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Enron Mail |
Manfred / Sven - congratulations on getting the Bremen deal signed! This=
=20 business represents the first significat long-term deal we have in Germany.= =20 It also allows us to expand our "stockpile" business on the Continent - and= =20 will allow us to develop a hub in Nordenham. The ability to put petcoke to= =20 Bremen is an added benefit. =20 Nice job on this deal - it took a lot of work on your part to get Bremen=20 comfortable with our shipping such a large percent of their requirements. Best regards, George -----Original Message----- From: Becker, Sven Sent: Sun 4/29/2001 3:24 PM To: Mcclellan, George Cc: Staley, Stuart; Ungethum, Manfred Subject: Summary on Bremen Deal Hi George, as requested just a quick summary on the Bremen transaction which was final= ly=20 signed by Bremen on Thursday (yesterday I also received the signed contract= =20 from Bremen). Term: from 1 May 2001 to December 2006, although we have already delivered since= =20 1/1/01 under the same contract terms as the long-term agreement. Volume: 4.6 Mio. t firm over 6 years=20 2001: 935=20 2002: 820 2003: 820 2004: 820 2005: 615 (tail-off due to expected shut-down of one block)=20 2006: 615=20 For 2002 to 2006, this will cover about 80% of Bremen's needs. We can be= =20 very confident to also attract the remaining 20% in the open tenders due to= =20 advantages on logistics and possible matching of best price. Quality: Generic with very generous quality specs (wider than SECA; also allows for= =20 1.7% sulphur) Under the deal we can also deliver 10% as pet coke (if the blend meets the= =20 wide quality specs) Pricing:=20 We deliver CIF @ BAW price. BAW is weighted average import price which lag= s=20 the market by 2-3 quarters. In rising markets we lose against spot purchase= ,=20 in falling market we win against it. If Bremen takes less than 10% pet coke, we will get a premium for each %= =20 point that Bremen underlifts. In this case, we are either financially deeme= d=20 to have delivered pet coke (we get the difference between BAW price and pet= =20 coke) or a fixed premium of $0.15/t per each % point (max. of BAW price += =20 $1.50) Strategic Advantages of Deal: - Significant position in the German market; breakthrough transaction in= =20 the German market =01) this transaction represents about 3% of current Germ= an=20 coal imports. It will make us one of the established players and help foste= r=20 our track record in Germany. - Longer-term volume flow in Northern Germany that will create economies = of=20 scale for the supply of smaller customers in the area; - Building Nordenham as the bridgehead for the supply of Northern Germany= ;=20 With increasing imports into Germany the Bremen volumes will enable ECS to= =20 take an active port position in Nordenham. This may be valuable since port= =20 capacity will have increasing value (currently under scrutiny). - Optionality on remaining synor tonnage; abilitay to fill in remaining 2= 0%=20 of Bremen needs. This can already be seen this year where we are expected t= o=20 deliver 935,000 instead of the contracted 820,000. - Upside from delivery of more of 10% of contractual volumes as petroleum= =20 coke (we can do this, if technically ok - under the contract Bremen actuall= y=20 has incentives to burn more than 10%). - Follow-on Deals with Bremen; we have started discussions on a coal-fired= =20 power block that Bremen would like to rent out to us and Bremen has offered= =20 us to do all their port business in Nordenham (thus, we would transform CIF= =20 deal into FOB deal) which would strengthen our position in Nordenham). George, if you have any questions related to the deal and its structure,=20 please do not hesitate to call either Manfred or myself (011-49 173 3070824= ). Kind regards Sven
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