print
---------------------- Forwarded by Jeffrey A Shankman/HOU/ECT on 10/24/2000 
01:47 PM ---------------------------


Ross Koller
10/24/2000 11:46 AM
To: Jeffrey A Shankman/HOU/ECT@ECT
cc:  
Subject: gdansk refinery

fyi
---------------------- Forwarded by Ross Koller/LON/ECT on 24/10/2000 17:47 
---------------------------


Ross Koller
24/10/2000 10:29
To: Chris Mahoney/LON/ECT@ECT, Tony O'Brien/LON/ECT@ECT, Henkka 
Talvitie/LON/ECT@ECT, John Spencer/EU/Enron@Enron, Chris Glaas/LON/ECT@ECT, 
Niamh Clarke/LON/ECT@ECT, Scott Moncrieff/LON/ECT@ECT, Graham 
Cane/LON/ECT@ECT, John L Nowlan/HOU/ECT@ECT
cc:  

Subject: gdansk refinery

was asked into a meeting yesterday regarding the eventual purchase of 15-25% 
of the gdansk refinery.
enron has been approached by the polish govt (and the main russian crude 
supplier JNS) to participate in this privatisation.  i have copies of the 
brief for all of you.  further background is that JNS (a smaller russian 
crude supplier) has 85% of the contracts into that refinery (and the Plock 
refinery), and controls the Druzbha pipeline.  they want us to b involved as 
the headline western company.  (the Plock ref people and the JNS people wud 
like to buy the thing but for political reasons cannot until about 5 years 
down the road.)   Therefore, we can structure our deal w/ a put option for a 
later date.
We can view this as a long crack position, with an eventual put in place 
if/when we don't like the deal.
There are other optionality benefits that need to be assessed.  (so far i 
have told them to count the trading angle as 0 profit, so that they don't 
load us up w/ a lot of bs).  We can use the facilities as a terminal.  We can 
just use the infrastructure to re-sell the crude that they get on the 
pipeline.  We can sell the ulsd they make and replace w/ regular diesel.  
Given their power needs they have their own plant but are still short 300 MW, 
so the power people like it.  etc etc.
I have already told them that we did not really want to waste our time 
thinking about this project if the specter of a reuters headline blaring that 
'Enron Buys Polish Refinery' is going to kill the deal from Skilling's 
perspective.  they assure me that they have run it by sheriff and he likes 
the power aspect and the higher profile this wud give us in poland so he is 
favorable towards it, for the moment.  rac will be looking for 20-25% roi, 
which may kill the whole thing anyway.  they have already gotten toxic waste 
indemnity from the govt.

we need to ask questions/poke holes and get as much information as possible 
out of the govt and JNS, because either they will do the deal and throw this 
in our laps, or they might pass on something that wud actually turn out to be 
interesting.  
if everybody wud please read the brief and come up w/ issues to be clarified 
by wednesday next week, i would appreciate it. thx