Britt

Please see comments in RED based mainly on discussions with Eric Tan. 

Matt

---------------------- Forwarded by Matthias Lee/SIN/ECT on 07/24/2000 04:29 
PM ---------------------------
From: Britt Davis@ENRON on 07/21/2000 12:44 AM
To: Matthias Lee/SIN/ECT@ECT
cc: Alan Aronowitz/HOU/ECT@ECT, Harry M Collins/HOU/ECT@ECT, Richard B 
Sanders/HOU/ECT@ECT, Linda R Guinn/HOU/ECT@ECT, Brenda 
McAfee/Corp/Enron@ENRON, Deborah Shahmoradi/NA/Enron@Enron 

Subject: In re M/V PACIFIC VIRGO

 PRIVILEGED AND CONFIDENTIAL;  ATTORNEY-CLIENT COMMUNICATION, ATTORNEY WORK 
PRODUCT

 Matt, it was a pleasure speaking with you this evening (your time).  As I 
mentioned, I have some follow-up fact questions that I would appreciate your 
help with, when you have a moment.  Some of these questions probably require 
the attention of experts (e.g., #s 3 and 4), so feel free to decline to 
answer where the question appears outside your "jurisdiction."  Please do not 
call anyone outside of Enron to get answers at this point; also, to the 
extent that you need to ask Enron employees for answers, I would prefer your 
asking them questions and writing down the answers to be kept in your 
investigation file, rather sending them this e-mail and getting e-mail 
responses.



 1.  A chronology sent by you as an attachment to your letter of July 14 to 
Mike Robison reflects that on 4 November 1999, a sample of "Elang Condensate" 
was taken by SGS Redwood Singapore.  Apparently, the "Filterable Dirt" was 
off spec (7.1, versus a max of 4.0).  With regard to this sampling,

 (a) Did Enron request it? YES If so, who requested it, JOHN CHISMAR/ERIC 
TANand for what purpose?PRELIMINARY ASSESSMENT OF SUITABILITY OF ELANG 
CONDENSATE BEFORE PURCHASE. 

 (b) Was the sample taken from one of the shore tanks from which the cargo at 
issue was loaded?  If not, from what location was the sample    obtained? 
SAMPLE WAS TAKEN FROM A FLOATING FACILITY (NOT SHORETANK). UNCLEAR WHETHER 
FROM SAME TANK AS LOADED CARGO. LOADED CARGO LIKELY TO HAVE COME FROM A FEW 
TANKS. 

 (c) Did the testing reveal that anything else that has us concerned about 
the present cargo, such as the presence of metals? NO

 (d) Did Enron do any follow-up with Phillips, who I understand was the 
supplier, about the off-spec dirt or anything else that was discovered during 
the  sampling?  If so, please give the particulars as to who was involved, 
what was said, and what the result was. NOT SURE IF JOHN CHISMAR SPOKE WITH 
PHILLIPS BUT NOTE THAT CARGO WAS NOT BOUGHT WITH GUARANTEED FGH TYPE SPECS 
BUT "NORMAL EXPORT QUALITY AT THE TIME AND PLACE OF LOADING" 

 (e) Has the sample been retained? NOVEMBER SAMPLE ALL USED UP AT TESTING

 2. Did Enron discuss with the supplier 

 (a)the proposed end use of this product 

 (b) its fitness for that end use and/or

 (c) the contract specs that Enron had to meet to satisfy FGH?  If not, why 
not? JOHN CHISMAR'S INPUT REQUIRED
 
 3. Another chronology prepared by you mentions that a loadport analysis was 
performed by SGS on 27 June and that our cargo met the FGH   contract specs 
(I assume, in all regards) YES ("ASHING" METHOD USED).  Do we still have that 
sample available for retesting, and will a restest of it be included in the 
current round of testing? THE SAMPLES WERE DRAWN AT LOADPORT FROM AN 
AUTOSAMPLER. 3X1L SAMPLES WERE USED UP AT THE 27 JUNE TEST. WE PRESENTLY HAVE 
A 1X5L LOADPORT SAMPLE FROM THE AUTOSAMPLER IN SINGAPORE RESERVED FOR JOINT 
TESTING AND ANALYSIS IN SINGAPORE. THERE IS ALSO ANOTHER 1X5L LOADPORT SAMPLE 
FROM THE AUTOSAMPLER IN OWNERS/P&I CLUB POSSESSION WHICH WE HAVE ASKED TO BE 
SURRENDERED TO US TO BE DELIVERED TO SINGAPORE WHERE ALL SAMPLES ARE BEING 
COLLATED FOR JOINT TESTING AND ANALYSIS.

 4.  Why is this product called "Elang Crude" when it is in reality 
reportedly condensate? CARGO CALLED "CRUDE" BY SUPPLIER APPARENTLY BECAUSE OF 
EXPORT REASONS (HAVE TO CHECK WITH JOHN CHISMAR). UNDERSTAND FROM SPEAKING 
WITH PACMARINE THAT AN "ULTRALIGHT CRUDE" LIKE ELANG CAN GENERALLY BE 
REFERRED TO AS "CONDENSATE" BUT THERE IS NO REAL BENCHMARK AS TO HOW LIGHT A 
CRUDE MUST BE BEFORE IT CAN RIGHTLY BE REGARDED AS CONDENSATE.

 5.  What is the meaning of the term "export grade"?  Are there various other 
gradations?  If so, what do those mean? JOHN CHISMAR'S INPUT REQUIRED.

 6. Has Enron ever purchased Elang Crude from this supplier previously?  NO 
Ever heard of any prior problems with Elang Crude from this supplier? NO. 
NOTE THAT CONDENSATE IS TYPICALLY DELIVERED TO REFINERIES (NOT POWER PLANTS) 
THAT ARE NOT TOO CONCERNED WITH DETAILED SPECS

 7. Has Enron ever chartered the PACIFIC VIRGO in the past to transport Elang 
Crude? NOIf so, please give a thumbnail description of the voyages.  If not, 
have we ever chartered the PACIFIC VIRGO at all?NO

 8.  Prior to this voyage, have our operations folks ever chartered any 
vessel to transport a cargo of Elang Crude?NO. HOWEVER, WE MADE 2 DELIVERIES 
OF SENIPAH CONDENSATE (FROM INDONESIA - ONE IN FEB 00 AND ANOTHER IN MAY 00) 
UNDER THE FGH CONTRACT If so, please give a thumbnail description of the 
voyages, including 
 
 (a) whether the tanks were Butterworthed, SENIPAH CARGO - NOT BUTTERWORTHED 
BUT INSTRUCTIONS WERE GIVEN TO TANK CLEAN PRIMARILY BECAUSE LAST CARGOES WERE 
CARBON BLACK FEEDSTOCK (MAY) AND FUELOIL (FEB). TANK CLEANING INSTRUCTIONS 
INCLUDED WASHING AND FLUSHING TANKS, PIPES AND PUMPS and if so, whether Enron 
had to pay extra; WE DID NOT HAVE TO PAY EXTRA ON BOTH OCCASIONS. IT IS ONLY 
IN THE C/P OF PACIFIC VIRGO THAT WE AGREED TO BEAR COSTS FOR CLEANING.

 (b) whether the end use of the Elang Crude was similar to the end use of the 
cargo here, BOTH SENIPAH CONDENSATE CARGOES WERE FOR FGH and

 (c)  whether there were any contamination problems/concerns. NO. NOTE 
HOWEVER THAT "ASHING" METHOD WAS USED BY SGS ON BOTH FEB AND MAY SENIPAH 
CARGOES
 
 9.  Who were the Enron ops personnel who negotiated the Butterrworth issue 
with the owners? ERIC TAN  If there are written documents memorializing this, 
including letters, telexes, telefaxes, e-mails, taped or recorded telephone 
messages, calendar entries, or diary entries, they need to be preserved.  I 
wonder if I could put you in charge of making sure that all files relevant to 
this voyage generally are carefully preserved for possible use as evidence 
later on.  One thing we don't want to happen is to face a (spurious) charge 
of spoliation of evidence because an allegedly important document or memo 
from our files is inadvertantly lost or destroyed.

 10.  The Watson, Farley letter opinion of 13 July notes that the B/L 
identified the actual owners as the carriers, rather than Mitsubishi, who I 
understand was probably a time-charterer. THE BROKER HAS CONFIRMED MITSUBISHI 
CORP TO BE THE TIME CHARTERER  The copies of the B/L that I have seen, 
however, reflect a blank space in the form underneath the word "CARRIER".  Do 
you have access to a B/L that mentions the name of the actual owner? NO 
Perhaps Watson, Farley meant that because Barwil Agencies signed on behalf of 
the master, that the true owner was bound, although I am just guessing. MY 
UNDERSTANDING IS THE SAME

 11.  The PacMarine report dated 7 July 2000 ascribes the cause of the 
contamination to (a) accumulation of excessive sediments in the ship's cargo 
tanks, especially clinkage and  (b) the cleansing properties of condensate.  
Although the author refrains from squarely linking the excessive sediments to 
prior inadequate tank cleaning, he clearly leans in that direction.  On the 
other hand, it is not clear from the report whether adequate tank cleaning 
under the circumstances required Butterworthing.  I SPOKE WITH PACMARINE 
(CAPT. SAWANT). HIS OPINION IS THAT BUTTERWORTHING OR USING THE VESSEL'S ON 
BOARD EQUIPMENT TO RINSE AND FLUSH TANKS, PIPES AND PUMPS WITH FRESHWATER 
WOULD HAVE BEEN ADEQUATE CLEANING

 (a) Were our ops people aware of the prior cargoes WE WERE AWARE OF THE LAST 
3 CARGOESand the methods used to clean the tanks WE WERE AWARE THAT NO TANK 
CLEANING WAS DONE PRIOR TO LOADING THE LAST CARGO and/or the cleansing 
property of condensates YES, BUT THE ASSUMPTION MADE WAS THE PREVIOUS CARGO 
OF COSSACK CRUDE WITH SIMILAR PROPERTIES WOULD HAVE "CLEANED" THE TANK AND 
THE VESSEL BEING YOUNG WOULD NOT HAVE A LOT OF CLINKAGE (I get the impression 
from your "Issue for Consideration" that the answer to the prior cargoes part 
of this question is "yes)."? 

 (b) Was it within the scope of SGS's duties to advise Enron of the foregoing 
NO. I WOULD NEED EXPERT SUPPORT ON WHETHER IT IS OWNER OR CHARTERER'S DUTY TO 
KNOW SUITABLE TANK CLEANING METHOD , or were they only supposed to issue a 
Dry Certificate?  

 (c) Did we have anyone else attend the ship at loading on our behalf besides 
SGS? NO

 I know this covers a lot of information; none of it is urgent.  Next week 
will be fine for a response.  Many thanks for your help.

        B.K.D.