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Enron Mail |
Charity gets a time at bat from Enron
Houston Chronicle, 10/03/01 States protest federal involvement in electricity competition, deregulation Associated Press Newswires, 10/03/01 USA: Enron stock extends recovery with 10 pct jump. Reuters English News Service, 10/03/01 Nigeria LNG Signs MOUs With Enron, Iberdrola Dow Jones Energy Service, 10/03/01 Supreme Court Hears Case With High Import For Pwr Mkts Dow Jones Energy Service, 10/03/01 INDIA: Enron's Indian unit again defaults on interest dues. Reuters English News Service, 10/03/01 USA: Energy merchant stocks up after Calif. settlement. Reuters English News Service, 10/03/01 BG India Hopes To Be Operator Of Enron Fields By Oct 31 Dow Jones Energy Service, 10/03/01 Enron sells Indian oil and gas assets to British operator Associated Press Newswires, 10/03/01 Enron Confirms India Oil, Gas Assets Sale To BG Grp Dow Jones Energy Service, 10/03/01 BG Group to Buy Enron India Assets for $388 Million (Update4) Bloomberg, 10/03/01 U.S. Supreme Court Questions Reach of Federal Energy Regulators Bloomberg, 10/03/01 Enron to Sell Oil, Gas Fields in India to BG Group (Update1) Bloomberg, 10/03/01 Oct. 3, 2001 Houston Chronicle Charity gets a time at bat from Enron By GREG HASSELL Copyright 2001 Houston Chronicle When Houstonians gather at Enron Field this week, Barry Bonds' attempt to rack up 71 homers in a single season won't be the only unprecedented feat on display. Just above the scoreboard that will record any homers Bonds might send screaming out of the ballyard is a sign bearing the United Way logo. It looks ordinary enough, like the dozens of other ads that dot the stadium. But the last time the Astros played at home, the sign bore Enron Corp. logo. Late last week Enron donated the sign to United Way, which will get the space through the 2002 season. It's the first time a naming rights sponsor of a modern U.S. stadium has donated a major sign to charity. According to advertisers familiar with rates at Enron Field, the sign is worth about $500,000 a year. Since Enron maintains a small logo on the sign, the actual value of the gift would be less. "This tells the world that, as powerful as Enron is, they put a lot of stock in what we do," said Jackie Martin, president of the United Way of the Texas Gulf Coast. "That's beyond the power of dollars. It's priceless." Enron decided to make the gift because it had two signs in the park, including one that reads ENRON FIELD in huge blue letters. "I looked up there and thought, `This might be a little bit of overkill,' " said Mark Palmer, vice president of Enron's corporate communications. "We could really help one of our community partners if we shared that space up there. For all the great work the United Way does, it makes sense to partner with them." Name gets a lot of play Since Enron agreed to pay $100 million for the naming rights, it has reaped a public-relations bonanza. "When people say they are going to a game here, they say, `I'm going to Enron,' " Palmer said. "That is tremendous for our company." Because of the stadium's odd dimensions and the tremendous number of home runs hit there, the name Enron Field is famous in sporting circles. "I was in London, and I overheard a television announcer say, `Big news at Enron!' "Palmer said. "My head just about snapped off, I turned around so fast. Then I realized it was CNN Sports, and they were talking about the stadium." While Enron's experience shows naming rights deals can give a mighty boost to a corporation's name, the wider world of naming rights deals is embroiled in turmoil these days. A number of companies that shelled out millions for naming rights are in financial trouble. That includes PSINet Stadium in Baltimore, named for a dot-com turned dot-bomb. It includes Pro Player Stadium in Miami, named for a troubled maker of sports apparel. The St. Louis Rams play in a dome named after TWA, but the financially trouble airline has been bought out and the dome's name is for sale. In past naming-rights deals, the heaviest buyers have been high-tech outfits and airlines. Both of those industries are in the toilet now, and it seems unlikely we'll see any big deals coming from those quarters anytime soon. "It is a period of uncertainty," said Todd Gruen, managing editor of a publication called Naming Rights Deals. "Once we get a handle on where the economy is going, the naming rights industry can find its place as well." Some deals go sour But the situation is more serious than merely dollars and cents. In some cities, there has been a backlash against selling names to the highest bidder. The mayor of Chicago threatened to scuttle a deal to refurbish Soldier Field unless the Bears relented on their demands for naming-rights revenues. The team backed down last week. In Denver, the Denver Post is refusing to call the new stadium there Invesco Field at Mile High. Instead, it will call it Mile High Stadium -- the name of the legendary abandoned stadium next door. Denver's mayor, who lobbied hard against selling the name to a corporation, applauded the snub. Does this mean the golden days of naming rights are over? Will the Rockets find a dry well when they go courtin' for a naming-rights partner for their new downtown arena? "We've seen a leveling off of prices and we'll continue to see a leveling off for the next few years," said Dean Bonham, president of the Bonham Group, which negotiates naming rights deals. "But contrary to some reports, the sky isn't falling. These deals will continue to be sought by corporations, just not with the sense of urgency we've seen in the past." States protest federal involvement in electricity competition, deregulation By H. JOSEF HEBERT Associated Press Writer 10/03/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. WASHINGTON (AP) - Several states told the Supreme Court the government went too far when it ordered electric utilities to open their power lines to competitors and spurred a movement toward deregulation. But one of the country's largest power marketers, Enron, argued before the court Wednesday that the Federal Energy Regulatory Commission should have gone even further to help companies like Enron get equal access to power grids. During the hourlong hearing, the justices gave little indication of how they will decide on a case that could dramatically affect management of the nation's power grids and the future of electricity competition. At one point, Justice Stephen Breyer said FERC, which regulates wholesale power markets and interstate transmission of power, was being "whipsawed" from both directions. The commission's 1996 decision, which for the first time required traditional utilities to open their transmission lines to competing power merchants, triggered a movement toward wholesale electricity competition and led numerous states to end monopolies in retail power markets. But utility regulators in nine states, led by New York, filed suit arguing that the FERC order amounts to a federal agency attempting to regulate retail sales, usurping a traditional state function. At the same time, Enron's lawsuit charged that FERC violated federal law because it did not require access to transmission lines when utilities continued to keep transmission and retail sales as one operation - as remains the case in many states that have yet to allow competition. In June 2000, an appellate court essentially upheld FERC's regulation, prompting appeals from both Enron and the state regulators. "It's an example of where an agency has overstepped its bounds," Lawrence Malone, general counsel for the New York State Public Service Commission, told the justices at Wednesday's hearing. The other states party to the suit are Florida, Idaho, New Jersey, North Carolina, Virginia, Washington, Vermont and Wyoming. Malone, appearing on behalf of all nine states, argued that FERC's order pre-empts state authority to regulate retail sales and set rates. "This case isn't about rates," countered Louis Cohen, representing Enron Power Marketing Inc. before the court. "What we're concerned about is getting onto the (grid) system." Cohen said that under the current access rules a dominant utility in a state that has not moved to competition may still "hog" the lines and keep Enron and similar marketers from moving power across a region. The Justice Department, representing FERC before the court, argued that the commission only sought to strike a balance between the need to give competitors equal access to power lines and leaving retail market issues to the states. Edwin Kneedler, deputy solicitor general, told the court that FERC, in his view, could have gone further, as Enron has argued. But, he said, to do so it would first have had to order all utilities to separate retail sales and transmission, something it chose to leave to the states. The case, which is not expected to be decided until sometime next year, comes at a time of growing concern about electricity competition and power grid reliability in light of recent power problems in California. About half of the states have taken some steps toward retail electricity competition. Many power industry experts as well as the FERC commissioners have emphasized that a truly competitive electricity market will be difficult to achieve without smooth and efficient flow of electricity across large regions, if not nationally. And that, argue companies like Enron who want to compete with traditional utilities, will require more open access to transmission. In an attempt to smooth the flow of power, FERC has embarked on a campaign to establish four large, regional transmission organizations to manage the national power grid. A court decision rolling back some of FERC's authority over open access to transmission lines could affect that effort. Uncertainty over how far the federal government will be allowed to go in requiring transmission access also could affect state decisions on whether to embrace electricity competition, according to some industry experts. --- On the Net: Federal Energy Regulatory Commission: http://www.ferc.fed.us/ Enron: http://www.enron.com/corp/ Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. USA: Enron stock extends recovery with 10 pct jump. 10/03/2001 Reuters English News Service (C) Reuters Limited 2001. HOUSTON, Oct 3 (Reuters) - Shares of Houston-based energy marketing and trading giant Enron Corp. extended their recent recovery from 3-year lows with a 10 percent gain on Wednesday amid improving investor sentiment toward companies that operate in U.S. wholesale natural gas and electricity markets. In afternoon trading Enron's stock was up $3.17 at $33.78, in a fifth straight day of gains since closing just above $25 on Sept. 26, its lowest close since October 1998. However, Enron's stock still shows a loss for the year-to-date of some 59 percent, compared with a decline of about 19 percent for the S&P 500 index, and Enron is trading well below highs of around $90 set in August and September of last year. "Enron was really beaten up because of several issues and was really oversold, so that's why it continues to recover," said Banc of America Securities analyst William Maze. The Houston-based company's stock fell sharply in August after the surprise resignation of Jeff Skilling as chief executive officer but the stock had already come under pressure as a result of a disappointing performance by its fledgling broadband business and a stalled power plant project in India. Maze said Enron was currently benefiting from a realization among investors that wholesale natural gas and power companies would probably suffer less than other sectors if the United States enters a protracted economic downturn. "It's one of the few sectors that offers some visibility to (earnings) numbers both this year and next year, so there is quite a bit of interest coming back into the group," he said. Maze said Enron and its peers also got a boost on Wednesday from Edison International unit Southern California Edison's plan to pay its creditors and avoid bankruptcy, even though Enron is not one of SoCal Ed's biggest creditors. Enron and its peers should also benefit from new Federal Energy Regulatory Commission Pat Wood's commitment to opening up the national power transmission grid, Maze said, while Enron's sale of its Indian oil and gas assets, announced on Wednesday, underscores its commitment to its "asset-light" doctrine. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Nigeria LNG Signs MOUs With Enron, Iberdrola 10/03/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) LAGOS -(Dow Jones)- Nigeria LNG Ltd has signed memoranda of understanding with Enron Corp. and Spanish power company Iberdrola for the sale of LNG volumes from the 4th and 5th production units of its expansion program, NLNG said in a statement released here Wednesday. Nigeria LNG plans to commence production from the two new units in 2005. However, it needs firm sales agreements accounting for all the production from those units before it will finalize the invesment. The latest deals bring to 6.5 BCM/year the LNG volume from units four and five already committed. Each of the new production units will have capacity of 4 BCM/year. Nigeria LNG and Enron had earlier signed an MOU for 1 billion cubic meters per year for the expansion program, also known as NLNG Plus volumes. The second agreement raises Enron's share of NLNG Plus volumes from 1 BCM/year to 4 BCM/year. Spanish and North American receiving facilities are the primary destinations for LNG shipments to Enron under the new agreement, the statement said. Iberdrola, which signed an MOU for 1.5 BCM/Year, will receive its shipments at the Spanish receiving terminal of Huelva. Jean-Francois Capelle, General Manager, Commercial, of Nigeria LNG Limited, said MOUs will soon be signed for the remaining volumes of LNG from these units, and that work had already started on sales and purchase agreements to firm up these contracts. These may be signed by the last quarter of the year. NLNG commenced commercial operation in October 1999 with its two-unit, 5.9 -million tons per annum Base Project. A third unit of similar design and capacity as the Base Project unit is currently under construction and is scheduled for completion in late 2002. On completion of the NLNG Plus Project, NLNG will have an overall production capacity of 17 million tons per annum of LNG and 2 million tons per annum of LPG. NLNG is a Nigerian Joint Venture company whose shareholders are the Nigerian National Petroleum Corporation (49%), Shell (25.6%), TotalFinaElf (15%) and Agip (10.4%). -By Vincent Nwanma; +234-1-585-0849/775-6185; vinwanma@beta.linkserve.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Supreme Court Hears Case With High Import For Pwr Mkts By Bryan Lee Of DOW JONES NEWSWIRES 10/03/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) WASHINGTON -(Dow Jones)- The U.S. Supreme Court Wednesday wrestled with how to interpret the 1935 Federal Power Act in the wake of competitive changes that have swept the $220 billion U.S. electricity sector over the past decade. The justices heard oral arguments in competing challenges to rules the U.S. Federal Energy Regulatory Commission adopted in 1996 requiring utilities to open their transmission lines to competing wholesale power providers. The case has great ramifications for congressional debate of electric industry restructuring legislation and FERC's ongoing efforts to promote competition as a surrogate for regulation. "If you pull the rug out from under (FERC's rulemaking), the implications are enormous," said Vicky Bailey, the U.S. Energy Department's assistant secretary for policy and international affairs. Bailey was a FERC commissioner in 1996 when the rules were imposed. State regulators argued the commission preempted their authority to regulate power sales at retail, while Enron Power Marketing Inc. (ENE), the nation's largest competitive power provider, maintained FERC failed to assert all the jurisdiction it could under the 66-year-old statute. FERC's open-access mandate, called Order No. 888, paved the way for competitive wholesale power markets. It also set the stage for a 1999 rulemaking carrying that mandate even further to require utilities to turn control of their power lines over to independent management by regional transmission organizations, or RTOs. But that sweeping effort to reshape the nation's interconnected power grid under control of a handful of RTOs would be hampered if the court agrees with the arguments of state utility regulators that FERC's rules supplanted authority Congress intended the states to have. If the court agrees with Enron, FERC would have a much freer hand in carrying out its RTO rulemaking. At issue is the arcane concept of "bundled" versus "unbundled" retail electricity sales. Congress in 1935 never envisioned that half the states today would have moved to open retail electricity service to competition among utilities and alternative providers. Until the onset of retail power competition, states regulated wholesale power transmission services "bundled" into the retail transaction as an intrastate transaction. FERC regulated interstate transmission services in support of wholesale sales. But FERC in Order No. 888 determined that once a state opens its power market to retail competition, then wholesale transmission services in support of the retail sales have been "unbundled," and regulation would shift from the states to the federal government. FERC's policy call usurped state control of retail power sales that Congress intended in 1935, Lawrence G. Malone, general counsel for the New York Public Utility Commission, told the court. FERC's assertion of authority over wholesale transmission services in support of unbundled retail sales should be struck down in order to preserve the "bright line" between retail and wholesale power sales Congress established in 1935, he said. "We now have two hands on the retail wheel and it doesn't work," Malone said, accusing FERC of "overreaching" and "rewriting the law." But Enron argued that FERC should have asserted authority over all wholesale transmission services, whether retail sales are bundled or unbundled. Allowing states to regulate wholesale transmission associated with retail sales violates the interstate commerce clause and disrupts sales in wholesale power markets, said Louis R. Cohen, the attorney representing Enron. "Utilities hog these (transmission) facilities for their own use and keep us off the road," Cohen said, employing a highway analogy. Deputy Solicitor General Edwin S. Kneedler argued on behalf of FERC for the court to uphold Order No. 888, which a lower court last year found was a permissible interpretation of FERC's authority under the law. In its June 2000 ruling, the U.S. Court of Appeals for the District of Columbia Circuit said FERC's open-access transmission mandate represented a reasonable assumption of authority to remedy "a persistent barrier to the development of a competitive wholesale power sale market." Nevertheless, Kneedler supported Enron's position by stating that FERC has jurisdiction over transmission in bundled retail rates. Any electricity transmitted on the power grid "is necessarily in interstate commerce," Kneedler said. The justices actively questioned the three attorneys about the language in the Federal Power Act addressing state and federal jurisdiction over electricity sales. The questioning seemed designed to determine if FERC erred, as Enron argued, in not asserting authority over all transmission services, or if the commission properly exercised discretion in asserting its authority, as the lower court ruled. But the questioning didn't provide a clear indication as to how the court will ultimately decide the case. Justice Antonin Scalia, renowned as being a strict constructionist of statutory language, appeared to argue both sides on the case, depending upon whether he was challenging arguments by Malone for New York or Cohen for Enron. Justice Sandra Day O'Connor's statements appeared to support Enron's position. "In 1935, we didn't have these interstate grids," O'Connor said. "Today, with a multi-state grid, it's hard to know how any transmission across the grid is anything but interstate commerce," she said. At another point, O'Connor asked: "What difference does it make if transmission is bundled or unbundled?" Lynne Church, president of the Electric Power Supply Association, which represents competitive power providers and supported Enron's case before the court, was optimistic that the court will rule that FERC's authority is expansive. "I think Enron won," Church said. "I'm cautiously optimistic we'll get a good result," said Cohen, Enron's attorney. But Charles Gray, executive director of the National Association of Regulatory Utility Commissioners, called the arguments and the probing by the justices "inconclusive." No matter which way the court rules, Congress will need to pass electricity legislation to address the divide between state and federal jurisdiction, said Gray, who represents state utility regulators. "I've learned the hard way not to make judgments based on oral arguments," said Elizabeth Moler, who was FERC's chairman in 1996. Moler, who now heads the Washington office of Exelon Corp. (EXC), called for the court to side with Enron's argument. "The world has changed since Order No. 888," Moler said, calling the commission's 1996 jurisdictional call a "fair reading" of the law at the time. "If I was there today, I'd go much further," she said. -By Bryan Lee, Dow Jones Newswires; 202 862-6647; bryan.lee@dowjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA: Enron's Indian unit again defaults on interest dues. 10/03/2001 Reuters English News Service (C) Reuters Limited 2001. BOMBAY, Oct 3 (Reuters) - Dabhol Power Co, the troubled Indian unit of U.S. energy giant Enron Corp , said on Wednesday it has defaulted on interest payments totalling $24 million, the company's second interest default in the past two weeks. "We have not made interest payments due on September 30 to Indian lenders," a Dabhol spokesman told Reuters. He said the lenders belonged to a consortium of Indian banks and financial institutions led by the country's largest term lender, Industrial Development Bank of India . Enron's spokesman told Reuters on September 21 that Dabhol defaulted on interest owed to international lenders, but had not specified the amount. Some of these payments were also to be made by September 30. Dabhol's power plant on the western coast of India, built at a cost of $2.9 billion, has been shut since June after its sole buyer, a loss-making local utility, stopped purchasing power and defaulted on payments. In addition to shutting down the 740 MW first phase of the plant, Dabhol ended work on the almost-completed second phase, which would have increased the capacity to 2,184 MW. The utility, the state-owned Maharashtra State Electricity Board, had contracted to buy all the plant's output, but later said it didn't need all the power, which it said was too expensive. Dabhol and the utility are now locked in a legal dispute. Dabhol has not been earning any revenue since June, and last month requested an unspecified amount from lenders to meet its monthly interest payments. The Dabhol spokesman said the lenders have still not responded to its request for assistance. Almost 70 percent of the power plant was funded by debt. Indian lenders, including banks and financial institutions, have lent about $1.4 billion and foreign lenders have contributed the rest. Of the 30 percent equity, Enron owns 65 percent, the state utility owns 15 percent, with General Electric and Bechtel owning 10 percent each. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. USA: Energy merchant stocks up after Calif. settlement. 10/03/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, Oct 3 (Reuters) - Shares of energy merchant firms rose sharply Wednesday in early trade after California's second largest utility reached a deal which will allow it to pay off the debt incurred to them for buying power. Late Tuesday, Southern California Edison, a unit of Edison International , said it reached a deal with state utility regulators that will enable it to develop a plan to pay off creditors. SCE amassed $3.9 billion in debt over the past year buying power, mostly from merchant energy companies. "I would imagine they are going up on the probability they are going to get paid," said Raymond Moore, an analyst with with Weatherly Securities. Gainers included Mirant Corp. , which was up 8.63 percent or $1.96 to $24.66; Enron Corp. , up 6.11 percent or $1.87 to $32.48; and Calpine Corp. , up 8.69 percent or $2.15 to $26.90. The fact that energy merchants are trading at historical lows relative to the Standard & Poor's 500 increase their attractiveness to investors, wrote Salomon Smith Barney analyst Raymond Niles in a research note. Niles recommends the entire group, which also includes Dynegy Inc. , Duke Energy Corp. , El Paso Corp. , Williams Cos. Inc. and Aquila Inc. . With the exception of Duke, the group was up between 1 and 4 percent. . (C) Reuters Limited 2001. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. BG India Hopes To Be Operator Of Enron Fields By Oct 31 10/03/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- British Gas India Pvt. Ltd., a wholly-owned subsidiary of the U.K.-based oil and natural gas company BG Group PLC (BRG), hopes to become the operator of the Pannna-Mukta oil and gas field and the Tapti gas field located offshore India's western coast by Oct. 31, BG India's Chief Executive Nigel Shaw said Wednesday. As reported, BG Group earlier Wednesday announced a conditional acquisition of U.S. energy company Enron Corp.'s (ENE) 30% stake in the Tapti and Panna-Mukta fields subject to getting the operatorship of the fields. The acquistion, worth $388 million, will be for Enron Oil and Gas India Ltd.'s entire offshore interests. "It's clear. If we don't get the operatorship, we will walk away. We are currently in talks with both ONGC and Reliance, the two other partners in Panna-Mukta and Tapti fields," Shaw told reporters at a press conference in New Delhi. India's state-owned Oil and Natural Gas Corp. (P.ONG) holds a 40% stake in Panna-Mukta and Tapti fields while Reliance Industries Ltd. (P.REL) owns the remaining 30%. Shaw said the commercially recoverable reserves from Panna-Mukta and Tapti fields have been estimated at 783 billion cubic feet of natural gas and 43 million barrels of crude oil. The natural gas from Panna-Mukta and Tapti fields will continue to be sold to the state-owned Gas Authority of India Ltd. (P.GAI) if BG becomes the operator. "The contract with Gas Authority of India will remain for the life of the fields. There won't be any change in the original sales contract," Shaw said. He added that BG India will try to double the current output from Panna-Mukta and Tapti fields by 2004. "That will be the best case scenario depending upon the overall domestic demand for oil and gas," Shaw said. Production from Panna-Mukta and Tapti fields totalled an average of 70 million standard cubic feet of natural gas a day and 8,200 barrels of crude a day in the year to March 31, Shaw added. -By Himendra Kumar, Dow Jones Newswires; 91-11-461-9426; himendra.kumar@dowjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron sells Indian oil and gas assets to British operator 10/03/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. SINGAPORE (AP) - Enron Oil and Gas India Ltd. said Wednesday that it has sold its Indian oil and gas assets to the United Kingdom's BG Group PLC for dlrs 388 million. Enron Oil and Gas India - a subsidiary of U.S. energy giant Enron Corp. - held a 30 percent stake in the Tapti gas field and Panna-Mukta oil and gas field. It also held a 62.64 percent interest in a major gas and oil exploration license. "The sale is subject to completion of arrangement with joint-venture partners," an Enron spokesman said. He said BG is making arrangements with Enron "to continue as operator." State-owned Oil & Natural Gas Corp. holds a 40 percent stake in the Panna-Mukta and Tapti fields, while the other 30 percent is owned by Reliance Industries Ltd. Energy analysts have said Enron Oil and Gas India is likely to have undersold its oil and gas assets. Earlier this year, the state reportedly bid dlrs 400 million for Enron's Indian oil and gas assets, only to have the bid rejected. Analysts said Enron was unlikely to settle for anything less than dlrs 600 million for its 30 percent stake in the venture. Analysts say the sale may herald Enron Corp.'s departure from the controversial Dabhol Power Project - India's largest private power plant - of which Enron Corp. has a 65 percent controlling stake. The dlrs 3 billion Dabhol project has been mired in financial disputes when its main customer, the Maharashtra State Electricity Board, failed to pay several of its bills. "This is unrelated to Dabhol," the spokesman said, however. "We had expressed an interest (in selling the oil and gas assets) before the Dabhol problems had begun." (dj/hp-ep) Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron Confirms India Oil, Gas Assets Sale To BG Grp 10/03/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) SINGAPORE -(Dow Jones)- Enron Oil and Gas India Ltd., a subsidiary of U.S. energy major Enron Corp. (ENE), confirmed Wednesday that it has sold its Indian oil and gas assets to the U.K.'s BG Group PLC (BRG) for US$388 million. EOGIL held a total 30% stake in the Tapti gas field and Panna-Mukta oil and gas field and a 62.64% interest in the CB-OS/1 exploration license. "The sale is subject to completion of arrangement with joint-venture partners," an EOGIL spokesman said. "BG is making arrangements with EOGIL to continue as operator." State-owned Oil & Natural Gas Corp. (P.ONG) holds a 40% stake in the Panna-Mukta and Tapti fields, while the other 30% is owned by Reliance Industries Ltd. (P.REL). Energy analysts have said EOGIL is likely to have undersold its oil and gas assets. Earlier this year, ONGC reportedly bid US$400 million for Enron's Indian oil and gas assets, only to have its bid rejected. Analysts said Enron was unlikely to settle for anything less than US$600 million for its 30% stake in the venture. The EOGIL spokesman declined to comment on the issue, saying the size of bids reported in the press were "speculative." The spokesman also declined to comment on reports that ONGC was positioning itself to be operator. Analysts have said EOGIL's offloading of its oil and gas assets in India may herald Enron Corp.'s departure from the controversial Dabhol Power Project - India's largest private power plant - of which Enron Corp. has a 65% controlling stake. The US$3 billion Dabhol project has been mired in financial disputes when its main customer, the Maharashtra State Electricity Board, failed to pay several of its bills. "This is unrelated to Dabhol," the spokesman said. "We had expressed an interest (in selling the oil and gas assets) before the Dabhol problems had begun." -By Sri Jegarajah, Dow Jones Newswires; 65-415-4066; sri.jegarajah@dowjones.com -0- 03/10/01 09-20G Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. BG Group to Buy Enron India Assets for $388 Million (Update4) 2001-10-03 12:30 (New York) BG Group to Buy Enron India Assets for $388 Million (Update4) (Adds BG closing share price in the fifth paragraph, Enron shares in the sixth, BG comment in the 15th.) London, Oct. 3 (Bloomberg) -- BG Group Plc, the onetime U.K. natural gas monopoly, agreed to buy Enron Corp.'s oil and natural gas fields in India for $388 million, its biggest purchase to date in a bid to fill the nation's growing energy shortage. India's gas production fell 11 percent to 1999 from 1997 as Oil & Natural Gas Corp., the state explorer, made no significant discoveries in 15 years. Insufficient supplies of gas have hurt growth in the country's fertilizer and chemicals industries and hampered upgrading of its power plants, still mostly coal-fed. Domestic bureaucracy has already thwarted efforts in India by Electricite de France and Cogetrix Energy Inc., which have pulled out, while Enron is locked in a price dispute with authorities. The government is the sole buyer of gas and power from producers and the sole seller to distributors. ``BG has gotten assets in an undersupplied market for a reasonable price,'' said Roger Richards, who helps manage $12 billion at Prudential Bache in London. ``True, there's general concern about the state involvement. But if you get your foot in the door, stay and work hard, you'll enjoy returns.'' BG shares fell 2.5p, or 1 percent, to 261p in London. BG shares over the past year have risen 1.1 percent, while the 11- member FT-SE All-Share Oil & Gas Index has fallen 9.6 percent. Enron shares rose as much as $2.84, or 9.3 percent, to $33.45 in New York. The government expects a gas deficit to triple in the next six years unless new wells are drilled or existing fields expand sales. BG, with 70 percent of its reserves as gas, is pushing to sell the fuel in markets from the U.S. to Asia. At Enron, the sale is part of a drive to end pumping oil and gas and focus on energy trading. Core Area ``The deal crystallizes India as a new core area of operations,'' said David McManus, a BG executive vice president, in an interview. ``India's gas demand is expected to grow by half over the next 10 years, while its gas production is falling. We aim to bridge this huge gap in some part.'' The operations include a 30 percent stake in the Tapti gas field and the Panna/Mukhta oil and gas field, as well as 63 percent of an untapped deposit on the west coast of India. The assets hold more than 170 million barrels of oil and gas, BG said. ``They're supplementing their existing gas business in India with new reserves,'' said Anthony Eccles, an analyst at Dresdner Kleinwort Wasserstein in London. ``That justifies the price they agreed to pay.'' BG controls Gujarat Gas Co., which supplies gas to customers in the Gujarat state, and owns half of Mahanagar Gas Ltd., which serves Mumbai. It also is building a liquefied natural gas plant in Gujarat. The Gas Authority of India is the monopoly buyer of gas from the fields and the seller of the fuel to BG's ventures. While the fields' existing output has been fully contracted to the Gas Authority, the company will negotiate a right to bypass it with additional production, McManus said. Commitment ``They must be committed to getting additional gas out of the ground'' to make the investment pay off, said Iain Reid, an analyst at UBS Warburg. ``This is the rationale for the deal.'' The acquisition is conditional on whether BG will be approved as the fields' operator, the company said. BG will invest ``hundreds of millions'' of dollars to double production in the Tapti field by 2004 if the other two partners in the venture, Reliance Industries Ltd. and ONGC Ltd., contribute as well, said Nigel Shaw, chief executive officer of BG India Pvt. ``BG is ready to play its part,'' he said. Lehman Brothers advised BG on the acquisition, McManus said. The agreement ``represents a significant step for Enron in selling assets not integrated into our wholesale or retail energy businesses,'' Enron president for exploration and production Jeff Sherrick said in a statement. The assets being sold to BG exclude Enron's Dabhol Power Co. project in India, a $3 billion venture entangled in a nine-month payment dispute with its state-run buyer. Enron has said it wants to sell its 65 percent share of Dabhol, which is owed $64 million by the Maharashtra State Electricity Board. Both Enron and BG said the sale of gas fields are unrelated to Dabhol's troubles. McManus declined to say whether BG would be interested in buying Dabhol. Before agreeing with BG, Enron rejected bids from its Indian venture partners, ONGS and Reliance, as well as from the nation's biggest refiner, Indian Oil Corp. Competition BG faces competition from other companies eager to set foot in the Indian gas market. Both Royal Dutch/Shell Group, Europe's largest oil company, and Indian state-owned energy companies are developing LNG terminals in Gujarat, whose coast faces Oman across the Arabian Sea. U.S. Supreme Court Questions Reach of Federal Energy Regulators 2001-10-03 16:37 (New York) U.S. Supreme Court Questions Reach of Federal Energy Regulators Washington, Oct. 3 (Bloomberg) -- The U.S. Supreme Court considered how far federal energy regulators can push electric utilities to make their power lines available to competitors. The nine justices heard oral arguments today on a landmark 1996 federal order requiring utilities to provide equal access to their power transmission networks. Regulators say giving competitors access to the power grid formerly run by utilities is key to opening the power business to competition. New York and other states say the Federal Energy Regulatory Commission order infringed on state authority and could prevent states from making sure power goes to their neediest customers during shortages. Power trader Enron Corp. takes the opposite view, saying the order didn't go far enough to ensure competition. ``We're trying to protect the rates and services for the 127 million customers in this country,'' Lawrence Malone, New York State Public Service Commission general counsel, told the court. The justices offered no clear indication of how they will rule, and several struggled to understand the technical issues of grid mechanics. ``I don't even know how this works, all this blocking, scheduling business,'' Justice Stephen G. Breyer said during a discussion of ways utilities can discriminate against competing power suppliers. The question is whether a 1935 law gives FERC authority to enact the rule, which is targeted at states that have opened their energy markets to competition, or about half the nation. The court is expected to rule by the end of June. Protecting Hospitals A ruling against the commission could halt the nation's advance toward opening to competition the electricity business, which had $226.5 billion in U.S. sales in 2000, experts said. ``If the court enshrines some limitations on FERC's authority, it will create confusion and it will, at least for a while, slow change in the industry,'' said James Hoecker, commission chairman from 1997 until early this year. Government lawyers dismissed concerns that the transmission rule might prevent states from ensuring that customers such as hospitals receive power if the system gets crowded. The rule says utilities can discriminate based on the need for power, while they can't favor transmission to their own customers over that of a competitor. ``They could protect hospitals, that sort of thing,'' said Edwin Kneedler, the Justice Department's deputy solicitor general. Enron Argument Enron lawyer Louis Cohen argued that the commission issued the transmission order in 1996 after finding ``endemic, undue discrimination'' by traditional utilities. Because not all utilities must open their lines, FERC still is exempting about 60 percent of traffic from the rule, he said. Houston-based Enron, the nation's largest energy trader, needs to be able to send power through lines in states that aren't open to competition so it can deliver power to customers in neighboring states that have open markets, Cohen said. ``This is a problem only FERC can solve,'' Cohen said. He asked the justices to tell the commission it has authority to order these utilities to provide equal line access. The commission can address claims of discrimination by utilities in states without open markets on a case-by-case basis, Kneedler said in response to questions from the court. Regional Organizations The commission has moved further since the 1996 order to ensure that power-sellers have equal access to transmission lines and that utilities aren't protecting the market for their own power plants. Recognizing that competitive power suppliers and marketers won't get into the business if they're not sure they can fairly sell power through utility lines, the commission has told utilities to join regional transmission organizations, or RTOs. The RTOs would independently control the grid even in states that haven't opened their energy markets to competition. Last week the commission told utilities to join an RTO by Dec. 15 or risk losing the authority to set their own rates based on market conditions, or having merger approvals delayed. Commission Chairman Pat Wood said recently he hopes Congress will step in if the high court rules against FERC. Enron to Sell Oil, Gas Fields in India to BG Group (Update1) 2001-10-03 16:13 (New York) Enron to Sell Oil, Gas Fields in India to BG Group (Update1) (Adds closing share price.) Houston, Oct. 3 (Bloomberg) -- Enron Corp., which has been fighting with India's Maharashtra state for nine months over power payments, agreed to sell oil and natural-gas fields in the South Asian country to the U.K.'s BG Group Plc for $388 million. Houston-based Enron, the biggest energy trader, has been selling assets, including infrastructure projects such as pipelines and power plants, to focus on trading and brokering energy and other commodities. Enron wants to sell its Dabhol Power project in India, a $3 billion venture it says is owed $64 million by the state's electricity board. The agreement ``represents a significant step for Enron in selling assets not integrated into our wholesale or retail energy businesses,'' Jeff Sherrick, Enron president for exploration and production said in a statement. Shares of Enron jumped $2.88, or 9.4 percent, to $33.49, paring this year's decline to 60 percent. BG fell 2.5p to 261p in London. BG, the U.K.'s former natural-gas monopoly, got a 30 percent stake in a gas field and an oil and gas field, as well as 63 percent of an untapped deposit on the west coast of India. They hold more than 170 million barrels of oil and gas, BG said. ``BG has gotten assets in an undersupplied market for a reasonable price,'' said Roger Richards, who helps manage $12 billion at Prudential Bache in London. ``True, there's general concern about the state involvement. But if you get your foot in the door, stay and work hard, you'll enjoy returns.'' Both Enron and BG said the sale is unrelated to Dabhol's troubles. McManus declined to say whether BG would be interested in buying Dabhol. Before agreeing with BG, Enron had rejected bids from its Indian venture partners, ONGS and Reliance Industries Ltd., as well as from the nation's biggest refiner, Indian Oil Corp. BG controls Gujarat Gas Co., which supplies gas to customers in the Gujarat state, and owns half of Mahanagar Gas Ltd., which serves Mumbai. It also is building a liquefied natural gas plant in Gujarat.
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