Gail, I will support your recommendation. Jim

 -----Original Message-----
From: 	Brownfeld, Gail  
Sent:	Thursday, April 26, 2001 1:11 PM
To:	Derrick Jr., James; Walls Jr., Rob
Cc:	Novak, John; Haedicke, Mark; Sanders, Richard; Williams, Robert C.
Subject:	Piedra Buena Dispute/Litigation

	As you might recall from the monthly litigation reports, Enron America del Sur has been involved in an ongoing dispute with Central Piedra Buena ("CPB") relating to approximately $3.3 million that Enron claims it is owed pursuant to a 1999 natural gas sales agreement. 
	 More specifically, pursuant to the sales agreement, Enron was to sell natural gas to CPB.  Enron bought this gas from a gas distribution company called Total.  The sales agreement and the purchase agreement contained similar provisions and Enron acted primarily as a middleman in the transactions. 
	Beginning in December 1999, after a change in CPB's management, CPB stopped paying Enron for the gas that was supplied.  As a basis for non-payment, CPB claimed that Enron had made numerous mistakes in calculating what was due from CPB.  CPB also made vague allegations of wrongdoing on Enron's part. The parties (including Total) have been negotiating for months in an effort to resolve their disputes; however, these negotiations have been unsuccessful.
	We would like approval to initiate an arbitration against CPB for the money they owe us which, in turn, we owe to Total. Although we believe that CPB may have set-off rights for a very small amount of the sums claimed, their failure to make any reasonable offer to resolve this matter has necessitated that we resort to arbitration.
	  Guido Tawil of the Bomchil firm has been helping us in our efforts to negotiate a settlement and would represent Enron in the arbitration.  Pursuant to the parties' agreement, this would be an ICC arbitration, would occur in Buenos Aires and Argentine law would apply. Additionally, several arbitrators have been interviewed and, in Guido's opinion, our best choice is Sergio La Pera, a commercial law specialist who has a good bit of experience as an arbitrator.  According to Guido, Mr. La Pera is available and wiling to serve on the arbitration panel.
	Should you need any additional information or have any questions, please let me know.  Thanks.