Re: First Gas

6.1 says when FG becomes aware of changes it "shall" (so its mandatory)
inform us "as soon as practicable" after it becomes aware. But then it says
these are "good faith estimates" and are not to give rise to any liability on
FG. These two provisions seem inconsistent to me. I think we should demand
that FG pay. Our odds of winning on the point in arbitration are 50/50
(would hinge on what was parties' intent as reflected in negotiations).

John L Nowlan@ECT
11/01/2000 08:34 AM
To: Robert C Williams/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Mike
McConnell/HOU/ECT@ECT
cc: Mike Brown

Subject: Re: First Gas

Comments from John in singapore. raises this issue that they give us their
requirements and we MUSTmeet their requirements. On the other hand if their
requirements change we are responsible for demurrage , reselling or any other
actions which must be taken . Bob is this your understanding, or once they
give us their requirements they are responsible for costs incurred for any
changes due to a change in their requirements?
---------------------- Forwarded by John L Nowlan/HOU/ECT on 11/01/2000 08:30
AM ---------------------------

John Chismar
10/31/2000 08:38 PM
To: John L Nowlan/HOU/ECT@ECT
cc:
Subject: Re: First Gas

This is good news to me. Hope that Siemen's does come thru and then we can
force the issue with FGH and show that they are being unreasonable in their
demand on the specs we currently have.

As to next delivery, the cargo just left ytdy and will arrive Batangas on
the 7th. Sample of the shore tanks prior to loading was flown to Sing and
tested using Ashing. Metals and everything was OK. We were rerunning last
night using direct injection. Haven't seen those results yet.

As to storage issue. Yes, we have seen some correspondence from FGH saying
that the cargo would not fit. Expect that it should just become an issue over
demurrage liability - ours vs FGH . However, you never know with this John
Russel guy - if the mkt were to fall away he could try to say he wants a
different price on the balance of the cargo. Expect it to price out at close
to $35/bbl. We loaded minimum volume so a bit of a hit on frt. As of ytdy
it looked like the ullage was going to be short by 8 to 15kbbls. If so we
will be liable for demurrage. Another point of interest on this one is in
all their forecasts they show usage everyday during the week. However, ytdy
we hear from the Plant that they expect minimum usage (possibly zero) over
the next two days due to religious holidays - All Saints. If so then the we
will probably go to about 30kbbls short of ullage and demmurage will increase
from a possible 4 days to 8 days @ $23k/day. Could this be construed as
possible false info?

John

John L Nowlan
31/10/2000 21:20
To: John Chismar/SIN/ECT@ECT
cc:

Subject: First Gas

John, think you should be aware of this. Any comments?
---------------------- Forwarded by John L Nowlan/HOU/ECT on 10/31/2000 07:19
AM ---------------------------

Mike McConnell
10/30/2000 11:28 PM
To: Jeffrey A Shankman/HOU/ECT@ECT, John L Nowlan/HOU/ECT@ECT
cc:
Subject: First Gas

FYI.
m
---------------------- Forwarded by Mike McConnell/HOU/ECT on 10/30/2000
11:32 PM ---------------------------

Robert C Williams@ENRON_DEVELOPMENT
10/30/2000 01:40 PM
To: Mike McConnell/HOU/ECT@ECT
cc:
Subject: First Gas

Privileged and Confidential Attorney-Client Communication

Mike Brown, David Terlip, Janice Moore and I met today. Plan is for Mike to
get an answer from Siemens (probably this week or next) on spec. If Siemens
amenable to relax First Gas' spec to plant, request First Gas to relax it's
spec to us. Mike will report to you as soon as he has heard from Siemens.
If either Siemens or First Gas recalcitrant, move to litigation strategy.
This would mean at next cargo delivery (due mid-November): (1) if cargo
"off spec" demand separate test using "ashing" technique (more likely to
pass) and if it passes using "ashing" declare on spec and arbitrate dispute
over acceptance of "ashing" as industry standard; (2) if cargo rejected
(either because First Gas refuses to accept "ashing" or because off spec even
with "ashing") resale cargo and force First Gas to locate alternative
supplies; dispute First Gas invoice for cost of cover. Mike mentioned a
possible dispute over storage which could also arise with the next delivery.
This could bring us into a dispute with First Gas even if the cargo is on
spec.

Our plan is to get back to you in any event next week when you return with a
status report.

Please let me know if you have any questions.

Cheers. And congratulations on the Sooners' win.