Folks,

I am forwarding this in order for the team to focus on the naphtha issue.  
Please note that:

As Phase II comes on line, Blocks B and C will first have to run on naphtha 
for a period of 3-6 months
This will hit us some time in 2001, hence is a more urgent issue than LNG, 
which is still a year away
If there are delays in the commissioning of the Regas terminal, the period on 
naphtha could further prolong
The naphtha market is more volatile than the crude market, and is not as 
deep, hence we need to take small positions early on to test the market
DPC Board has already approved a Risk Management Policy that allows for 
hedging.  We may need to look into options that are costless (selling put and 
buying call) to begin with, and test while only Block A is in place.
Close coordination will be required on this with the Global Markets group, 
and I propose someone like Anshuman should actually be seconded onto the group
A whole plan on tools to manage the fuel risk need to be worked in close 
coordination with the team on the ground

These are just some of my thoughts.  With 50% of the tariff being fuel price 
dependent, this is an area that requires close attention.

Regards,
Sandeep.
---------------------- Forwarded by Sandeep Kohli/ENRON_DEVELOPMENT on 
01/03/2001 10:29 AM ---------------------------


Tushar Dhruv@ENRON
01/02/2001 09:25 PM
To: Neil McGregor/SIN/ECT@ECT, Sandeep 
Kohli/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Mukesh 
Tyagi/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, pavan.dave@enron.com, Anshuman 
Srivastav/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Marc De La Roche/HOU/ECT@ECT, Doug Leach/HOU/ECT@ECT 
Subject: Naphtha hedge for 2001

Current level of naphtha prices and the crude futures curve being 
backwardated provide an opportune time for DPC to enter into a hedge for all 
or a portion of its naphtha requirements for the year 2001.  We (EFI) would 
like to explore this possibility before this situation passes.  Please 
advise.  Best regards,

  -- Tushar