29.04.2008

Eustream – A New Name for the Gas Highway to Europe

Bratislava, 29th April 2008 – On January 1st 2008, SPP preprava a. s. changed its name to eustream a. s. The company reported today that the transported volumes of gas in 2007 amounted to 72.8 bln m3, representing 1/7th of the total gas consumption in the European Union. Eustream thus underlines its position as one of the biggest gas transmission system operators in the EU.

The vision of Eustream is to preserve the company’s position as a key player in the transmission of natural gas in Europe. “Therefore, we reviewed also our communication strategy and initiated a re-branding process in the second half of 2007 with the goal of highlighting our profile in international communication. These activities resulted in the new trade name for our company that was changed from “SPP – preprava a. s.” to “eustream a. s.” as of 1st January 2008. The new brand is to strengthen the company’s position on the European transmission market and to highlight the fact that Slovakia is a highway for Russian natural gas to Europe,” said Chairman of the Board of Directors of Eustream, Andreas Rau.

Eustream has reached a profit of SKK 3.1 billion
According to Slovak Accounting Standards (SAS), Eustream ended the 2007 period with an after-tax profit of SKK 3.1 billion. The structure of revenues and expenses in 2007 and 2006 cannot be compared, given that these results represent a half-year and a full-year of operation of Eustream.* In addition, 2006 results were strongly impacted by one-time effects related to unbundling.
The 2007 economic results were greatly influenced by developments on the foreign exchange markets. Primarily, the results reflect more than a 16% year-over-year strengthening of the Slovak koruna against the US dollar. The strong koruna negatively influenced the company’s revenues, which are to a great extent reported in US dollars. This influence was mitigated, however, thanks to a successful hedging policy.

Eustream transmitted 1/7^th of European consumption
Last year, Eustream transmitted 72.8 billion cubic meters of natural gas, representing 1/7th of all European gas consumption. This total amount of gas transportation confirms the position of Eustream as one of the major transmission system operators in Europe. However, climate changes are having a visible effect on transported volumes, which have decreased by 1.4% compared to 2006, due to extraordinarily warm temperatures in Europe during the first three months of 2007. “Most importantly, it was another year of safe and reliable gas transmission services rendered to our customers without any disruptions” stated Andreas Rau.

Eustream is investing in safety and reliability
Novelties with regard to improving the parameters of the transmission system include the automation of transmission system management from the dispatching center in Ivanka pri Nitre, and an increase in the compression ratio at the compressor station in Veľké Kapušany. Both projects will be implemented in 2008/09, after which the company intends to carry out the systematic re-engineering of other compressor stations. As part of these re-engineering activities, the focus will also be on the implementation of clean technologies.

Another investment project by which the company enhances the security of the gas supply to the European market, concerns reinforcement of the interconnection between Vysoká na Morave (Slovakia) and Baumgarten an der March (Austria). It is a joint project between Eustream and OMV Gas GmbH and its implementation began in 2007. Its goal in the near future is to achieve higher throughput of natural gas at the border delivery station Baumgarten.

Long-term commitments still key to supply security
Diversification of transit routes for importing natural gas is part of the European policy to improve the security of gas supplies. Due to growing competition on the international transmission market, one of the key issues for the company is to strengthen its relations with major business partners through long term commitments. In 2008 Eustream expects the conclusion of a new long-term gas transmission contract with the most important user of the transmission network in Slovakia, the Russian company Gazprom Export. Both parties are interested in concluding a contract that will be valid from the1st January 2009, and that will bring stability and visibility for the next two decades.
In addition to the traditional transmission of natural gas via the Slovak transmission system, Eustream recorded a significant increase in the number of network users who are interested in short-term transmission contracts. The company has seen greater interest in contracts of this type, signaling further development of cross-the-border gas trading in our region.

Eustream supports efficient legal unbundling
The company also faces challenges resulting from the so-called third energy package of the European Commission (EC). In this package, the EC introduced new requirements relating to the rules on the common energy market. “Together with colleagues and energy experts from Europe, we have the feeling that the EC should support the existence of strong European players to improve our negotiating position with the major gas producers. We are also aware of the fact that competition is important for final gas consumers and we fully support the philosophy of implementing efficient legal unbundling, as promoted by Slovakia and other European countries. We believe that public discussion on this issue will assist us in finding a solution to the satisfaction of all parties concerned.” said Member of the Board of Directors and as of 1st July 2008 the Chairman of the Board of Directors of Eustream, Christophe Poillion.

	2006 July - December	2007 January - December	Absolute difference 2007-2006
Operating revenues	14,5	27,6	13,1
Operating expenses	-10,0	-24,0	-14,0
Operating income	4,5	3,6	-0,9
Financial revenues	0,3	0,9	0,6
Financial costs	-0,8	-0,6	0,2
Income from financial operations	-0,5	0,3	0,8
Income tax	-0,2	-0,8	-0,6
After-tax profit	3,8	3,1	-0,7

*Until 30th June 2006, the gas transmission activities formed part of activities pursued by SPP a. s. Due to the requirements introduced by Slovak and European legislation, transmission activities were legally unbundled as of 1st July 2006 to an independent subsidiary, the company SPP – preprava a. s. The structure of revenues and expenses is not fully comparable because of a half-year and a full-year period of independent operation of Eustream. The financial results reported by the company for 2007 are therefore compared on a year-over-year basis with the results for a six-month period of 2006. The 2006 financial results were strongly influenced by specific accounting operations that were specific to 2006 only and related to legal unbundling.

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