THORN MEMO - WTO ,
 ---------------------- Forwarded by Maureen McVicker/HOU/EES on 12/09/99 
04:22 PM ---------------------------


Terence H Thorn@ENRON_DEVELOPMENT
12/02/99 05:38 PM
To: Maureen McVicker@EES
cc:  
Subject: 

This is the note I want you to distribute. You may have gotten by mistake a 
shorter version which you can discard.
---------------------- Forwarded by Terence H Thorn/ENRON_DEVELOPMENT on 
12/02/99 08:10 AM ---------------------------


Terence H Thorn
12/02/99 08:08 AM
To: Maureen McVicker@EES
cc:  

Subject: 

Maureen- would you distribute this note Friday morning  to everyone who 
participates in the Friday call. Thanks.T

Again I find myself in a time zone (Korea) that will prevent me from 
participate in the weekly call.  Although I realize that this will do nothing 
to dispel the rumor that Thorn has become virtual, only an e-mail address 
that floats in space, it's a good time of year to update you on key 
activities that I am handling or involved in personally that will carry over 
to next year.  This certainly isn't inclusive for the global affairs group.  
Hopefully each week Mike or Gia has ben giving you a good run down of the 
broad range of  activities from  throughout the world in which the group 
participates.

At the top of the list is Japan where I spent Thanksgiving week with Joe and 
Nicholas.  Although we  continue to make the rounds to both gauge  reactions 
to and promote our comments, the most important time was spent internally 
putting together a market entry plan and objectives for the next few months. 
The MITI schedule is :

 November 19 -file comments
 December 2 -the Joint Working Group meets to submit guidelines to 
MITI/guidelines are official
 December 2 -submitted comments are made public
 December 31- can we get the Japan Fair Trade Commission, the monopoly laws 
changed to cover utilities? Probably not until the Spring
 January 4 -The electric utilities publish their tariffs
 March 21 - the market opens under the published tariff schedule

Feed back indicates that our comments to MITI were well received and they may 
take the extraordinary step of responding in writing. Still we don't expect 
many if any changes.  My read is simple and reflects the advice we received 
from one Japanese official: don't do seminars, do business.  Until we can 
actually test the system with a transaction, we're spinning our wheels.  
Wrobel's people hope to lock up some generation from a steel company by the 
end of the year and then it's up to Hirl, Nick and I  to help them do a back 
to back PPA and navigate the new regulations . That's when all of the 
obstacles the utilities  throw up come out of the wood work and we see if the 
rates make a sale possible. We're in for a long, incremental battle.  I met 
with the MITI person in New York in Seattle and Edith covered bases with 
USTR.  In January Hirl and I will go to London to work through the European 
experience and see how the Japanese structure mimics or allows the types of  
experiences we've seen in Europe.

Prior to Tokyo, I was  asked to be at APEC's energy working group meeting in 
Wellington.   The APEC  Energy Minister's established an energy working group 
that develops programs and projects for their approval.  The Minister's also 
wanted to have strong business involvement so the Energy Business Network was 
created this past year with two business men representing each economy.  I 
along with Ken Thompson from ARCO was appointed by DOE for two years  to 
represent the US Energy industry. We have produced such things as the IPP 
best practices manual and most importantly the Natural Gas Initiative which 
provided a complete compendium of the things Asia economies would have to do 
attract foreign investment to develop much needed gas infrastructure.  This 
was followed by approval of a consultative process where economies invite 
teams in from the business communities to address gas or electric issues. We 
just finished a very successful visit to Thailand where I used Nancy Gardiner 
as a key speaker on pipeline deregulation, basically telling PTT there is 
life after death (privatization/liberalization).  She did great and has the 
temperate, Knowledge and style to get our meessage across.  Unfortunately, to 
some economies such strong business involvement is an anathema to their 
protected worlds  and do everything to eliminate or reduce the EBN influence. 
Barry Leay, the Chair of the EBN asked me to be at his side to defend against 
attacks by the Japanese, Mexicans and Chinese. We argued and won a strong 
endorsement of the EBN and its work, lost a little on the consultative 
process (DOE was no help) with a little more EWG control/interference and 
kept energy services alive at least through  Spring.  Ken and I will met with 
US energy companies in Houston on December 15 to go over developments and 
plan for 2000.  The US group is split with the majors opposing a strong 
deregulation agenda and an energy services initiative which they interpret as 
open access for some reason.   This type of involvement keeps us face to face 
with the ministers and energy ministers of 21 Asian economies and allows us 
to push through an official government organization a liberalization agenda.

Joe Hillings will provide you a complete update on the WTO Seattle 
Ministerial this week. Any typos in this note can be blamed on the residual 
effects of tear gas.  It seemed odd to me to be on this side of a police line.

Everyone is aware of the outstanding job Joe Hllings has done in forming the 
Energy Services Coalition in less than a year. Our major goal is Seattle was 
to get energy services on the negotiating agenda. It looks like all services 
will be included but not broken out by categories.  You just assume energy is 
included. The only thing that worries me is that a three year period has been 
designated to study the issue with no milestones or deadlines during the 
period. That was as of Wednesday. Again Joe will know how it ended up. The 
side meetings were excellent: with Eisenstat (the gaza project, the Bolivia 
conservation plan-he's on the OPIC board,  and Sutton's ABAC nomination), 
Secretary Daly (South America), and Mack McLarty.  Mark- Following on a 
conversation and suggestion with Ken Lay, Mack did talk to Clinton about 
Blair's swing to the left and the energy tax policy and both of us in 
separate meetings talked to Al From who is a close friend of one of Blair's 
key advisors. Al  will talk to him about his departure from the third way.

Ken Lay had a keynote address Thursday and lots of interviews so I'm sure he 
knocked them dead. Kelly handled all the interviews and I'll look forward to 
hearing from her how it went.

What's alarming about Seattle is the backlash against the WTO which has 
become a symbol for globalization. Trade is no longer an economic issue- it's 
a social issue.  Eisenstat said it best. We have five tasks as a governmment 
and industry: 
 
 an education effort about trade and it benefits. we can't be defensive
 demystify the WTO- it is a powerful instrument to make countres abide by the 
trade rules
 clarify the US trade agenda
 give the less developed nations a sense of equity and participation
 open up the WTO system to be more inclusive to these groups who feel shut out

Open markets are critical to Enron's international success.  We'll need to 
decide next year what role we want to play in this debate and right out of 
the block we've got China's WTO agrement with the US.  After my DLC 
presentation I talked to reps from the unions and from the environmental 
groups about opening a dialogue and what would be a good forum to discuss the 
WTO and related trade issues. No one has any answers yet. 

I continue to work with Shell and the NGO's to set up the US Trust fund for 
the $15 million dollar Bolivian conservation plan.  The Associon de Hecht has 
cleared it's legal review. It's not going to happen until January. We have 
also had  an open letter to the president of Bolivia criticizing us for 
violating our agreements with the indigenous peoples.  Dennis Vegas is 
working on this as is Abe Moreno.  Meet with them, find out if we're really 
at fault, and fix it. I have found the person I want to hire for a 
environmental liaison for the southern cone, based in Bolivia. She will also 
be our main rep working on the conservation plan and with the indigenous 
communities. In the end Rachel can be a trouble shooter for the southern 
cone. I will meet with Jim Broad way in December, our consultant on setting 
of the Environmental Management System for the Blivian project for a debrief 
and lessons learned.

Mike Dahlke has an optimistic report on our Korean tax issue and it looks 
like we'll get the percentage reductions we want for the threshold for 
holding company participation. If the 30% holds it's a great vistory that 
took a year to accomplish.  I am in Korea now working on next years final 
budget and strategy (I'm on the SK/Enron board) and a new bid for some of 
KEPCO's genration.  They have just told us they want everyone to bid again. 
Sounds lke Mexico and Vietnam.  We had a long discussion over our formal 
Korean dinner tonight on the best way to collect and prepare mosquito eyes.

It looks like we've the Bangdalesh Power Development Board blink and agree 
that electricity form our proposed plant could be exported to India as long 
as LPG's from the gas go to Nepal and Bhutan. Jim Steffes dream of going to 
Bangdalesh may come true.

We got caught in a political p------- contest between the two major political 
factions in Columbia over our legislation to allow exports of Columbiaa Gas 
through an Enron pipeline to central America. We also had quite an internal 
debate on open access pipelines. Things are progressing and Amr is doing a 
great job.

We have reached a critical junction in Thailand and if we don't start 
generating income we'll have to shut down or at least cut back.  Merrill, 
Grimes and  Jane and myself will be participating in an all hands strategy 
session with the Thailand team in December to flesh out priorities and real 
opportunities and hopefullt make some tough calls. 

Sue has everyone's comments in on the new enviromental due diligence hand 
book and module. We can now begin working on the costs tables where we can 
provide real cost data on different clean up problems. With all the work we 
have done over the years, we've never kept organized records of actual costs 
which could provide much better estimates when we bid on a project in the 
future.

Palmisano Whalley and I have agreed on a commercial plan for the carbon 
trading business for 2000. On the commercialside we'll start pusuing projects 
that generate credits for sale as well as continue discussions with other 
companies about participating in an Enron carbon fund. We conducting an 
inventory internally our carbon position- are we long or short and which 
projects will generate credits for sale. An internal trading system is 
inevitable. We are developing contract language for all deals so that any 
project any Enron company is involved in can capture credits of they are 
developed. The GHG data base will be carried over to an entire inventory of 
Enron emissions. When in New Zealand I visited two projects from which we 
could buy and market credits, one of which looks like the best sequestraton 
project i have ever seen.

We've created an internal working group to assist the GHP on Houston's ozone 
problem. Our next get together will be around the 16th.

I hooked up with Andrew Makk on the Gaza project and we agreed on a work plan 
for the rest of December with the Israeli's and others to move the project 
along. Key now will be a future gas supply and I will be working with El 
Paso, who made the short list on the piplene from Egypt. When I travelled 
with Daly last month, I met all of teh cabinet members in Israeli, Egypt and 
Jordan and had private side meetings withteh energy ministers and 
infrastructure ministers.  There is a real cahnce Egyptian or Jordian gas 
will move to Israel and Gaza, hoepfully to our projects.

Mosquitos eyes have a slightly nutty flavor and when cooked properly are 
crunchy.
steven.kean@enron.com