Message-ID: <6297143.1075843943806.JavaMail.evans@thyme>
Date: Sun, 29 Apr 2001 11:54:00 -0700 (PDT)
From: george.mcclellan@enron.com
To: sven.becker@enron.com
Subject: RE: Summary on Bremen Deal
Cc: stuart.staley@enron.com, manfred.ungethum@enron.com, 
	mike.mcconnell@enron.com, jeffrey.shankman@enron.com
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Manfred / Sven - congratulations on getting the Bremen deal signed!  This=
=20
business represents the first significat long-term deal we have in Germany.=
 =20
It also allows us to expand our "stockpile" business on the Continent - and=
=20
will allow us to develop a hub in Nordenham.  The ability to put petcoke to=
=20
Bremen is an added benefit. =20

Nice job on this deal - it took a lot of work on your part to get Bremen=20
comfortable with our shipping such a large percent of their requirements.

Best regards,

George

-----Original Message-----
From: Becker, Sven
Sent: Sun 4/29/2001 3:24 PM
To: Mcclellan, George
Cc: Staley, Stuart; Ungethum, Manfred
Subject: Summary on Bremen Deal

Hi George,

as requested just a quick summary on the Bremen transaction which was final=
ly=20
signed by Bremen on Thursday (yesterday I also received the signed contract=
=20
from Bremen).

 Term:
 from 1 May 2001 to December 2006, although we have already delivered since=
=20
1/1/01 under the same contract terms as the long-term agreement.

 Volume:
 4.6 Mio. t firm over 6 years=20
  2001: 935=20
  2002: 820
  2003: 820
  2004: 820
  2005: 615 (tail-off due to expected shut-down of one block)=20
  2006: 615=20
 For 2002 to 2006, this will cover about 80% of Bremen's needs. We can be=
=20
very confident to also attract the remaining 20% in the open tenders due to=
=20
advantages on logistics and possible matching of best price.

 Quality:
 Generic with very generous quality specs (wider than SECA; also allows for=
=20
1.7% sulphur)
 Under the deal we can also deliver 10% as pet coke (if the blend meets the=
=20
wide quality specs)

 Pricing:=20
 We deliver CIF @ BAW price. BAW is weighted average import price which lag=
s=20
the market by 2-3 quarters. In rising markets we lose against spot purchase=
,=20
in falling market we win against it.
 If Bremen takes less than 10% pet coke, we will get a premium for each %=
=20
point that Bremen underlifts. In this case, we are either financially deeme=
d=20
to have delivered pet coke (we get the difference between BAW price and pet=
=20
coke) or a fixed premium of $0.15/t per each % point (max. of BAW price +=
=20
$1.50)

 Strategic Advantages of Deal:
 -  Significant position in the German market; breakthrough transaction in=
=20
the German market =01) this transaction represents about 3% of current Germ=
an=20
coal imports. It will make us one of the established players and help foste=
r=20
our track record in Germany.
 -  Longer-term volume flow in Northern Germany that will create economies =
of=20
scale for the supply of smaller customers in the area;
 -  Building Nordenham as the bridgehead for the supply of Northern Germany=
;=20
With increasing imports into Germany the Bremen volumes will enable ECS to=
=20
take an active port position in Nordenham. This may be valuable since port=
=20
capacity will have increasing value (currently under scrutiny).
 -  Optionality on remaining synor tonnage; abilitay to fill in remaining 2=
0%=20
of Bremen needs. This can already be seen this year where we are expected t=
o=20
deliver 935,000 instead of the contracted 820,000.
 - Upside from delivery of more of 10% of contractual volumes as petroleum=
=20
coke (we can do this, if technically ok - under the contract Bremen actuall=
y=20
has incentives to burn more than 10%).
 - Follow-on Deals with Bremen; we have started discussions on a coal-fired=
=20
power block that Bremen would like to rent out to us and Bremen has offered=
=20
us to do all their port business in Nordenham (thus, we would transform CIF=
=20
deal into FOB deal) which would strengthen our position in Nordenham).

George, if you have any questions related to the deal and its structure,=20
please do not hesitate to call either Manfred or myself (011-49 173 3070824=
).

Kind regards
Sven