Transport Fuel P/L

---------------------- Forwarded by Zimin Lu/HOU/ECT on 08/30/2000 11:06 AM
---------------------------

Zimin Lu
08/30/2000 11:07 AM
To: Colleen Sullivan/HOU/ECT@ECT
cc: Andrew H Lewis/HOU/ECT@ECT, Greg Couch/HOU/ECT@ECT
Subject: Transport Fuel P/L

Colleen,

After looking into the transport deals for NBPL (long term deal 1,2, 25,26),
I think I figured it out why
we see positive fuel P/L for deal 1,25,and 26 and negative fuel P/L for deal
2.

The following plot shows NYMEX curve as of 8/23/00:

For short term, NYMEX moved up compared to that of 8/22/00, while the long
term NYMEX moved down.

Here are the tenor for each deal:

Deal 1: start 01-Sep-00, end 22-May-09, the above graph suggested a
positve fuel P/L
Deal 2: start 01-sep-00, end 28-feb-02, the above graph suggested a
small negative P/L
Deal 25: start 01-may-02, end 28-feb-09, the above graph suggested a
positve fuel P/L
Deal 26: start 01-mar-09, end 31-may-09, the above graph suggested a
positve fuel P/L

The transport book seems to be correct on these fuel P/Ls.

Another point worth to mention is that the fuel cost is related to index
price (NYMEX+basis+index premium), to correctly interpret fuel P/L,
we need to look at the index curve change.

Let me know your thoughts on this.

Zimin