Miguel,
 
Contractually: On the positive side, Section 7.3.1.1 says that "EcoElectrica and Terminal Operator shall use reasonable efforts to integrate Terminal Operator's then committed LPG purchases and supply arrangements into EcoElectrica's overall LPG purchase and supply program". However, Eco's borrowing rights under Section 7.3.2.4 could give ProCaribe its biggest problem. Eco can drawdown ProCaribe's inventories to 3250 MT as long as there is a vessel loading or en route with at least 8,000 MT of LPG for EcoElectrica. If the cargo takes 14 days to arrive, ProCaribe's needs would be 6,300 MT during those 14 days. We need to have a provision in our deal with PDVSA that gives ProCaribe the option to receive 4,000 - 5,000 MT on short notice if Eco declares a Second Period Supply Disruption.
 
Mechanically: I cannot think of any reasons why ProCaribe would be unable to supply both EcoElectrica and all of Puerto Rico's LPG distributors. The difference between what we are hoping for under the PDVSA agreement and what ProCaribe was doing last year is the loading of an additional 175,000 gallons (335 MT) per day into trucks. That would be an additional 16 trucks per day. If EcoElectrica was at 100% output, they would be consuming 1900 MT per day and the rest of the island would be using 450 MT per day. As long as your heaters can warm-up a total of 2500 MT per day, you should be in the clear.
 
Inventory Requirements: EcoElectrica, today, is at risk if there is an extended disruption in its LNG supply. That risk will be there, regardless of whether or not ProCaribe does the PDVSA deal. Eco must keep a minimum supply of 15 days of fuel on site. Typically, an LNG ship arrives when there is 6 days of LNG in the tank. That means that Eco must have 9 days of LPG and/or diesel. As of August 31st, Eco had 5 days of LPG (9250 MT) and 4 days of diesel (2,800,000 gallons) on-site. If Eco were suddenly faced with a disruption in LNG supply, Eco would call PDVSA for LPG and both Coastal and Amerada Hess for diesel. Depending on availability, purchases would be made from those 3 suppliers to relieve the crisis. In the past, it has been much easier to arrange a short-notice diesel purchase than an LPG purchase. If necessary, a larger LPG purchase could be arranged from Africa or the North Sea. Expect an advance notice of at least 35 days. Again, Eco has this risk even under today's operations.
 
Logistics: I do not see the PDVSA deal as a negative factor from the logistics point of view. PDVSA asks for fewer days of advance notice and seems to be more flexible. If Eco were in a position of having to bring in large cargoes of LPG from across the Atlantic, the PDVSA deal may actually make the logistics easier if PDVSA would be flexible in their deliveries.
 
Paul
 
  

-----Original Message-----
From: Mahan, Mariella 
Sent: Friday, August 31, 2001 7:22 PM
To: Maltes, Miguel; Y'Barbo, Paul
Subject: Technical limitations with Eco LPG


Are there ANY technical limitations imposed by a potential sudden need to use LPG at Eco that would get in the way of performance under the proposed PDVSA agreement?  What are the conditions that Eco would have to face for Procaribe to experience storage or receiving constraints resulting from having to meet both Eco's and PDVSA's needs?
Thanks