Following EnBW and Eni's majority acquisition of Gasversorgung Sueddeutschland GmbH, EnBW is also seeking to win over local authorities and public suppliers fo

Substantial growth prospects for gas supply in Baden-Wuerttemberg merging of electricity- and gas-supply markets.

Stuttgart, Germany 2. 7. 2002 (PROTEXT/ots) Followingconclusion of the contract for the majority acquisition ofGasversorgung Sueddeutschland GmbH (GVS) by the German-Italiangas-supply market consortium of EnBW Energie Baden-WuerttembergAG and Eni SpA, EnBW also wishes to win over local authoritiesand their public suppliers for strong partnerships to developthe gas-supply market. 'Together with Eni, GVS, public suppliersand customers, we wish to actively benefit from theopportunities offered by the liberalized gas-supply market',announced EnBW's managing director Pierre Lederer to journalistsin Stuttgart on Monday. Moreover, it was the strategic aim ofthe third-largest German energysupply company to play an activerole in the merging of the electricity- and gas-supply marketsunder the conditions created by the liberalized energy- supplymarket in Europe.

Takeover of the GVS majority by the EnBW/Eni team wasaccording to Mr Lederer 'absolutely perfect to secure GVS'sfuture.' By pooling the strengths of EnBW (partnership concept,understanding of local authorities and sales skills in Germany)and Eni (supply and transport know-how as well as recourse totheir own gas), a strong alliance would be formed. With its 1,881kilometres of gas-pipeline network, GVS, Germany's fourth-largestlong-distance gas-supply company, would admirably complement thedevelopment, transport and sales chain. The integrated gas-supplymarket concept linked to the joint venture of EnBW and Eni couldsoon be realized from gas procurement from various developmentregions, efficient transport and distribution networks up to andincluding competitively priced supply and expert customermanagement.

Mr Lederer is convinced that the faltering development of thegas-supply market in Germany and the rest of Europe hitherto canbe attributed, above all, to an inadequate number of fullycompetent market participants at all stages along the gas-supplymarket chain. In addition, the wheeling regulations are noteffective enough and there is a lack of large supplies of gasfreely available to the market.

In addition, Mr Lederer expressed doubts as to whether the'Gas II association agreement' concluded in May 2002 would bringabout the preconditions required to create effective competitionon the gas-supply market, which would in turn benefit consumers.Therefore, ownership of gas-supply networks was playing a keyrole in the active development of the gas-supply market.

Mr Lederer praised the Italian Eni concern as the 'idealstrategic gas-supply partner for EnBW.' Eni's global activitiesand vast know-how in all sectors of the gas-supply industry wouldenhance the energy-market expertise of Germany's third-largestenergy-supply concern. Eni had direct access to gas fields andproduction in various regions which could be of great importancein view of the growing demand for gas supply and, within thiscontext, trends towards shortages and higher prices that couldbecome a reality in future. Eni could also transport gas toGermany thanks to its own pipelines and transport rights.

On the basis of EnBW's strategic partnership with Electricitéde France (EDF), particularly on the European electricity-supplymarket, the partnership with Eni now offered the opportunity,also within EnBW's gas-supply area, to play a key role indeveloping the market together with one of the world's leadingcompanies in this sector.

The EnBW/Eni gas-supply partnership including the futurejoint GVS subsidiary would also directly involve localauthorities and their public suppliers, provided these wereincorporated into, wanted to remain or wished to become part ofthe gas-supply market chain with EnBW/Eni/GVS. Furthermore,EnBW/Eni/GVS would provide their partners with professional andfair support to develop the gas-supply market and would, inturn, benefit from the customer proximity of their partner publicsuppliers. The concern expressed on occasions in the past thatEnBW/Eni wanted to squeeze the public suppliers out of themarket, had been alleviated as far as partners in localauthorities were concerned, pointed out Mr Lederer.

EnBW/Eni the ideal team to secure GVS's future and itsdevelopment.

The important role that Gasversorgung Sueddeutschland GmbHwould play within EnBW and Eni's integrated gas-supply marketconcept, was at the same time a 'guarantee of development and,therefore, an effective way to ensure GVS's future', stated MrLederer. As an independent company integrated within the EnBW/Eniconsortium, GVS would be able to help develop the gas-supplymarket from procurement and transport up to and including thesupply of industrial customers and public suppliers in theBaden-Wuerttemberg region, where its regular customers were, andbeyond.

In future, the gas-supply market expertise and customerrelations of EnBW and Neckarwerke Stuttgart AG (NWS) would beincorporated into this gas-supply market network.

Scheme to develop the gas-supply market

Mr Lederer sees excellent opportunities for growth anddevelopment on the gas-supply market in Baden-Wuerttemberg, wherethe regular customer base of EnBW and GVS is located. Here, thefigure of 16% for those who use natural gas as primary energy isclearly well below the national average of 21% (both figures wererecorded in 1999). This also applies to the use of gas fordomestic heating, where the national average in this importantgrowth market is around 45%. In Baden-Wuerttemberg, however, theaverage is only around 37% (figures recorded in 2000). The gasjoint venture, to which EnBW and Eni has each contributed as muchas 50%, will also aim to develop the gas-supply market, not onlyin Baden-Wuerttemberg but also in other regions, and was open-minded about concluding further partnerships with publicsuppliers and other customers.

EnBW recognizes further prospects in connection with thepossible E.ON/Ruhrgas ministerial approval. Here, EnBW has alwaysmade it clear that, in addition to an improvement in liquidity ingas production and the required neutralization of the networks,'aeration' of vertical integration had to be an indispensable andintegral part of the requirements. Against this background, MrLederer underlined EnBW's interest in Thuega.

An increase in transport and storage capacities was also akey factor in the development of the gas-supply market anexamination of pipelines and sites for additional gas-storagefacilities had already begun. At the same time, it was 'alsofeasible, together with other companies, to build new storagefacilities or extend existing ones', stated Mr Lederer. By way ofexample, he cited the projects planned by Ruhrgas and Wingas toconstruct gas-supply pipelines through Baden-Wuerttemberg.

Mr Lederer saw GVS's growth potential in the gas-supplysector in further acquisitions and partnerships, above all, inneighbouring regions: as for instance Bayerngas.

On Thursday of last week, EnBW Energie Baden-Wuerttemberg AGand Eni SpA acquired 62.22% of Gasversorgung Sueddeutschland GmbHthrough their gas-supply market joint venture. Correspondingcontracts were also concluded between the federal state of Baden-Wuerttemberg, which held 25% of GVS shares hitherto, among sixjoint shareholders, who held 37.22% of GVS, and the buyers EnBWand Eni. Options agreements on these business shares wereconcluded with two joint shareholders (Heilbronn and Ulm), whotogether hold 4.38% of GVS shares. Furthermore, the joint ventureof EnBW and Eni intends to acquire the 33.4% share thatNeckarwerke Stuttgart AG (NWS), which is part of EnBW, holds inGVS. This acquisition would increase the joint venture's share inGVS by 95.62%. All contracts are still subject to approval by thecompetent monopolies and mergers commission, which thecontracting partners expect to gain during the summer.

Gasversorgung Sueddeutschland GmbH (Stuttgart) suppliesdirectly and indirectly around 750 towns and communities via its1,881-kilometre long-distance pipeline. During the business year2000/2001, GVS achieved a turnover of approximately EUR 1.7billion with 74,223 gigawatt hours.

Eni SpA (Rome), one of the world's leading energy-supplycompanies, achieved net annual income of EUR 7.8 billion withturnover of EUR 48.9 billion during 2001. Within the gas-supplysector, Eni has a network at its disposal that covers severalcontinents as well as its own development and productioninstallations, secure supply sources and transport networks.Hardly any other company is in such a favourable situation.

With over 4.5 million customers, annual turnover of EUR 7.9billion and net annual income of EUR 272 million (2001), the EnBWGroup is one of the fastest growing companies in Germany and onthe liberalized European energy-supply markets.

EnBW Energie Baden-Wuerttemberg AG Company communicationDurlacher Allee 93 76131 Karlsruhe Tel.: +49 (07 21) 63-1 43 20Fax: +49 (07 21) 63-1 26 72 unternehmenskommunikation@enbw.comwww.enbw.com

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