PRIVILEGED AND CONFIDENTIAL: ATTORNEY-CLIENT COMMUNICATION, ATTORNEY WORK 
PRODUCT

Matt,

1. I'm on the same page as Janice with regard to testing, although I'd like 
to spin out my thoughts a bit.  In my view, at the end of the day, it is 
virtually inevitable that both D3605 with ashing and D3605 without ashing are 
going to be used on the critical loadport sample (and, therefore, for the 
rest of the samples as well ) at the joint analysis.  

 Mitsubishi's strategy at the joint analysis will be to get the remaining 
loadport sample to come up off-spec on retesting, for obvious reasons.  

 Prior to the joint analysis, Mitsubishi will be aware that (a) D3605 without 
ashing is in the FGH contract and that (b) ECT believes D3605 without ashing 
may have a reproducibility issue with this type of product.  Given this, if 
ECT proposes to use only D3605 with ashing (our safest bet) on the loadport 
sample at the joint analysis, Mitsubishi will smell a rat and insist on D3605 
without ashing.   The same would apply, I think, if even if ECT proposed to 
use only D3605 without ashing as its sole test at the joint analysis.  The 
more different kinds of tests Mitsubishi can forcefully argue should be run, 
the more likely it is that one of them will show the loadport sample is 
off-spec.  Mitsubishi's goal will be supported by the general practice of the 
chemists involved, who will want to rerun every test previously run in order 
to get to the bottom of this.  

 My sense is that it would be very difficult under the circumstances for ECT 
to credibly take the position that only one test or the other (D3605 with 
ashing or D3605 without ashing) should be run; in fact, in light of what I 
believe is virtually inevitable (Mitsubishi insisting on whatever test we 
don't propose), and in order to keep from appearing to be overly concerned 
about the reproducibility problem, my feeling is that we may want to go ahead 
and propose both tests to Mitsubishi (assuming that it is expected that we 
would initially propose the proper tests to Mitsubishi, and not the other way 
around).

2. Can you let us know exactly who will be doing the hands-on testing of this 
product in Singapore?  I know that we nominated SGS Singapore, but does this 
necessarily mean that someone from SGS will be doing the actual work, as 
opposed to us just using SGS's lab?  As Janice pointed out, we need to make 
absolutely sure that (a) the lab is first-class and (b) whoever performs the 
test this time is very experienced with D3605 with and without ashing.  Also, 
it is my thought that we do not want anyone from SGS there who is aware of 
the pre-sale analysis that SGS did of the Elang Crude cargo.  This latter 
point, especially, needs to be handled with great care; if there is a need to 
communicate with SGS about any of this, I would suggest that you first confer 
with David or Neal.

Many thanks for your help.

      Britt  

 Again, many thanks for your help.

      Britt   
 
----- Forwarded by Britt Davis/Corp/Enron on 08/10/2000 03:18 PM -----

	Janice R Moore@ECT
	08/10/2000 10:52 AM
		
		 To: Britt Davis/Corp/Enron@ENRON
		 cc: Alan Aronowitz/HOU/ECT@ECT, Deborah Shahmoradi/NA/Enron@Enron, Harry M 
Collins/HOU/ECT@ECT, Matthias Lee/SIN/ECT@ECT, Michael A Robison/HOU/ECT@ECT, 
Richard B Sanders/HOU/ECT@ECT
		 Subject: Re: D3605/In re M/V PACIFIC VIRGO

PRIVILEGED AND CONFIDENTIAL:  ATTORNEY-CLIENT COMMUNICATION, ATTORNEY WORK 
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Matt:
I agree w/ Britt that we need to know more about what testing has been done, 
but I would think that the joint test should be conducted using the same 
method used at loadport (regardless of whether ashing is proper or not).  Not 
for the reason you mention (Mitsubishi may well argue about "proper" 
rejection, but that's not likely a viable argument, since the fact is that 
First Gas rejected the cargo and the dirt spec alone was sufficient grounds 
for that rejection), but for the sake of consistency.  It doesn't matter at 
all to First Gas what test methods were used or will be used on this cargo -- 
it's no longer any of their concern.  It's Enron's risk and sole 
responsibility to deal w/ costs following rejection -- per the contract.  I 
hope that we are not informing First Gas about anything that has happened or 
will happen on this cargo (I noticed a note from Jon Russell inquiring about 
the cargo -- I trust that we have politely refused to tell them anything).   
Regards,
Janice

EB3861
Assistant General Counsel, Enron North America Corp.
713-853-1794 (Fax:  713-646-4842)



	Britt Davis@ENRON
	08/08/2000 09:30 AM
		
		 To: Matthias Lee/SIN/ECT@ECT
		 cc: Janice R Moore/HOU/ECT@ECT, Alan Aronowitz/HOU/ECT@ECT, Harry M 
Collins/HOU/ECT@ECT, Richard B Sanders/HOU/ECT@ECT, Michael A 
Robison/HOU/ECT@ECT, Deborah Shahmoradi/NA/Enron@Enron
		 Subject: Re: D3605/In re M/V PACIFIC VIRGO

PRIVILEGED AND CONFIDENTIAL:  ATTORNEY-CLIENT COMMUNICATION, ATTORNEY WORK 
PRODUCT

Matt,
 
Thanks for the heads-up on this issue.  I will confer with Janice and one of 
us will get back to you.  

Meanwhile, I think I may need further clarification about  what testing 
methods were used by SGS at loadport and at discharge in Thailand and the 
Phillipines.  My key area of concern is whether (as now appears unlikely from 
your e-mail) SGS tested using both ASTM D3605 without ashing and ASTM D3605 
with ashing at all the relevant points, and whether the test results were 
consistent; e.g., whether the product was on-spec for both methods 
immediately before loading, but off-spec for both methods at discharge in 
Thailand and the Phillipines.  May I impose on you to provide one summary 
chronology of the analysis done at loadport and both discharge ports, with 
particular emphasis on (a) whether both testing methods (ASTM D3605 without 
ashing and with ashing) were used, and the results, and (b) the results for 
filterable dirt? (You have just sent something like this for the Thailand 
cargo only, which I found very helpful).   Also, if SGS or anyone else has 
made comment about the reliability or unreliability of the filterable dirt 
analysis (or any other aspect of the testing done by SGS of this cargo), 
please let me know about that as well.

I appreciate your good help.

    Britt

   



	Matthias Lee@ECT
	08/08/2000 06:39 AM
		 
		 To: Janice R Moore/HOU/ECT@ECT, Britt Davis/Corp/Enron@ENRON
		 cc: Alan Aronowitz/HOU/ECT@ECT, Harry M Collins/HOU/ECT@ECT, Angeline 
Poon/SIN/ECT@ECT
		 Subject: D3605

Dear Janice / Britt

I know that Janice has kindly agreed to return to the team to advise and 
coordinate with Mike Brown's team and myself in regard to the D3605 issue, 
whilst I am to look to Britt's guidance for the contamination on the Elang 
cargo. My apologies therefore for mixing the issues for the puposes of this 
e-mail. 

The joint testing of samples of the Elang cargo is planned to take place end 
next week. The joint testing would include metals as well as filterable dirt, 
so we would need to decide, in quite short order, on the test method we want 
to propose for metals for relevant parties to agree.

Although we believe the contamination would be dramatically demonstrated by 
the level of filterable dirt, the metals clearly would also be an important 
factor. As you may be aware, the loadport sample results which we are 
presently relying on to say that the cargo was on spec when loaded, was 
tested with "ashing" for metals. We would not be able to say whether another 
loadport sample would test on spec for metals using straight D3605. If it 
doesn't test on spec at the joint testing using straight D3605, the vessel 
owners would surely argue that the cargo would have been rejected by First 
Gas anyway, independent of the filterable dirt. Although such as argument may 
not defeat our case entirely, it is very likely to impact on the quantum we 
would be able to recover.

It seems that the preferred test method for metals at the joint testing would 
therefore be "ashing" to avoid conflict with existing loadport sample 
results. We still have SGS's support for that, but we need to convince Minton 
Treharne who acts for the cargo underwriters as well as the Owners/P&I Club. 
Still, just in case details of our dispute with Mitsubishi become known to 
Firts Gas, we may wish to avoid proposing a test method for joint testing 
that would be inconsistent with the one we ultimately present to First Gas, 
which for obvious long term objectives ought to be the CORRECT test method 
acceptable to parties whether D3605 or "ashing" or some other method. That 
said, I think if we are able to go with "ashing" for the joint testing, it is 
not likely to jeopardize our position with First Gas. 

I note Janice's preference for US experts over European experts for the D3605 
issue. Have we been able to get any US experts' view on the right test to use 
(whether D3605 or "ashing")? Has Enron formed a view on the "correct" test 
method? If we have been able to source a "friendly" US expert, we may want to 
have his input for the contamination issue. 

Your views and guidance would be most appreciated.

Thanks and regards
Matt







I also note Janice's preference to source for US experts to assist us on the 
D3605 issue over European experts and was wondering whether we have been able 
to for