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Enron Mail |
Thanks V V---I am forwarding this to Mike, Eric and Jonathan for their
information V V Rao@ECT 05/28/2001 06:21 AM To: Clay Harris/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rick Bergsieker/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc: Subject: Meeting with NWS at LNG 13 - Followup Today, I spoke to Greg Veitch (Shell's representative to NWS) about an upcoming meeting. During the call, he asked me about Mike McConnell's comment at the LNG 13 meeting that we were concerned about some of NWS' consortium partners and how they viewed a potential sale of LNG to Enron. He was concerned that Enron was inferring that Shell or BP somehow interfered with the process that NWS had instituted in evaluting the bids they received for the wedge cargoes. I told him that I didn't know what exactly Mike meant but that it was probably more in the context of Shell and BP being global LNG competitors of Enron and not to the specific process around the wedge deal. I also told him that I was quite comfortable with the process that NWS used in evaluting the wedge cargo proposals and that I didn't see any issues (i.e. we assume that Shell put in the best proposal for NWS both on price and flexibility and that the final evaluation was made by all partners except Shell and BP). I've gotten to know Greg quite well over the past year and he told me off the record that Shell's bid was quite a bit better in terms of price (he implied about 15-20 cents higher) and flexibility (basically no call back premiums). This is something I have also been able to confirm indepedently with our contacts at Mitsubishi and BHP. Once we lost MetGas as a potential discharge point for the wedge cargoes, Shell had an advantage over us because of access to Cove Point's higher basis differential and access to a larger shipping fleet. This underscores the point that Enron will find it difficult to compete on Price and Flexibility on merchant deals in the near term. Our ability to develop proprietary global market outlets supported up by a critical mass in shipping will be the key to developing a viable LNG business. vvr
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