WTO And Energy Services Strategy

Steve: I had a memo from Rick in response to our trip report last week
regarding the meetings we held in Helsinki and Brussels. He again has raised
the issue whether or not we are expending too much effort on the energy
services liberalization and has no doubt that we are.

I did call him as requested on Tuesday morning Houston time after Ken Lay's
presentation (it was excellent and has been getting good press) and suggested
that you, Rick and I get together for an update. Rick wants to have another
group conference call but I would prefer that we not have any such call
because several of the participants have no day to day understanding of what
has been accomplished and what can be accomplished.

A lot has happened in the last several weeks and the WTO Committee on
Specific Committments meets again next week. USTR believes that it is likely
to be important for the Energy Services Coalition to conduct a work shop for
WTO delegations in Geneva during October. USTR and others are pushing for a
launch of actual negotiations late this year or in the first quarter of 2001.
Our goal continues to be to make certain that energy services is one of the
sectors negotiated. That is not yet decided but the October and possibly
Novemeber meetings of the Committee on Specific Committments is thought to be
ready to recommend a launch.

Ken and our people in Japan believe that we should follow up the invitation
of Mr. Kushakawa and brief Japan energy officials on our energy services
campaign. Carla Hills is prepared to go to Japan late this month. Bob Fisher,
Steve Burns and I would also go. We have been talking with Nick O'Day to
coordinate with our people in the region to advantage their goals and from
the correspondence I just forwarded to you, I see our people in Japan
supporting whatever we can do using Carla Hills as the principal messenger on
energy services at the WTO.

While in Paris, Ken Lay met with Rachel Thomson and me to get updated on the
energy services campaign. I have asked Rachel to put togeher a package on
helping us within the WTO and in educating certain strategic delegations that
have persuasive powers withing their regional blocks. She has made that
proposal. Ken believes that several ESC companies such as GE and Halliburton
should be able to put up funds to handle that part of the cost and is willing
to call Messrs Welch and Chaney directly if we go forward.

Based on what I have heard over the last few months I believe we now need a
paper supporting energy services from a distinguised expert from a developing
nation essentially supporting the Rachel Thomson material.

What I am suggesting is that if the company continues to feel that pursuing
an energy services liberalization at the WTO is positive and accelerates our
own efforts to get nations to agree to liberalize sooner rather than wait for
a two or three year WTO process then I think that the items mentioned in this
memo should be approved and go forward. If the company disagrees then after
this July meeting of the WTO Committee on Specific Committements and after
the meeting in Japan near the end of July should be the time for us to plan
the "exit" strategy. Whether or not Halliburton or GE would pick up the
campaign is unknown to me. I do plan to get together with the ESC Executive
Committee early next week to tell them in detail about the new proposal by
Rachel Thomson.

I would like your authority to move forward on the several items I have
suggested including funding for a developing nation paper, the trip to Japan
later this month and at least an initial funding (estimated at about $30,000
for APCO (Rachel's employer) to get the ball rolling on a longer range
strategy through October). I would prefer to have any conference call
postphoned until you, Rick and I meet and have a thorough discussion. I do
believe that Ken Lay supports this effort and feel that if I am correct then
Rick needs to understand that he is sending a conflicting message. If I am
wrong then I need to know it and the discussion of an exit strategy needs to
be discussed in detail.

Please review and advise.

Joe