocation of these capabilities are specified in the annex to this letter, established by mutual agreement by the federal Office of energy and the Directorate-General of energy and climate. This annex freezes the Swiss to a maximum value corresponding to the current contractual situation needs; These values must not be exceeded.
The period of application of the preceding provisions and without prejudice to the development of trade relations between the companies involved, will understand it that, for access to gas storage french, I cannot assure you superior visibility to what the french government now has to its own consumers.
In these circumstances, I propose that these provisions be in place until September 30, 2016 (end of gas), with the exception of those concerning the principle of equality of treatment of Swiss and french clients, concluded until September 30, 2030. I suggest that they will be renewed by tacit agreement, by period of seven years from 30 September 2016 respectively 2030, except denunciation by one of the Parties with written notice of twelve months.
I also propose that representatives of french Ministers and Swiss responsible for energy review, as needed, at the request of one or other of the Parties, the clauses contained in the annex to the present letter, and can on this occasion amending it by mutual agreement, if necessary.
I should be grateful if you would let me know if the foregoing provisions collected the approval of your Government. If so, this letter and your reply constitute an agreement between our two Governments which will enter into force 1 day of the month following the date of your reply."

I have the honour to announce the agreement of my Government to the foregoing provisions as well as the annex mentioned in this letter. In these circumstances, this agreement comes into force on March 1, 2009.
Please accept, Mr. Minister of State, the assurance of my high consideration.

Schedule 1. Beneficiaries as agreed in the exchange of letters mentioned above, consumers of natural gas located in Western Switzerland are recognized as a priority within the meaning of art. 3 of Decree No 2006-1034 for access to the French underground storage capacity and will be treated in the event of shortage, according to a principle of equality with french consumers of public distributions located east of the France.
It is through the operators that supply above Swiss consumers benefit from access to the storage capacity and of the supply security in accordance with the pre-existing commitments to the implementation of the opening of the European energy markets.
2 storage capacities necessary to the supply of Swiss consumers the storage capacity to the Swiss consumers diet are defined in volume (TWh) and flow racking (GWh per day). They are the subject of a statement of operators Swiss concerned with the french Minister and Swiss federal councillor responsible for energy before 1 December each year.
These storage capabilities cover the commitments of gas of France with its counterparties Swiss GAZNAT SA (Gaznat) and Gasverbund Mittelland AG (GVM). On the one hand, they include storage capacities contracted by the company Gaznat with gas of France, or 1.51 TWh and 37,44 GWh per day and storage capabilities to honor supply contracts between Gaznat, gas de France and GVM and gas of France, with a flexibility of supply of gas of France of 114%, respectively 0,609 TWh and 4.03 GWh per day and 0,898 TWh or 5.94 GWh per day on the other hand.
Storage capacity of this annex would not be higher to 3,017 TWh in volume and 47,41 GWh per day in flow racking available February 1 after 55% of the useful volume has been extracted.
3. method of subscription of the storage capacity storage so defined can be underwritten by the concerned Alternatively Storage Manager: - by operators feeding referred to in the letter, Swiss consumers once they have authorisation of such provision as defined in the Decree n March 19, 2004 2004-250, - by the agents of their choice vendor (s) authorized (s) of natural gas in France.

The Swiss operators inform the french Minister and Swiss federal councillor responsible for the energy of the modality they hold and the agents concerned as volumes and rates of filling they wish to subscribe.
To have access to these capabilities, the operators feeding Swiss consumers or their agents cater to the storage manager concerned in accordance with the provisions of art. 6 of Decree No 2006-1034 above. The french Minister and Swiss federal councillor responsible for energy are also recipients of a copy of this application.
Demand for storage capacities of the coming year must be transmitted to the above-mentioned Manager on December 1 in accordance with the allowance of this regulation.
4 control and report if there are changes, Swiss federal councillor responsible for energy informed its counterpart in french before February 1 of each year of storage capacities necessary to the security of supply of Swiss consumers beneficiaries within the limit of the amount shown in the point 2. of this annex.
Operators feeding concerned Swiss consumers or their agents are beholden to a report on the use made of the capacities of storage that they have subscribed, passed before December 1 of each year to the french Minister in charge of energy.
5. management of the shortage now available in France storage capabilities allow to satisfy all of the needs listed in art. 3 of Decree No 2006-1034 above for the next three years.
The storage needs of end-users within the french territory are estimated annually by the Minister of energy. Storage capacities are distributed among the suppliers through their rights of access to storage. These capabilities are geographically allocated in different sites of underground storage of the french operators through their allocation regulations.
Several cases have to be distinguished.
-In the first case, says local shortage, where applications providers on the site of storage where storage capacities in the title of this bilateral agreement are desired, suppliers will be served in proportion to their request under para. 1 of art. 9 of Decree No 2006-1034 above: "the operator of underground storage reduces storage capacities reserved of each supplier in proportion to the reserved useful volumes, taking into account the order of priority established to the satisfaction of the needs listed in art. 3. " Not provided balance can be purchased on another storage site. In any event, on the one hand, shortage being limited to one site or group of storage, Swiss consumers power capacity can be purchased in another storage site, and on the other hand, the subscription of these abilities in another site must be such that the availability of natural gas for Swiss suppliers is provided.-the second case says global shortage is cyclical, or rights of access to storage capacities are higher than physically available capacities. In such a case, provided for by para. 3 of art. 9 of the Decree n 2006-1034 referred to above, the Minister responsible for energy takes the necessary precautionary measures to balance the supply - demand for storage capacity: 'the rights of suppliers are reduced as necessary, by ministerial order, the sum allocated in useful volume and flow storage rights of racking is equal once satisfied with available capacity requirements as defined in para. 1 of art. 3'.-Finally, if this shortage is its cause in a threat to security of supply of natural gas from the France, art. 18 of the Act of 3 January 2003 through national emergency measures would apply. In this event, a meeting between the French authorities and the Swiss authorities could be quickly arranged.

In these situations, Swiss consumers will be treated as french consumers. The Swiss authorities and operators concerned Swiss will be informed by the Minister responsible for the energy of the application of these measures promptly.
6 forecast of investments in the field of storage and cooperation between the France and the Switzerland developments in storage by the operators are subject, in France, of a multi-year indicative plan of investments in the gas sector.
Through the development of future plans, the Swiss authorities will be invited by the French authorities to take part in this work, so especially to express the demand for underground storage of gas for the Swiss needs. The Swiss authorities may involve operators concerned Swiss.

State on March 1, 2009

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