Chotěbuz-Warsaw, 14 September 2011

THE OPENING OF THE POLAND - CZECH REPUBLIC GAS PIPELINE

On 14 September 2011, the opening ceremony of the gas pipeline interconnector between Poland and the Czech Republic took place in Polish Cieszyn and on the Czech side in Chotěbuz village. The Prime Minister of the Czech Republic, PetrNeczas, and the Prime Minister of the Republic of Poland, Donald Tusk, took part in the ceremony in the Polish Cieszyn and on the Czech side of the common boarder just Czech Prime Minister Petr Nečas.

The Czech – Polish Interconnector is common project of the Polish Gas Transmission Operator GAZ-SYSTEM S.A. and the Czech Transmission System Operator NET4GAS s.r.o. Constitutes the beginning of the cooperation between the Companies planned for many years to come in the scope of the development of the gas market in Central Europe.

The connection of the natural gas transmission systems of Czech Republic and Poland is an example of the integration of the transmission infrastructure strengthening the security of supply.

"With the start-up of the Poland-Czech Republic gas pipeline we are opening up to a new direction in cooperation in Europe. The Poland-Czech Republic gas pipeline is the connection of the Polish transmission system with the system of the European Union, and at the same time the fulfilment of one of the most important EU priorities - ensuring the unrestricted flow of gas between Member States. The connection performed on the southern border of Poland is an element of the strategy implemented by GAZ-SYSTEM S.A. to increase the integration of the gas markets in Central Europe by building cross-border transmission infrastructure within the so-called North - South Gas Corridor," – Jan Chadam, President of the Management Board of GAZ-SYSTEM S.A., commented.

“Construction of the pipeline contribute to the needed transmission capacity increase, but it is also of strategic importance from the energy security and energy source diversification point of view, “ NET4GAS, s.r.o. CEO Thomas Kleefuss said in this context. The project aims to interconnect Poland and the Czech Republic by a high-pressure pipeline in the Třanovice–Cieszyn–Skoczów section. The STORK pipeline cross the Czech-Polish border Northwest of Český Těšín, in the cadastral area of Zpupná Lhota – a part of the Chotěbuz municipality - through an about 500m long hole drilled under the road and the railway line, on either side of the border, and under the border river, Olše. This demanding part of the construction was successfully completed in November 2010 in collaboration with the Polish. And just from April to the August 2011 (5 month) needed NET4GAS for a full build-up of the Czech part of the Interconnector pipeline – STORK. The pipeline continues the new high-pressure pipeline on the Polish side, where there is also a border transfer station. On both the Czech and Polish side, the project is EC co-funded from the EEPR program (European Energy Program for Recovery). The pipelines, including the border transfer station, are conceived as a single technological unit offering the possibility of natural gas transmission either way. The Polish part of the project received co-financing in the amount of 10.5mln EUR, whereas the Czech side was awarded 3.5 mln EUR, which constitutes 50% of the planned outlays.

"The full integration of the Community gas market by 2015 requires a wide-scale investment plan for the development of the European transmission infrastructure. The very beginning and important element of this process is the cross-border connection which we are opening today and which we will be jointly developing along with our Czech partner by increasing its capacity in order to satisfy the demands of all the market participants. New connections with the systems of neighbouring states will create the appropriate conditions to build a gas trade platform in Poland which, through cooperation with the platforms already functioning in other European countries, will increase our competitiveness on the Community gas market," Jan Chadam added.

The NET4GAS and GAS-SYSTEM also today signed in Chotěbuz the Interconnecting agreement The contract also specifies the methods and procedures of metering, information exchange and emergency procedures between operators..

The Poland - Czech Republic interconnector will initially enable the import of gas from a new entry point to the Polish transmission system with a capacity of approx. 0.5 bn m3 annually. However, considering the crucial role that the Poland-Czech connection may have in the process of integration and liberalisation of the gas market in this region of Europe, GAZ-SYSTEM S.A. and NET4GAS s.r.o. will continue to cooperate in the scope of the further development of this connection pursuant to the signed agreement. At present, the Companies are on the stage of defining the scope of works necessary to increase the capacity and functionality of the newly opened Poland-Czech Republic connection in future years. In the next stage, the Companies expect to fulfil actions enabling optimisation of the use of the transmission capacity of the already constructed gas pipeline by increasing its capacity to approx. 2.5 bn m3/year and ensuring bi-directional gas flow. This will require modernisation actions of the Polish and Czech transmission systems, which are already being prepared. In the next stage of the development of the Investment the transmission capacities between the systems will be able to be increased above 2.5 bn m3/year. Specification of the scope of necessary actions to be undertaken will constitute the object of analyses jointly conducted by the Companies in 2011 and 2012. GAZ-SYSTEM S.A. and NET4GAS s.r.o. have already submitted, at the beginning of 2011, a joint application to the European Commission for the granting of financial aid for the said analyses. The European Commission has approved this request and thus accepted the premises regarding the significance of developing this connection for the advancement of the integration process of the gas market in Europe.

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NET4GAS s.r.o. is the Gas Transmission System Operator that ensures access and sufficient capacity to both its domestic and foreign partners, guaranteeing non-discriminatory access to the transmission system.

NET4GAS, s.r.o., is the Czech Republic’s exclusive natural gas transmission licence holder. NET4GAS, s.r.o., transports natural gas in the Czech Republic by a system of 3,600 kilometres of pipelines. (2,455km transit and 1,187 km intrastate pipelines) Natural gas is the most environmentally friendly of all non-renewable sources of energy. Unlike solid fuels, it does not leave ash after burning, nor does it produce hazardous emissions detrimental to the environment.

The Gas Transmission Operator GAZ-SYSTEM S.A. is a strategic company for the Polish economy and energy security of the country. The key task of the Company is the transport of natural gas via the transmission system throughout Poland as well as the development of the gas pipeline network.

The Company manages assets worth in excess of 5 bn PLN comprised mainly of elements of the transmission system, e.g. more than 9.7 thousand km of high pressure pipelines, 14 compressor stations, 56 hubs and 970 exit points. The Company employs over 2,000 people.

GAZ-SYSTEM S.A. is also the owner of the LNG S.A. Company which was appointed to construct the liquefied natural gas terminal (LNG) in Świnoujście.

By 2014, GAZ-SYSTEM S.A. will have built over 1,000 km of new gas transmission pipelines. The most important will be constructed in northwestern and central Poland. The construction of the Gas Compressor Station in Goleniów was completed in spring 2011, and in autumn 2011, the Włocławek – Gdynia gas pipeline and the Gas Compressor Station in Jarosław will be started-up. In 2011, gas pipelines in Lower Silesia will also be developed and the capacity at the Lasów point on the Polish-German border will be increased from 0.9 bn m3 to 1.5 bn m3.

The Poland - Czech Republic interconnector, which was opened on 14 September 2011, will contribute to the development of internal gas transmission systems in Central Europe and their connection with the integrated network, e.g., through the North - South Gas Corridor, which will integrate the LNG terminal in Świnoujście (Poland), through southern Poland and countries in the south of Europe with the Adria LNG terminal in Croatia and with the planned Nabucco gas pipeline.

Contact:

GAZ-SYSTEM S.A.

Małgorzata Polkowska

Spokesperson for GAZ-SYSTEM S.A.

tel. +48 22 22-01-755, +48 691-911-217

e-mail:

www.gaz-system.pl

NET4GAS, s.r.o.

Milan Řepka

External Communication and Spokesman of the NET4GAS s.r.o.

tel. +420 220 225427, +420 739 537461

e-mail:

www.net4gas.cz

Interconnection of the STORK pipeline and the Czech transmission system

The STORK pipeline

Start of construction: March / April 2011

End of construction: September 2011

Length of the pipeline: 9,450 m

Pipeline pressure

Designed 7.35 MPa

Operating 6.3 MPa

Investor: NET4GAS, s.r.o.