Sara,

I hope you are having a good vacation and are not looking at your emails 
until you return.  I just wanted to get you up to date on a couple of items.  

Bolivia--Randy asked if we have ever done any research on whether we could do 
derivatives in Bolivia.  I told him I thought we had checked on this and 
determined that Bolivia was not one of the countries that  had been surveyed, 
but that I would check with you to be sure.  I think he is asking since we 
are looking at doing physical deals there and the next thing the business 
guys always want to do is financial trades.  

Colombia--There is a new group of commercial guys who want to do electricity 
trading (and gas trading???) in Colombia.  I have passed this request on to 
Mark who is looking at it.  I think we will run into the same problems we had 
last year with the gas trading proposal.  Susan Baily found the Colombia 
financial and physical trading survey for me to give to Mark and I faxed some 
other memos I found in my files here.  There is a lot of memos on structures 
that had to do with the earlier trading vehicles and joint ventures which I 
did not send.  I also did not send the memos relating to our efforts to get 
financial trading allowed.  Bob Carter worked a lot on that issue but the 
commercial interest died before we saw any tangible results with the Colombia 
political process.

Brazil--Don lobbed a bomb last week to Randy and then casually mentioned it 
to me after the fact.  Don asked Randy to set up a swap vehicle in Brazil so 
that Don can do his financial trading with Argentina from Brazil.  This is 
some speculation on my part but I think Don doesn't like the current 
structure of having to run his financial trades with Argentine counterparties 
through Houston.  He does not have the ability to direct and control the 
process of negotiating and trading for Argentina through ENA which is 
problematic for him since for tax reasons we are telling him anything of 
substance has to come from ENA in Houston.  Don asked Randy, who asked Andrea 
Bertone, to set up a swap vehicle in Brazil to trade with Argentine 
counterparties.  Obviously Don could control the negotiating and trading from 
Brazil and his operational problem is solved.  As you know this may create a 
whole host of other problems that cannot be solved as easily.  I will discuss 
with Andrea today my initial thoughts on the issues raised by this 
proposal.   First the tax issues may make Brazil a difficult place to make 
any money on a trading operation, tax will need to be brought in first thing 
to analyse the structure.  Second, we may not be able to trade cross border 
swaps without regulatory problems, we will need to speak with Antonio Felix 
and others at Tozzini to start reviewing the structure.  Third, there may be 
significant currency issues involved that need to be reviewed at the same 
time we look at the tax and regulatory issues.  If we are able to overcome 
these issues then we will need to review the substantial legal and 
operational issues raised by such a structure.  The ISDA agreement, which 
would be in English, would need to be reviewed by local counsel to ensure 
that all of the substantive provisions including arbitration, limitation of 
liability and collateral structures would be enforceable in Brazil when 
entered into with Argentine counterparties.  Operational issues such as who 
will be responsible for the negotiation of masters, drafting of confirmations 
etc. would also need to be addressed. 

Argentina--I think the Acindar swap issue has gone away.  Pat emailed though 
that they are now looking at an option structure.  I do not know what they 
mean by "option" or what the new structure would be.  I will let you know 
what I find out.

Call when you get back and I can update you on where things stand.

Brent