Dan -

FYI. 

Bruce

---------------------- Forwarded by Bruce Lundstrom/ENRON_DEVELOPMENT on 
02/11/2001 09:32 AM ---------------------------


Robert Mathis
02/11/2001 05:54 AM
To: Bruce Lundstrom/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Sandeep 
Katwala/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Paul 
Kraske/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Gail 
Brownfeld/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc:  

Subject: Oman LNG meeting

The meeting with the Oman LNG delegation went well on Saturday, February 10, 
2001. The meeting was attended by delegates from the Oman Ministry and Oman 
LNG, who were:

1.  Talal Al Aufy - Marketing Director, Ministry Oil & Gas, Oman,
2.  T. V. Suresh - Advisor, Ministry of National Economy, Oman,
3.  Harib Al Kitani - Head of Marketing, OLNG,
4.  Ms. Susan Farmer - Lawyer for OLNG (from Denton Wide Sapte in London), 

and Enron representatives: Jim Hughes, Wade Cline, Neil McGregor, Mohan 
Gurunath, Paul Kraske, Mukesh Tyagi, Rick Bergsieker (Global LNG team) and 
myself.

Mohan Gurunath made the presentation, which contained the same information 
that we have shared with the lenders. The delegation asked questions, and the 
Enron representatives, mostly Jim and Wade, shared their views on the issues 
facing DPC. Generally, the discussion included a description of the makeup 
and expectations of the expert committee, and the need for the central 
government's involvement in resolving some of the problems related to the 
demand-supply of power, cost of power, transmission and distribution losses, 
power trading and sale to third parties. The discussion included a 
description of the security package. DPC noted that the outcome of 
discussions with the expert committee, state and central governments, and 
MSEB may require the PPA to be adjusted and the equity sponsors to realise 
less of a return on their capital. 

The parties did not discuss any specifics as to how or what will be the 
impact on the Oman LNG supply contract as a result of the discussions and 
resolution of issues between MSEB/DPC. Certainly no concessions for relief of 
the LNG supply contract obligations were offered by the Oman team (and none 
were or are expected). Clearly, the point made by DPC to the Oman team was 
that it was too early to discuss specifics, but that DPC would need to 
revisit the matter with the Oman team as and when developments occurred and 
events became clearer in the future. The Oman team asked what help they could 
be to DPC in the Oman team's discussion with the central government.  DPC 
asked the Oman team to emphasize that the Oman government has made 
significant investments in Oman for the supply of gas to the DPC project, and 
that Oman urged and expected that the contracts between the various parties 
and DPC will be enforced and observed, and that the failure to enforce the 
contracts would be observed by Oman, and also by other countries and 
businesses in the world. 

The Oman team inquired about the status of the MetGas project and, generally 
about the gas market in India. DPC explained that MetGas is being put on hold 
until such time that the DPC controversy is settled. The Oman team 
understands that the MetGas business is being preserved, and that Enron will 
determine its MetGas investment strategy after discussions regarding DPC are 
finalised with MSEB and the state and central governments. The discussion 
included speculation on what various people thought may happen with other LNG 
terminal projects in India, and the possible related business connection or 
competition with the DPC terminal. Most people concurred that the DPC 
terminal could be used for serving a backbone gas pipeline business in India, 
that open access/carrier should be encouraged, and that it is possible though 
not likely that the another LNG terminal will materialise on the West Coast 
of India. The Oman team expressed that they are hearing that an LNG terminal 
in the state of Gujurat is still being pursued by Petronet with the support 
from the state owned gas pipeline company (GSPL).

Robert