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Date: Mon, 2 Oct 2000 07:22:00 -0700 (PDT)
From: jeffrey.shankman@enron.com
To: jennifer.burns@enron.com
Subject: LNG for Spain
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---------------------- Forwarded by Jeffrey A Shankman/HOU/ECT on 10/02/2000 
02:23 PM ---------------------------


Doug Arnell@ENRON_DEVELOPMENT
09/24/2000 02:57 AM
To: Clay Harris/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Eric Groves@ECT, Joe 
Gold@ECT, Eric Gonzales@ECT, Wayne Perry/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, 
Merritt Thomas@ECT
cc: Rick Bergsieker/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Jeffrey A 
Shankman@ECT 
Subject: LNG for Spain

Some follow up on friday's meeting:

We need to focus quickly on whether or not there is any deal to be done with 
Middle East suppliers that can contribute to Enron Europe's power project in 
Spain.

Our pending deal with Adgas to ship LNG on the Heogh Galleon could be a good 
fit however  the current volume being discussed (0.3 MMTA) is only a small 
portion of the 1.3 to 1.5 MMTA required for the project in years 03+ (minimum 
delivery would be 1.0 MMTA).  We should press ADGAS to see if they would 
commit to a higher volume.  We also need to determine what we believe is the 
most effective pricing structure for the ADGAS LNG purchase (both in terms of 
supply to our project in Spain, but also for potential diversions to Europe 
in 01/02) and for what term.  Based on our discussions on friday, it may be 
that a crude based purchase price may work the best.  We have discussed both 
Brent and NYMEX based pricing formulas with ADGAS.  Merritt, Eric, lets add 
that to the agenda for our monday morning meeting and get some price 
structuring done.

The structure of the ADGAS deal will be based on a U.S. delivery.  We will 
reserve the right to divert to any other market (except TEPCO).  We will 
likely have to share, in some way the shipping savings, if we divert to a 
non-U.S. terminal but I think we can keep any upside made on the indexed 
portion of the price for ourselves.

In addition we will be contacting OMAN LNG to determine their ability to 
provide quantities to augment the ADGAS supplies, as well as potential 
shipping options (Exmar?)  Obviously we need to consider shipping 
requirements for our Atlantic Basin projects (i.e. Elba Island) when thinking 
about shipping for Spain.  I would also like to look at how Elba could be 
used as part of a potential take or pay avoidance strategy for the Spain 
power plant.

I will try to keep everyone updated as the pieces come together.

Thanks