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Enron Mail |
Folks,
I am forwarding this in order for the team to focus on the naphtha issue. Please note that: As Phase II comes on line, Blocks B and C will first have to run on naphtha for a period of 3-6 months This will hit us some time in 2001, hence is a more urgent issue than LNG, which is still a year away If there are delays in the commissioning of the Regas terminal, the period on naphtha could further prolong The naphtha market is more volatile than the crude market, and is not as deep, hence we need to take small positions early on to test the market DPC Board has already approved a Risk Management Policy that allows for hedging. We may need to look into options that are costless (selling put and buying call) to begin with, and test while only Block A is in place. Close coordination will be required on this with the Global Markets group, and I propose someone like Anshuman should actually be seconded onto the group A whole plan on tools to manage the fuel risk need to be worked in close coordination with the team on the ground These are just some of my thoughts. With 50% of the tariff being fuel price dependent, this is an area that requires close attention. Regards, Sandeep. ---------------------- Forwarded by Sandeep Kohli/ENRON_DEVELOPMENT on 01/03/2001 10:29 AM --------------------------- Tushar Dhruv@ENRON 01/02/2001 09:25 PM To: Neil McGregor/SIN/ECT@ECT, Sandeep Kohli/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Mukesh Tyagi/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, pavan.dave@enron.com, Anshuman Srivastav/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc: Marc De La Roche/HOU/ECT@ECT, Doug Leach/HOU/ECT@ECT Subject: Naphtha hedge for 2001 Current level of naphtha prices and the crude futures curve being backwardated provide an opportune time for DPC to enter into a hedge for all or a portion of its naphtha requirements for the year 2001. We (EFI) would like to explore this possibility before this situation passes. Please advise. Best regards, -- Tushar
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