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Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable X-From: Sara Shackleton X-To: Brent Hendry X-cc: X-bcc: X-Folder: \Sara_Shackleton_Dec2000_June2001_1\Notes Folders\Sent X-Origin: SHACKLETON-S X-FileName: sshackle.nsf ----- Forwarded by Sara Shackleton/HOU/ECT on 08/04/2000 02:00 PM ----- =09Rogelio L?pez Velarde <rlopezv@lvha.com.mx< =0908/04/2000 02:52 PM =09Please respond to Rogelio L?pez Velarde =09=09=20 =09=09 To: "Sara Shackleton" <Sara.Shackleton@enron.com<, "Shari Stack"=20 <sstack@ect.enron.com<, "Steve Van Hooser" <Steve.Van.Hooser@enron.com< =09=09 cc:=20 =09=09 Subject: CRE Resolution Encouraging the Use of Financially Settled C= ommodity=20 Derivatives Transactions For Natural Gas Prices . ? August 4, 2000. ? ? MEMORANDUM ? VIA E-MAIL ? To:????? Steven Van Hooser, Esq.???????????????? ??????????? Enron Capital = &=20 Trade Resources Shari Stack, Esq.????? ???????????=20 ??????????? Sara Shackleton, Esq. ? From:? Rogelio L?pez-Velarde ??????????? Sean McCoy=20 ???????????=20 Re:????? CRE Resolution Encouraging the Use of Financially Settled Commodit= y=20 Derivatives Transactions For Natural Gas=20 Prices? ??????????? ??????????? ??????????? ??????????? ??????????? ???????= ??? ? ? . ? ? The Energy Regulatory Commission (Comisi?n Reguladora de Energ?a) (=01&CRE= =018),=20 published last Wednesday in the Federal Register a resolution by means of= =20 which the CRE encourages the use of financially settled commodity derivativ= es=20 transactions (=01&Financial Instruments=018) to hedge the risk of the natur= al gas=20 price variations in Mexico (the =01&CRE Resolution=018). Over-the-counter F= inancial=20 Instruments transactions are being enticed by the CRE in light of the surge= =20 of natural gas prices[1]. It is expected that such derivatives market will = be=20 expanded to other type of energy commodities, such as electric power. ? Essentially, the CRE is encouraging the use of Financial Instruments by=20 giving a discount of the price index applicable for the month of August, 20= 00. ? The CRE Resolution provides in general terms that: ? 1. The Mexican Users[2] that are able to sign a Financial Instrument with= =20 Pemex-Gas y Petroqu?mica B?sica (=01&PGPB=018), or with any third party, be= fore=20 September 1, 2000, covering commodity prices fluctuations for the period of= =20 September 2000 thru February 2001, will benefit from a factor of at least= =20 0.75, which will be applied to the price of reference (i.e. $3.705 U.S.=20 Dollars per MMBtu), which results in a price of $2.7788 U.S. Dollars per=20 MMBtu, only during the month of August, 2000 (the =01&Discount Factor=018). ? ??????????? 2.Mexico=01,s Local Distribution Companies (=01&LDCs=018), that= have=20 contracted Financial Instruments for their clients, shall passthrough to th= e=20 Users the benefits resulting from the Discount Factor, only if such end use= rs=20 have previously agreed upon the rendering of such services. ? ??????????? 3. Needless to say, the price determination for the period of= =20 September 2000, thru February 2001, will be freely agreed upon between sell= er=20 of the Financial Instruments, and the User or the LDC, as the case may be. ? ???????????=20 ??????????????????????? ??????????????????????? ??????????????????????? ???= ??? ????? Very truly yours, ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? RLV/JCC/SMC H:\jcc10\VARIOS\Futuros Gas\MM Futuros Gas.doc ? ? [1]Domestic natural gas prices in Mexico are indexed to a liquid market in= =20 South Texas. Such index prices have increased in 43% during the period of= =20 May-June 2000, and in 89% from January-June 2000. [2]As defined in the Natural Gas Regulations, =01&User=018 shall mean eithe= r a=20 marketer or an end user. - header.htm
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