FYI, another perspective on market opening successes down here, accomplished 
by Jose and the commercial team under Brett Wiggs.
---------------------- Forwarded by James M Bannantine/ENRON_DEVELOPMENT on 
10/27/2000 01:51 PM ---------------------------


John Novak@ENRON
10/12/2000 06:54 AM
To: Brett R Wiggs/SA/Enron@Enron, James M 
Bannantine/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Federico 
Cerisoli/SA/Enron@Enron
cc: Randy Young/NA/Enron@Enron 

Subject: TBG-Enersil transaction

FYI, my "post-mortem" note to Jim Derrick and Rob Walls on this deal.
---------------------- Forwarded by John Novak/SA/Enron on 10/12/2000 09:51 
AM ---------------------------


John Novak
10/09/2000 08:58 PM
To: Stephanie Harris/Corp/Enron@ENRON, Rob Walls/NA/Enron@Enron
cc: Robert C Williams/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Randy 
Young/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 

Subject: TBG-Enersil transaction

Jim and Rob:

I thought you might be interested in seeing a translation of an article that 
came out in Gazeta Mercantil (the "WSJ" of Brazil) the day we signed the 
interruptible gas transportation contract with TBG.  This is the deal we 
discussed in which we got comfortable with in-country arbitration in Brazil 
based on the relatively small size of the deal, its consistency with our 
practice in similar trading transactions in other parts of the world, and its 
importance to the commercial team in being able to implement our gas trading 
strategy in the region.  As you can see below, despite the deal's small size, 
Enron's success in forcing open the market for interruptible gas 
transportation in Brazil made a big impression.  The commercial team tells me 
they now have their sights set on opening the firm service market.  We'll be 
hoping for similar success there.

Regards,
 John


Gazeta Mercantil, September 29, 2000.

ENRON BREAKS STATE GAS MONOPOLY
By Nicola Pamplona

The state monopoly on transportation of natural gas ended today with the 
execution of the first Fuel Transportation Agreement by a private entity in 
Brazil. Enersil, a subsidiary of the North American company Enron, will carry 
1 million cubic meters of gas per day through the Brasil-Bolivia Pipeline 
(Gasbol), operated by TBG, a company which has Petrobr?s as a majority 
shareholder. Negotiations with respect to the use of the pipeline have lasted 
for almost a year, punctuated by divergences on price and technical aspects 
of the services.

 The National Oil and Gas Agency (ANP) celebrates the execution of the 
agreement with a ceremony to take place today at the agency,s headquarters in 
Rio de Janeiro.  The agreement not only represents the opening of the market 
for transportation of natural gas, but also the end of the first arbitration 
proceeding submitted to the agency.  According to the involved parties, the 
proceeding was very complicated due to the non-existence of previous 
standards and to the fact that such market is only in its incipient stage. So 
much so that, after the ANP,s decision, it took over a month for the contract 
to be ready for execution. 

 &ANP has guaranteed competitiveness to the market and also acquired 
experience for future arbitration proceedings8 says Enron Vice-President to 
regulatory affairs, Mr. Robert Gross.  According to him, the proceeding lead 
to the definition of a model contract which may be used for future interested 
parties in transporting gas through Gasbol.  The main inclusion was the 
distance factor to the tariff calculation, an issue that has never made part 
of TBG,s plans under the argument that it would prevent the return of the US$ 
2 billions invested in the pipeline. 

&On top of that, there have been a number of general terms and conditions to 
the services which have been made more clear to the market", highlights 
Gross. Enron, however, has not succeed with respect to pricing the 
transportation tariff in the agreement which has been fixed to US$ 1,15 per 
million of BTUs (British thermal units).  At the end of last year, when the 
negotiations started, the company was asking for a tariff with a 25% discount 
rate, as it referred to an interruptible service, i.e, services that use 
capacity already paid but not taken by third parties.

Such services can be interrupted by the carrier, namely TBG, in the event the 
company that has contracted the capacity in first place decides to increase 
the volume  to be transported.  "It is a lower quality service, which is why 
we requested a lower price", explains the officer.  ANP, however, has 
understood that  since the volume transported through Gasbol is still very 
far from full capacity, the transport would not in fact be interrupted, 
incorporating thus the features of non-interruptible service.  "We 
understand, however that, as the market develops, the tariff for the 
interruptible services will tend to fall", he states.