Auction Announcement Notice – 2019/1

Hungarian Gas Storage Ltd (hereinafter referred to as MFGT) on this day announces an auction for booking available storage capacities for the storage years 2019/24 for a period of minimum 2, maximum 5 years. The capacity auction is carried out by MFGT in line with the Storage Capacity Auction Regulation II/A document as per Annex No. 1 and the specifications of this Auction Announcement Notice. In the event of any difference or contradiction between the two documents, the stipulations herein shall prevail.

Auction Details:

Bids are opened in the presence of a public notary.

Capacity Bidders with valid registration for storage year 2019/2020 are not required to repeat their registration unless the content of the previously submitted document has changed.

For those without a valid registration for storage year 2019/2020, participation in the capacity auction shall be conditional on indicating the intent to participate before the deadline, which shall be in line with the registration process rules announced on 25 February 2019. Acceptance of the registration by MFGT shall be conditional on the full and complete submission of the documents required for registration as specified below, which can take place by mail or by email, however, in the latter case, the original documents shall also be submitted prior to bidding, in the absence of which the registration is rendered invalid, and thus the bid cannot be evaluated. Participant is obliged to inform MFGT of any changes to the content of the documents subsequent to their submission.

Registration

At the capacity auction, bids can be made by only those capacity bidders that are eligible for storage access, and whose documents submitted during the registration process were accepted.

Documents required for registration:

• Applicable original certificate of incorporation in case of business organisations registered in Hungary and abroad, and its translated copy in Hungarian or in English (certified translation is not required in case of companies registered in Hungary, the online version by the Hungarian Ministry of Justice is accepted –  http://www.e-cegjegyzek.hu/) in case of business organisations registered abroad.

• In case of business organisations registered in Hungary: copy of the notarised specimen signature(s) (or sample signature(s) countersigned by an attorney-at-law) of the authorised signatory (signatories) signing the bid.

• In case of business organisations registered abroad: copy and translated English or Hungarian copy of the notarised specimen signature(s) (or sample signature(s) countersigned by an attorney-at-law) of the authorised signatory (signatories) signing the bid; or the original copy and translated English or Hungarian copy of their sample signature signed in manuscript in the presence of two witnesses, and in the latter case: a Hungarian or English copy of the signed side of a personal document belonging to the signatory (by mail or e-mail).

• Furthermore, in the event that said documents are signed by an attorney-in-fact, a copy of the signed side of a personal document belonging to the attorney-in-fact is also required, in compliance with the above rules applicable to the authorised signatory acting as principal. The power of attorney shall clearly indicate that the attorney-in-fact is entitled to represent the bidder during registration and/or bidding.

   

Accordingly, in order to participate in the capacity auction, the listed documents shall be delivered until the registration deadline specified for this auction. Although registrations received after the deadline specified in the registration process may be accepted, they only qualify the capacity bidder to submit bids on subsequent auctions, as they shall be considered as void in terms of this auction. In the event of any changes in the content/form of the documents (e.g.: changes in signatories/attorneys-in-fact, identification instruments or data concerning the company) as submitted previously (in the same storage year), participant shall inform MFGT and re-submit the relevant document(s) not later than until the end of the 3rd business day preceding the bid submission deadline of the subsequent capacity auction.

Please note, even if you are a customer with valid registration:

In as far as the participant fails to submit the required (and updated) document(s) or fails to inform MFGT of the changes, its registration for the capacity auction shall not be accepted until the correction of such document(s).  Furthermore, participant shall be fully liable to MFGT or to a third party for any direct or indirect damage arising from the failure to provide or to properly provide such information.

MFGT reserves the right to request deficiency correction from the participant – if any formal or substantive deficiency or other non-conformity (e.g.: delay) is detected during the specific review of the documents submitted –, and the participant may not have valid registration for the auction unless such deficiency correction is performed within the deadline – set forth by MFGT.

Deadline for submitting to MFGT the documents required for registration in relation to this auction: 13 March 2019 (Wednesday), 12:00.

In case of a valid registration, MFGT confirms the fact of registration to the Bidder by e-mail.

During registration, MFGT shall be obliged to treat data submitted to the auction in a confidential manner and will not disclose them to any third party.

Additional provisions

Security of Supply Product:

The awarded System User of auction 2019/1 or its parent company or affiliate as per Section 3 (2) 1 or 2 of Act No C of 2000 on Accounting, having a valid registration at MFGT, shall become eligible for using the following Security of Supply Product.

Content of the Security of Supply Product for optional use:

• 1 000 000 kWh additional working gas capacity, together with the related

• 6 250 kWh/day (160 days) injection and

• 10 000 kWh/day (100 days) withdrawal capacity.

The Security of Supply Product can be booked:

• for a period equal to the period awarded at Auction 2019/1,

• only for a volume equal to the working gas capacity amount awarded at Auction 2019/1

Fee for the Security of Supply Product:

Indexation of the Security of Supply Product:

The unit price of the Security of Supply Product shall be reviewed prior to the end of each storage year. If the regulated unit price of the storage product with 160-day injection capacity and 100-day withdrawal capacity parameters decreases with regard to the subsequent storage year compared to the relevant storage year, the unit price of the Security of Supply Product for the subsequent storage year shall increase by an amount nominally equal to the absolute value of the change.

The Security of Supply Product fee shall be paid monthly in advance.

System User that became eligible for booking the Security of Supply Product reports it via email within 5 business days as to whether it intends to use the product. 5 business days shall be a limitation period. In the event that the eligible System User does not intend to book the product, or fails to report back, its right to use the product shall terminate.

Instead of the System User, its parent company or affiliate as per Section 3 (2) 1 or 2 of Act No C of 2000 on Accounting, having a valid registration at MFGT, shall also become eligible for using the Security of Supply Product, provided they accept the terms of contract on the Security of Supply Product without any changes.

The template contract on the Security of Supply Product shall be contained in Annex No. 3 of the announcement notice.

Provisions for Ownership Change

In the event that the contract on the Security of Supply Product is concluded by the parent company or affiliate, as per Section 3 (2) 1 or 2 of Act No C of 2000 on Accounting, of the awarded System User of Auction 2019/1, and if this status between them terminates during the term of the contracts, MFGT shall be entitled to terminate either of the said two contracts by the end of the relevant storage year.

Bid evaluation procedure

Bids below the minimum price set forth by MFGT shall be considered invalid.

MFGT applies a congestion management procedure if based on received bids amounting to at least the minimum price, total capacity requests exceed the announced amount of capacity.

Congestion management procedure: Bearing in mind domestic security of supply aspects and the achievement of the highest possible fill level facilitating optimal storage operation, MFGT will rank successful bids based on summarizing the following criteria:

• booking period (number of years)

• amount of booked capacity (kWh)

• unit capacity fee offered (kWh/HUF)

  The number resulting from the product of multiplying the above three factors (“Product of Multiplication”) shall be the basis of establishing a descending order.

  MFGT concludes the Natural Gas Storage Contract first with the Bidder having the highest Product of Multiplication, then with the Bidder having the second highest Product of Multiplication, and so on, up to the extent of selling all the offered capacity bundles. It may occur that the Auctioneer will not or will not fully satisfy a Bidder’s or several Bidders’ capacity request. If several Products of Multiplication are the same, MFGT distributes the still available capacities based on the longest requested booking period first, then in case of equal periods, on a pro rata basis (in the ratio of the capacity bundles requested by the awarded Bidders).

  Final Provisions

MFGT shall notify the bidders on their awarded capacities until 17:00 hours on the day of the Auction.

Following the auction, MFGT and the Bidder having submitted a valid and successful bid shall conclude the Natural Gas Storage Contract on the awarded natural gas storage capacities within 5 business days from the auction.

Auctioneer (MFGT) explicitly reserves the right to withdraw without explanation the open storage capacity Auction announced as Capacity Auction No. 2019/1 until the announcement of its results.

In the event that the Auction is withdrawn, Auctioneer will not compensate for any damage or cost incurred by the bidders.

Should you have any further questions or require information in relation to the auction, please consult the designated contact persons of MFGT: Hajnalka Horváth (Phone: +36 30-748-99-71, e-mail: horvathh@mfgt.hu and Balázs Meggyes (Phone: +36-30-718-9343, e-mail: meggyesb@mfgt.hu), sales experts.

Annexes:

1. Storage Capacity Auction Regulation II/A

2. Capacity Booking Contract Template

3. Security of Supply Contract Template

4. Bid Form