Cargo/Storage Claim - Styrene at Baytank

---------------------- Forwarded by Kristi I Louthan/HOU/ECT on 08/11/2000
03:12 PM ---------------------------

From: Lisa Walker 07/18/2000 03:02 PM

To: Kristi I Louthan/HOU/ECT@ECT
cc:
Subject: Cargo/Storage Claim - Styrene at Baytank

---------------------- Forwarded by Lisa Walker/HOU/ECT on 07/18/2000 03:00
PM ---------------------------

"Ted Rosen" <trosen@jwortham.com< on 07/17/2000 03:14:55 PM
To: <Lisa.Walker@enron.com<, <James.P.Studdert@enron.com<,
"<"<selliot@enron.com<
cc:
Subject: Cargo/Storage Claim - Styrene at Baytank

I spoke to the head adjuster Sharron West this morning regarding this claim.
She has discussed same with their chemist Bob Ash.

Sharron has reached some conclusions that are far different from the claim
which was submitted to her. From our conversation, the main differences seem
to be:

1. She is calculating the claim using the basis of valuation in the Philco
contract. That basis of valuation seems to coincide with your monthly
storage declarations. Your calculations appear to be based more on the spot
price of the product. I believe the difference is around $.10 per lb which is
very significant when so many lbs are involved.

2. There appears to be a discrepancy in the number of pounds involved in the
claim. Baytank's records seem to indicate around 2,000,000 lbs. whereas your
claim references approx. 6,000,000 lbs. Both Sharron and Bob think that a
maximum of 4,000,000 lbs. should be considered.

3. Ancillary charges. The Enron claim appears to include some Baytank
charges that are not recoverable, such as tank cleaning, etc. As a cargo
policy normally insures against direct physical loss or damage to the product
itself, there are some charges that are not recoverable under a cargo
policy. There also appear to be stock throughput charges in your claim
through January of 2000, although the product would have been gone by the end
of November.

At any rate, based on the valuation of product in the Philco contract (and
the storage declarations that have been submitted for premium purposes), and
there being a total of 4,000,000 pounds of product, Sharron has calculateda
claim in the vicinity of $150,000. This is obviously a far cry from the
claim submitted of around $900,000+. Of course, if you consider a
difference of $.10 /lb. and apply it to 4,000,000 lbs, you already have a
difference of $400,000. If you then factor in the difference between
6,000,000 lbs claimed vs. 4,000,000 lbs. recognized by the adjusters, you
have another significant sum.

I would be interested in your comments at this point. If you feel that the
adjuster has everything wrong, I might suggest that we arrange a meeting and
go through the claim point by point. This is sometimes the quickedt way to
resolve major differences.

Please let me know.

Thanks and regards,

Ted Rosen