BUSINESS HIGHLIGHTS

EBS Joins EWS
Effective, July 12, EBS has become a business unit within Enron Wholesale Services.  All EBS commercial support functions will be integrated into those units within EWS, which enables us to better manage the resources and costs of the support functions.

All EBS commercial functions have been consolidated into the following units:
Europe - headed by Matthew Scrimshaw
Asia - headed by Anthony Duenner
Americas - headed by Rich DiMichele

Additionally, the North American EBS origination teams have been consolidated into one group, led by Stewart Seeligson.  North American trading and risk management will continue to report to Paul Racicot.  Paul will also oversee the global portfolio from a risk management perspective.

Global Network Operations will continue to report to the EBS Office of the Chairman.

All EBS asset positions will continue to be reviewed and repositioned to most effectively meet the future needs of EBS and the Portland office will be closed by October 1.


Global Strategic Sourcing
Effective July 1, a number of measures and recommendations have been implemented to reduce expenditures associated with, among other things, travel and entertainment, and professional services.  Global Strategic Sourcing ("GSS") will undertake this very important initiative and they would like to enlist your support in the implementation of these new procedures.

This message will focus on Travel and entertainment.  Next week's message will focus on professional services.

Travel and Entertainment - Enron has a tremendous opportunity to save on travel and entertainment expenditures by making some relatively painless adjustments.

?	Air Travel - Air transportation is the single largest component in the travel mix.  In recognition of this fact, a number of significant discounts have been negotiated with all of the major carriers.  There are two separate channels available to employees to access the Enron-negotiated fares.  The first is Travel Agency in the Park ("TAP"), or the GSS-approved preferred travel agency for your location, and the second is the new Enron-managed online travel booking service, ClickTrip, located at <http://clicktrip.enron.com/enron>.

Over the coming weeks, GSS will be promoting training and usage of ClickTrip, as the primary method of booking domestic U.S. travel for a number of reasons.  First, excluding proprietary carriers like Southwest Airlines, ClickTrip provides employees easy access to all travel and pricing options for their destination, including the Enron-negotiated fares.  Second, industry data shows that employees will generally make the most cost-effective travel decision when presented with the relevant facts.  Conservatively speaking, we estimate that a 20% savings in airfare is attainable through the use of this tool alone.  Third, it is relatively painless to use.  Fourth, ClickTrip is accessible 24X7 from any internet-enabled personal computer and after-hours telephone support is available. If you have travel-related questions, please contact Tracy Ramsey at ext. 6-8311.
 
One final air travel reminder worth promoting: For employees who fly in the United States, use of non-refundable coach tickets generally runs 65 percent less than refundable tickets and can usually be changed by simply paying a $100 fee.

?	Lodging and Car Rental - GSS has also negotiated preferred rates at a number of hotel chains in many cities worldwide to accommodate your business unit's individual hotel policy. Additionally, preferred car rental rates including insurance coverage with National (U.S. and Canada) and Alamo (U.S.) have been negotiated for your use.  More detailed information is available regarding both programs through our travel site located at <http://travel.enron.com>.

Enron Industrial Markets - Forest Products
EIM began trading in the physical markets for Forest Products (newsprint, pulp, recycled paper, and lumber) in August, 2000 and Steel in January, 2001.  Since then EIM has handled over 140,000 tons of recycled paper, 180,000 tons of newsprint, 150,000 tons of pulp, 160 million board feet of lumber, and 210,000 tons of steel.  Currently on a weekly basis, EIM is moving approximately 20,000 tons of forest products (newsprint, pulp and recycled paper), 3 million board feet of lumber, and 10,000 tons of steel products throughout the world.  

Due to much larger volumes of forward trading, EIM is expanding its physical product delivery capabilities around the world to physically handle 5 million tons per year.  The EIM Logistics Group coordinates the activities of customer service, supply and demand matching, scheduling of owned assets, and physical transport and warehousing.  These activities are primarily coordinated through the Houston office, with additional resources in London and Singapore.

Additionally, EIM owns paper mills in Quebec City and New Jersey which have a combined production capacity of 750,000 tons of newsprint per month, and a cold rolling steel mill in Arkansas with capacity of 400,000 tons per year.  Each of these facilities includes Logistics resources that are coordinated through the EIM Logistics Group.

Enron Global Markets - LNG
Enron Global LNG has enhanced its Atlantic Basin LNG supply portfolio with volumes from Nigeria LNG Limited (NLNG).  Enron Global LNG recently signed a Memorandum of Understanding with NLNG for delivery of 1 BCM/ year (billion cubic meters) or (97,000 Mcf/day) from the NLNG Plus Project.  This is a two train expansion of NLNG's existing Bonny Island LNG production facility.  The expansion is scheduled for completion in 2005.  This deal represents a major step in the establishment of Enron's global LNG network.

EGM - Finance & Structuring
On June 29, 2001, Enron Global Markets - LNG Group successfully completed the divestiture of its 100% equity interest in Progasco, to CHDR, Inc. via an all cash transaction.  Progasco sells and distributes LPG to commercial and industrial clients, and independent resellers, through a fleet of tanker trucks, bobtail trucks and 13 filling plants throughout Puerto Rico.  CHDR, Inc. is the record and beneficial owner of all of the issued and outstanding shares of stock of Tropigas de Puerto Rico, Inc. ("Tropigas").  Upon completion of this transaction, Tropigas, hitherto the 3rd largest market player will operate the newly consolidated entity and control a 35% market share, becoming the 2nd largest Puerto Rican LPG marketer. 

The sale proceeds of approximately $14.3 million, have been split between Protane (a wholly owned Enron Corp. Delaware subsidiary) and San Juan Gas (SJG), and were used to pay down inter-company debt owed to SJG and Pro Caribe.  The net (pre-tax) gain recorded on the transaction was $3.9 million. 

The profitable sale of this strategic asset allows EGM to exit the retail propane business it inherited through the 1985 merger of three companies: Protane, Petrolane and Imperial Gas, and will enable Enron to better deploy the cash received and more efficiently manage its Puerto Rican human resources. 

EGM - Weather
The Weather group just completed a deal with People's Energy to protect them against lower gas prices during a warmer than normal winter.  This innovative winter protection was structured to manage People's exposure to both the volume and price of natural gas.  Greg Penman and Bob Beyer, from the Chicago office, were the lead dealmakers for this transaction.  Simlar deals with other counterparties are expected to come over the winter season.
Also, the Weather Group has started exploring new opportunities with EES.  To support this effort, Elsa Piekieniak has joined the group.  Elsa is looking for several people to help her with this initiative.  If you're interested in a position, please contact Elsa.

WELCOME
New Hires
EGM  - Chevondra Auzenne, Anuj Gupta, Lois Stone, Rich Friedman
EIM   - Brian Gaughan, Jennifer Basinski
ENA  - Juli Salvagio, Pepi Beltran, Oliver Jones

Transfers (to or within)
ENA  - Jinsung Myung, Russell Diamond, Chris Helfrich, Jerry Farmer, Kenton Erwin
EGM - Meredith Campbell, Martin Gleason, Maritta Mullet, Dorothy Burrell, Luis Castillo, James Posway, Ted Behrens, Michael Mitcham

EnronOnline Statistics
Below are the latest figures for EnronOnline as of July 17, 2001:

	Total Life to Date Transactions  > 1,214,000
	Life to Date Notional Value of Transactions  > $711 billion


NEWS FROM THE GLOBAL FLASH

UPDATE ON ENRON EUROPE'S CONTRIBUTION TO 2ND QUARTER RESULTS
Congratulations to all staff for your contribution to another fantastic quarter!  

By now we hope you will have had an opportunity to read about Enron's Q2 earnings, which were released to the investment community in Houston on Thursday, 12th July.  Overall the business has seen continued strong growth with revenues increasing to over $100 million in the first half of the year up from $30 million for the same period last year.  Earnings per share this quarter also exceeded analyst expectations and came in at $0.45 for the quarter up from $0.34 for the same period last year.

Equally important, however, is the vital role Enron Europe played this quarter in contributing to the company's overall results.   We are seeing some terrific trends here in Europe - notably, on the wholesale side, the Continental, UK and Nordic power and gas teams keep going from strength to strength as we see exceptional growth in volumes and transactions continue this quarter.  Total physical and financial settled volumes for gas and power in Europe have seen an increase of 172% in the first six months of the year compared to the first six months in 2000 and the total number of transactions per day has risen to 604 from 272 last year.  Specifically, UK power volumes are up 204% to 147 TWh in the first six months of 2001 from 48 TWh in the same period last year.  Continental gas volumes have grown from 351 Bbtue/day in 2000 to 1,390 Bbtue/day in 2001 - a 296% increase - and Continental power volumes have seen growth of 360% with volumes rising from 18 TWh in the first six months of 2000 to 83 TWh for the same period this year.  The growth in volumes is not simply limited to the UK and Continental markets, however, as Nordic power volumes have increased by 153% from 29 TWh to 73 TWh in the first half of 2001.

The success stories are not just limited to gas and power trading, however, and abound throughout the business:

Enron Energy Services
The retail business has experienced a real boost this quarter with the closing of EES' first, major "marquis" brand energy outsourcing transaction with supermarket giant, J. Sainsbury plc.  Of equal importance, Enron Direct's business continues to grow with total customers now in excess of 160,000.  The success of Enron Direct's business model has translated into the development of new business on the Continent in the Netherlands and Spain and, more recently in North America, with the 2nd quarter opening of Enron Direct Canada.  

Enron Credit
A year after Enron Credit's launch, the total life to date notional value of transactions has surpassed $11.8 billion and in the 2nd quarter alone, Enron Credit generated $10.4 million in EBIT.  Further, more than 20,000 readers per week view the Enron Cost of Credit (ECC) through independent publications.   

Enron Australia
With 2nd quarter power volumes up 177% from the first three months this year, Enron Australia is gearing up for a strong growth year.  With the development of a physical power position key to expanding Enron's power trading in Australia, work began this quarter to identify and begin the initial pursuit of asset development projects.  Other businesses undergoing significant expansion this quarter were coal, renewable energy credits and weather derivatives. 

Spain:  Arcos
The Arcos asset development project in Spain continues to make great progress with third party access to gas supplies for the power project being successfully negotiated this quarter, plus the project achieved another milestone in the permit/government approvals arena with the granting of its water concession in Q2.

UK:  ETOL
ETOL, a long-standing contributor to Enron Europe's earnings, generated yet another profitable transaction this quarter with the signing of a series of deals with chemical giant Du Pont for supplies at Wilton International. The transaction further strengthens Enron's relationship with Du Pont, one of ETOL's largest customers, and will extend the current steam and power supply contract through 2010.  

Enron Metals
A year after entering the metals business, Enron Metals has seen increased volumes of 130% in its merchant and financial trading operations this quarter with volumes up to over 3.5 million tonnes as compared to just over 1.5 million tonnes in the 2nd quarter last year.  Not only has the team seen positive growth in volumes this quarter, but they have increased their share of trading on the LME by 50% and are making significant progress with Project Salem - a major IT and systems improvement project that will streamline deal capture and risk management for metals transactions.  Finally, the metals team achieved a true home run this quarter when they closed a major ten-year origination transaction that, through the addition of smelting assets, will enable the metals team to improve its trading position.  The transaction proved to be the perfect opportunity to leverage all of Enron's trading and origination capabilities and involved input from a number of groups across Enron.   

Looking to the future, we have every expectation that the strong growth we've witnessed in Europe for the first half of the year will continue through end 2001.  So, in the words of Solomon Smith Barney analyst, Ray Niles, when talking about Enron's European wholesale operations results this quarter, "Europe is kicking butt and it's about a quarter of [Enron's] activity, nearly double what it was last year.  And, that is a new market that is the size of the US."  

LEGAL STUFF
The information contained in this newsletter is confidential and proprietary to Enron Corp. and its subsidiaries.  It is intended for internal use only and should not be disclosed.


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