|
|
Enron Mail |
Matt advised me today that John Nowlan and John Chismar have decided that
they want to try to settle this case before the joint survey takes place and that they will likely appoint Paul Henking, their new head chartering person in Singapore (formerly of Enron's Houston office) to contact Mitsubishi about this. A. A number of new developments may have influenced this decision (although I would rely on Matt's knowledge about this, as he actually spoke with Nowlan and Chismar): 1. SGS's Singapore lab continues to struggle with trying to implement the joint survey test program that Steve Jones, our chemist, wants to use. In order to determine if SGS is up to it, Jones feels that it will be necessary to send Alan Goddard (another one of our experts) to SGS's Singapore lab and assist in the trials, at an additional cost of about $7,250. Goodard can't leave for another ten days or so, causing further delay. Goodard may or may not conclude at the end of his stay that SGS is up to it. ECT's other options are clearly second choices in terms of cost and strategy. 2. ECT's damages now appear to be harder to prove. As to the Elang Crude cargo at issue, ECT was recently able to calculate that it actually reportedly made over $500,000 more than if ECT had sold the cargo to FGH. ECT's big loss was having to substitute a naptha cargo for the Elang Crude that FGH had rejected. That loss is reportedly in the range of about $1,300,000. However, this seems to raise a number of issues: (a) Is this a recoverable consequential damage? I haven't yet looked at the charter to see if there is any contractual limitation on damages. (b) can we prove that we in fact had to substitute naptha for condensate (our contract with FGH reportedly requires us to sell the naptha at a big discount)? Our traders would reportedly have a tough time stating under oath that there was no condensate available; our key problem was lack of confidence what the D3605 test would show even with condensate that we thought was on spec. 3. ECT has determined that it may need to recharter vessels from Mitsubishi in the future for strategic routes. There may be other reasons for Nowland and Chismar's decision, and I invite Matt to report on anything else of which he is aware. B. Settlement Strategy Matt advises that Nowlan and Chismar want to offer to settle for a net payment of $250,000 by Mitsubishi to us (Matt, I would appreciate your helping me out with the numbers on how that figure was calculated). I have told Matt in the past that I believe a drop hands agreement between ECT and Mitsubishi would be a very good result, and I think he and I agree. David Best also agreed with a drop hands agreement when I mentioned it to him in the past (although he will not be aware until receipt of this e-mail of the recent revelation regarding the damages figures). I will keep you advised. Britt
|