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Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: 7bit X-From: Shari Stack X-To: Mark Taylor, Brent Hendry X-cc: X-bcc: X-Folder: \Mark_Taylor _Dec_2000\Notes Folders\Notes inbox X-Origin: Taylor-M X-FileName: mtaylor.nsf FYI (I don't know why I still keep getting these ......) ----- Forwarded by Shari Stack/HOU/ECT on 08/07/2000 09:45 AM ----- Rogelio L?pez Velarde <rlopezv@lvha.com.mx< 08/04/2000 02:52 PM Please respond to Rogelio L?pez Velarde To: Sara Shackleton/HOU/ECT@ECT, Shari Stack/HOU/ECT@ECT, Steve Van Hooser/HOU/ECT@ECT cc: Subject: CRE Resolution Encouraging the Use of Financially Settled Commodity Derivatives Transactions For Natural Gas Prices . August 4, 2000. MEMORANDUM VIA E-MAIL To: Steven Van Hooser, Esq. Enron Capital & Trade Resources Shari Stack, Esq. Sara Shackleton, Esq. From: Rogelio L?pez-Velarde Sean McCoy Re: CRE Resolution Encouraging the Use of Financially Settled Commodity Derivatives Transactions For Natural Gas Prices . The Energy Regulatory Commission (Comisi?n Reguladora de Energ?a) ("CRE"), published last Wednesday in the Federal Register a resolution by means of which the CRE encourages the use of financially settled commodity derivatives transactions ("Financial Instruments") to hedge the risk of the natural gas price variations in Mexico (the "CRE Resolution"). Over-the-counter Financial Instruments transactions are being enticed by the CRE in light of the surge of natural gas prices1. It is expected that such derivatives market will be expanded to other type of energy commodities, such as electric power. Essentially, the CRE is encouraging the use of Financial Instruments by giving a discount of the price index applicable for the month of August, 2000. The CRE Resolution provides in general terms that: 1. The Mexican Users2 that are able to sign a Financial Instrument with Pemex-Gas y Petroqu?mica B?sica ("PGPB"), or with any third party, before September 1, 2000, covering commodity prices fluctuations for the period of September 2000 thru February 2001, will benefit from a factor of at least 0.75, which will be applied to the price of reference (i.e. $3.705 U.S. Dollars per MMBtu), which results in a price of $2.7788 U.S. Dollars per MMBtu, only during the month of August, 2000 (the "Discount Factor"). 2. Mexico's Local Distribution Companies ("LDCs"), that have contracted Financial Instruments for their clients, shall passthrough to the Users the benefits resulting from the Discount Factor, only if such end users have previously agreed upon the rendering of such services. 3. Needless to say, the price determination for the period of September 2000, thru February 2001, will be freely agreed upon between seller of the Financial Instruments, and the User or the LDC, as the case may be. Very truly yours, RLV/JCC/SMC H:\jcc10\VARIOS\Futuros Gas\MM Futuros Gas.doc - att1.htm - header.htm
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