Thanks.  Be sure to get Larry Lawyer,  Brent Price, and Eric Groves 
involved.  This project is extremely important to Enron, and our LNG 
strategy.  If there are any resources you need, please let me know.  

Jeff




Emilio Vicens@ENRON_DEVELOPMENT
11/07/2000 03:11 PM
To: Jeffrey A Shankman@ECT, Mike McConnell/HOU/ECT@ECT
cc: Eric Gonzales@ECT 
Subject: Jose LNG - Next Steps

Jeff,

The following summarizes the key next steps on the Jose LNG project:

Immediate Next Steps

? Contracts: concentrate on modifying in-country agreements with PDVSA to 
allow execution in Dec 2000.
 - Participation Agreement: introduce and agree restructured marketing scheme 
which incorporates ENE and PDVSA off-take agreements
 - Gas Supply Agreement: introduce and agree a couple of small changes in 
order to reduce purchase price 
 
 ENE exposure post agreement executions: $1.25MM after 7 months
 $4.0 MM after 7 months and for up to 12 months if ENE decides to stay in the 
deal (ENE option)
 $20.0 MM after 19 months if ENE still decides to stay in the deal (ENE 
option)

? Financing: confirm final financing assumptions and equity syndication 
requirements
 - Debt: corroborate market funds availability, pricing, tenor, coverage 
ratios and debt/equity ratio
 - Equity: define required project company IRR for equity syndication 
(current assumption 18%)
  
 ENE,s exposure:    None prior to issuance of EPC notice-to-proceed (NTP)
       Post NTP release - if we can't acquire 3rd party capital, ENE would 
have to bridge
      
? Markets and Nat Gas Swaps and Options:
 1. Shift LNG destination to Higher Netback Markets: focus on gaining access 
to alternative regas terminals - Cove Point and Boston (currently modeling  
the two least attractive netback terminals in the US: Elba and Lake Charles)
 2. Gas Swaps and Options: confirm value for Enron as a whole.  Estimated MTM 
value of ENE offtake contract at the Gas Desk's Mid is $308MM coupled  with a 
Project Company equity IRR of 18%. 

It is our intent upon reaching agreement with PDVSA on our proposed changes 
and post appropriate RAC and Financing Group reviews, to circulate all 
contracts for your final review and approval.  If you require any additional 
information as to our current plans etc. please give me a call.

Thanks 

Emilio