Jeff,

As discussed yesterday, provided below is the note I mentioned.  Please call to discuss.  I would like to get this inter-company relationship agreed today.

Eric      x52711





In an effort to promote an internal operating business structure that maximizes the value opportunities for Enron in respect to European LNG activities, provided below is an agreed group interaction protocol.

Defined points of contact
LNG's European commercial lead:	Clay Harris
Continental Commercial Nat Gas lead:	Steve Sapling

Clay Harris and Steve Asplin shall meet at a minimum weekly to discuss current ongoing business and relevant future transaction prospects.  

Prospective transactions with existing European LNG Market Participants
The LNG group shall continue to advance the execution of Master LNG Purchase and Sales Agreements with these relevant European LNG players: Distrigas, Tractabel, GdF, Gas Natural, Repsol, Enagas, Botas, Enel, SNAM/ENI, Edison, Iberdrola, Union Fenosa, Endesa, etc.  Clay Harris and Steve Asplin will coordinate these activities, which will be further coordinated with the relevant EEL country representatives.  The LNG group shall always use Steve Asplin and these relationship managers to coordinate meetings to discuss LNG opportunities on a regional and global basis.  An invitation to join these meetings should and shall always be extended to both groups when LNG opportunities are to be discussed.  European ex-ship LNG transactions shall not require intermediation by the EEL nat gas trading desk. However, the LNG group shall always keep the relevant EEL trading desks aware of the proposed transactions in advance. 

LNG Sales into France and Belgium
The groups will maintain daily contact regarding prospective LNG terminal capacity positions and LNG sales.  The two group's main short term interaction objective shall be for the facilitation of market making for the prospective LNG deliveries by the LNG group.  An important factor that all parties must appreciate is that Enron's activities in Belgium are extremely sensitive to relationship issues with Distrigas.

LNG Sales into Spain
At this point in its development, the natural gas market in Spain is unique to other continental markets given the limited access to source pipelines and the significant market share of LNG.  As such, a coordinated effort to source, create and execute transactions is imperative for Enron's success.  To create an atmosphere of thorough communication, the EEL nat gas group will ensure that an invitation is extended to the LNG group for its gas marekting meetings and discussions, and that the LNG group is completely informed regarding potential transactions.  The LNG group will ensure that the EEL nat gas group is kept fully informed and included in potential sourcing activities.  The overriding goal shall be to ensure that transactions are completed that create the maximum possible value for Enron Corp.

Current Proposed Spanish Transaction
As discussed above, in order to capture the current prospective transaction opportunities in Spain, EEL and Global LNG have agreed to jointly take the proposed length position (0.7BCM/yr for 2 to 5 years) in Spain.  The P&L shall be managed on a complete open book basis (i.e. groups will exchange all relevant term sheets associated with LNG purchases, nat gas sales, re-gas and transit costs, and shipping).  Any margins generated shall be split between the groups.  Determination of the relevant margins shall take into account the market value of LNG groups prior existing LNG charter positions, as well as prior existing EEL  trading desk positions nat gas group.  

The final determination of the value split shall be made on a fully open book basis by Eric Gonzales and Eric Shaw.