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Enron Mail |
Jeff -- Here is an update on our discussions with Phillips over their lack of
performance on delivery of gas during high price periods. I will see you next week at the PRC and give you a further update on our progress with them. John ---------------------- Forwarded by John Sherriff/LON/ECT on 24/07/2000 08:30 --------------------------- Peter Crilly 20/07/2000 12:50 To: John Sherriff/LON/ECT@ECT, Richard Lewis/LON/ECT@ECT cc: Gail Hill/LON/ECT@ECT, Matthew Ferguson/LON/ECT@ECT Subject: J-Block Update Following the meeting Richard and I had with Jim Simpson of Phillips and the letter we subsequently sent requesting more information, Phillips have proposed a technical meeting to discuss production problems and a commercial meeting to discuss alternative solutions. The technical meeting is scheduled for Friday of this week and we will be taking advisers so that we can assess the extent of the problem and the adequacy of the Sellers plans for remedial action. The commercial meeting took place on Tuesday. The Sellers took the position that they were happy to continue discussions regarding deliveries at Bacton or at the NBP but that they would need compensating for any additional risks/costs that they would incur. Essentially, if they have alternative sources of gas available, they do not want to sell it to us at the contract price when they can get significantly more value in the market. We made it clear that we were looking for a commercial solution which would enable them to deliver contract gas at the contract price at an alternative location. At the end of the meeting, the Sellers agreed to respond to our previous proposal on Bacton deliveries, and to formulate an additional proposal on NBP deliveries. This will probably take a couple of weeks. In the meantime, following the technical meeting on Friday, we will be able to take a more informed view regarding the extent to which the Sellers are to blame for the current problems - eg lack of investment, failure to act as an RPO etc. My current thinking is that we then exert pressure on them to deliver the gas at the alternative locations at contract price through management pressure (Mulva) and contractual pressure (failure to act as RPO etc). I will update you early next week when we have reviewed the information from the technical meeting. Regards Peter
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