Energy Europe

Overview

• European Gas
• European Power
• European Coal
• Various Activities

Various European Activities

Central Europe

RBS Sempra Energy Europe is one of the leading liquidity providers on the Czech - Slovakian, Slovakian - Hungarian, Austrian - Hungarian, Polish - Slovakian borders. We recently participated at biddings in Albania, Bosnia and Herzegovina and are exploring electricity trading in the Ukraine, Romania and Serbia. Furthermore, we have strong expertise in cross-border capacity auctions across Central Europe. In short, we are working with mainstream utilities, traders, system operators and regulators to guarantee the smooth flow of power in the fragmented Central European power sector.

In addition to the above inter-country activities, we trade electricity in the emerging domestic power markets in Central Europe. For example, we will shortly be marketing power to eligible customers in the Czech Republic and Hungary.

We are one of the few commodity traders offering a wide range of structured products such as electricity indexed to metal prices and swaps on oil-linked gas contracts. In the future, we expect to offer other structured products (e.g. options to toll) as the markets in Central Europe continue to be liberalized.

On the gas side, we have created a network of contacts and are ready to start trading in Central Europe as soon as the relevant statutory, regulatory and contractual conditions are in place.

Italy

RBS Sempra Energy Europe started its Italian gas and power operations in January 2000. As Italian end-user gas and power prices are linked to petroleum, our strong position in the oil markets allows us to structure OTC risk management products for our customers.

We were the first company to offer swaps on the Ct, Snam-Confindustria and Snam-Unapace formulas, and we remain one of the few trading houses to offer gas and power contracts without basis risk. With the start of the ''Borsa Elettrica,'' we are able to trade and offer financial swaps on the IPEX. We can also provide gas to customers in Italy with capacity on the TENP pipeline due to our strong presence in the UK and in Zeebrugge.

Emissions Trading

An outgrowth of the Kyoto Protocol, emissions trading became active in January 2005 with the beginning of the European Union Emissions Trading Scheme (EU ETS). RBS Sempra Energy Europe is a major participant in this market as well as the market for primary and secondary Certified Emissions Reductions (CER's) and Emissions Reduction Units (ERU's). We offer debt and/or equity finance for CER/ERU projects and trade physically-settled futures, options and forward emissions contracts.