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Enron Mail |
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---------------------- Forwarded by Jeffrey A Shankman/HOU/ECT on 12/27/2000 11:30 AM --------------------------- John L Nowlan 12/26/2000 10:06 AM To: Mike McConnell/HOU/ECT@ECT, Jeffrey A Shankman/HOU/ECT@ECT cc: Subject: gmp update and mtm exposure WE can discuss thurs with Mahoney where we are with these guys. ---------------------- Forwarded by John L Nowlan/HOU/ECT on 12/26/2000 10:05 AM --------------------------- Chris Mahoney 12/23/2000 05:54 AM To: Adam Nye/LON/ECT@ECT, Ross Koller/LON/ECT, John L Nowlan/HOU/ECT@ECT, David Hardy/LON/ECT@ECT, Steve W Young/LON/ECT@ECT, Robert Quick/LON/ECT@ECT, Tim Davies/LON/ECT@ECT, Graham Cane/LON/ECT@ECT cc: Subject: gmp update and mtm exposure in addition to our unsecured debt and strategic stock risk we also have a mtm risk on the cargoes that we have been importing under ectric. the arrangement was that we would import the cargoes (enron selling to ectric) and allow gmp to buy small volumes from us on an intank transfer basis. this was working ok for the month of november but with their volumes falling dramatically in dec they have not been buying any material and in addition have given us a program for 3 dec cargoes that at this stage they really didn't need. that is not 100% correct because they did need these volumes to meet their strategic stock requirements but clearly they are not going to be selling these volumes for sometime if they cannot get some cash to prepay for the oil. this mtm risk is conservatively around 9 mil dollars. this mtm risk reflects the fall off in flat price of oil over the month of december. this is somewhat of a hedge against gmp acknowledgement of the hedges that ectric was holding against the strategic stocks but nonetheless we are in a situation where we should import no further oil. robert quick and myself are going to spain in the first week of january to clarify the veba oil pledges and potential fraud. we are getting several vsl on subs for lifting oil out of spain in 1h january to show that unless gmp is seen putting money back into the business we will be removing our support from them. given the significant risks still present we can only hope that such actions on our behalf in ely jan. will initiate a response from gmp management that hasn't happened previously. i've enclosed the spreadsheet that reflects the appx mtm risk on the oil ectric is holding in spain for the account of gmp. I don't believe we could have done this any other way or they would have folded already. any hedging we did on their behalf would have added further to our risk (we already had the short futures vs the strategic stocks) in an upmarket but cleary we need to consider this risk when we evaluate how quickly we are prepared to take the actions that will close down gmp. .
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