Updates

Nissho Iwai (project Sato): We have spent a considerable amount of time over
the last couple of weeks defining what Enron could do for them and building a
level of trust and understanding. Recall that a couple of their board
members had come to us about a month ago to discuss a USD2-3 billion near
term liquidity "issue". On Friday their strategy planning group will be
taking the proposal of cooperation with Enron to their president and some of
their key advisors at Sanwa Bank and DKB. We have proposed the means
(without specific definition) of how we could provide near term liquidity and
set the path to look for opportunities in key business areas. Almost all the
areas of interest are in key Global Market products. Sanwa and DKB are part
of the equation as they worked out a rescue deal for NI a year ago. This
plan also had the support from Hiyami (former NI president and now head of
BOJ). So any decision to handle their near term problems and future growth
would have to get support from these key groups. The NI team we have been
working with seem quite positive on their prospects of getting this through
Friday's meeting. From this point we would proceed with a very detailed due
diligence effort across key areas which will be mutually defined, but
would/could include: LNG, coal, petchems, shipping, freight, metals, etc. We
would determine how much we could pay for certain rights and/or positions.
If we could get something done this would have a huge impact on the market
and would give us tremendous reach to other Japanese customers in their
group. During this "liquidity solution" phase, we will also be evaluating
areas of growth and of mutual interest to our companies.

Hitachi: weather ventures: The #3 guy in Hitachi came to us a couple of weeks
ago indicating that they thought there could be tremendous possibilities for
Enron and Hitachi to jointly market weather products in Japan. Note: we
have been discussing possibilities with Hitachi since Ken Lay visited.
Hitachi does not have any weather experience, but does have a tremendous
customer base, a large sales force and a very strong name in Japan. As
Hitachi are involved in just about everything, they also have business lines
in the capital markets area and insurance. Hitachi senior management has
strongly implied that if we can get something done then they can deliver
quite a few companies including the large utilities. They could also give us
access to the Japanese insurance companies... beyond the Marine and Fires. I
believe that the president of Hitachi has already decided that they want to
do this. In fact, in true Japanese style, they have mentioned to TEPCO that
they would be pursing something like this with Enron to "sort of" get
permission. Hitachi could be quite useful in getting us further access to
the utes for fuel deals as well. What we have contemplated (and discussed
with Tawney) is an arrangement where Enron provides the pricing for standard
and structured products and takes on the risk of transactions (risk books
outside venture) while Hitachi provides the customers and a trained sales
force. In return, Hitachi gets some sort of agency fee for each deal done.
Hitachi also has tremendous weather risk themselves that they would be
looking to manage from a corporate level. They have wanted to race to an
MOU, but we have brought them back to a CA first. We'll be getting more
definition over the next couple of weeks with the idea of having advanced and
productive discussion with Tawney when he is over the middle of next month.
Needless to say, getting something like this done with Hitachi would be a
tremendous boost to our local credibility and would open many doors.

Nissho Iwai: methanol: We will be presenting an indicative term sheet to
Deutsche Bank tomorrow concerning a prepay structure for 100k+ tons of
Methanol for up to three years out of Bontang. We have been able to work
down the CDS spreads from the international market for Indonesia and NI down
from 1750 bps over Libor to approx 600. The structure would likely involve a
trade finance arrangement with one of the Japanese banks (with sufficient
Bank of Indonesia deposits) providing coverage for the Bank of Indonesia who
would provide the local performance gtee. This is a unique arrangement that
the Jp banks have with Indonesia. Also the general feeling amongst Jp
trading companies and banks is that they are already pregnant with Indonesia
and a little more doesn't matter. Basically Indonesia is in the national
security interest of Japan and therefore Jp govt and institutions will
provide support. I have mentioned the possibility of this to Stu to consider
other ways to manage coal risks. Prepay would likely be in the range of
USD30-40 million. Nowlan has indicated the possibility of greater volumes,
so will work variables as we get feedback from NI/DB. For a more detailed
discussion see internal writeup:

Joe

Joseph P. Hirl
Enron Japan Corp.
81 3 5219 4500
81 3 5219 4510 (Fax)
www.enron.co.jp