FYI---one of the many,many articles that have come out over the past few 
days.  This one captures the essence of most of them.  See in particular the 
part I have highlighted.

General reaction in the business community is that Enron must be crazy to 
have worked this hard to beat the competition, only to withdraw just as the 
project becomes real.  The phones continue to ring constantly.

At the same time, we have just received the official notification from the 
Saudis that we have been awarded, after what is being described as "fierce 
competition", a piece of Core Venture 2.  We have already wired this with Oxy 
and will exit this week in a manner that hopefully protects the relationships 
that we have built with the Saudis----but the timing (exactly the same time 
that we are withdrawing from Dolphin and filing a termination notice for 
Dabhol) does not help.

As you might expect, the mood in the office is terrible----the team is proud 
of the fact that they started with nothing two years ago have accomplished 
the impossible against great odds (beating the competition in Dolphin, Saudi, 
SADAF and Oman, as well as putting together a world-class LNG supply system 
for Dabhol) only to have it all fall apart with what is perceived as limited 
redeployment potential and little PRC support because of the "ex EI" stigma.

Over the next several days we must work through the UOG Dolphin press 
announcements, Saudi (we must notify Saudi of our intentions by Wednesday), 
explanations regarding Dolphin to all of those that have helped us (e.g., 
U.S. embassy and our local sponsors) and, as luck would have it, the Dubai 
government wants to proceed with the Jebel Ali Aluminum/electricity deal (I 
suspect that they will change their mind over the next several days as events 
unfold).  

In addition, we have employee meetings on Tuesday to reduce the size of the 
Dubai/Houston team from 35 to 11.

The next several days are not going to be fun....

Rick
---------------------- Forwarded by Rick Bergsieker/ENRON_DEVELOPMENT on 
05/19/2001 10:15 PM ---------------------------


Jeffrey Hammad
05/18/2001 05:21 AM
To: Rick Bergsieker/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Maurizio La 
Noce/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rob 
Stewart/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Kevin 
Ruffcorn/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Pete Cleary@Enron, Daniella 
Carneiro@ENRON
cc: Jackie Gentle@ECT, Mac McClelland/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 

Subject: Article: Firms Line Up to Swim With Dolphin in Abu Dhabi.




Firms Line Up to Swim With Dolphin in Abu Dhabi.

05/17/2001
The Oil Daily
(c) 2001 Energy Intelligence Group. All rights reserved.

It's all go in Abu Dhabi, where Enron's decision to sell its 24.5% stake in
the Dolphin group has opened the door for other oil companies to join the $8
billion project to pipe natural gas from Qatar to the United Arab Emirates
(UAE).

At the same time, the oil-rich emirate has launched a tender to sell 28% of
Zakum Development Co. (Zadco), which is producing 500,000 barrels per day from
the offshore Upper Zakum field. Total Fina Elf, Exxon Mobil, Royal
Dutch/Shell, and BP have been invited to bid, and a decision is expected at
the beginning of next year.
Having been in the cards for a long time, Enron's little-noticed withdrawal
from Dolphin was made official about three weeks ago, when it gave the
mandatory 30-day notice to its two partners in the consortium, Total and UAE
Offsets Group (UOG). Total and UOG will formally announce the news at a press
conference in Abu Dhabi on May 21, EIG understands.

Enron's share of Dolphin will be sold back to UOG, which is headed by Sheikh
Mohammed bin Zayed al Nayhan, who is a UAE Armed Forces chief and a key figure
in the Abu Dhabi ruling family. UOG already holds 51% of the project and will
then sell whatever portion of its aggregated 75.5% stake it likes. Total,
which will operate the upstream side of the project in Qatar, retains its
24.5% interest.

Who else will join is a matter of wild speculation, but there is certainly no
shortage of interested parties.

"The whole industry wants to get involved," a source close to the project
said.

Among the chasing pack, Conoco is making a strong pitch to join Dolphin, which
would compliment its assets in Dubai, where it is operator of 180,000 b/d
Dubai Petroleum Co., consolidating its position in the Gulf. Occidental, which
like Conoco has no presence in Abu Dhabi, is also sniffing around. And then
there are the heavyweights - Exxon, Shell, and BP - all of which are
interested and have the advantage of having been in Abu Dhabi's oil sector for
more than 20 years.

"I think we'll see a veritable feeding frenzy," said one analyst in the
region. "There are all kind of oily types coming to Abu Dhabi."

After the Enron experience, UOG's priority will be to find a partner that is
reliable and seems unlikely to be taken over by a larger company during the
course of the 20-year project, people familiar with the company say. This line
of thinking would appear to favor the super majors, although smaller players
may have more to gain and thus more to offer.

The Dolphin departure ends an unhappy chapter for Enron in the Gulf and is
part of the group's strategy to divest some of its overseas assets. Enron
seemed unable to decide what it wanted to do in Qatar: At first it planned to
sell liquefied natural gas (LNG) to Israel, then it switched its attention to
selling LNG to India. By the time it joined Dolphin two years ago, Enron had
made several enemies in Qatar who would not forgive it for commitments that
were never fulfilled.

Ironically, Enron has pulled out of Dolphin just when the project looks
certain to go ahead. In March, the partners signed the crucial "term sheet"
for the $1.5 billion upstream part of the project, which calls for the
production of 2 billion cubic feet of gas per day from Qatar's giant North
field. The deal is due to be finalized by autumn. Dolphin is on course to
deliver the first volumes of Qatari gas to Abu Dhabi in 2005.

Abu Dhabi is also pushing ahead with its plan to sell 28% of Zadco, which is
88% owned by state oil company Adnoc and 12% by Japan Oil Development Co.
Zadco is a long-running saga: In October 2000, 14.67% was due to be sold to BP
and 13.33% to Total, but for reasons known only to itself, the Supreme
Petroleum Council decided against the idea.

Paul Sampson.

(c) Copyright 2001. The Oil Daily Co.

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