Jose LNG Project November 2000 Project General Overview

Jose LNG Project November, 2000

Project General Overview • LNG liquefaction, storage, and export facility in eastern Venezuela – 2. 1 MMTPA capacity – Approximately 300 MMscfd of net exports, enough for 2000 MW • To be located in the existing PDVSA-Gas cryogenic complex at Jose – Adjacent to Enron’s ACCRO LPG facilities. Site large enough for three LNG trains • Gas supply required, 350 MMscfd (compared to 5700 MMscfd produced daily in Venezuela, mostly associated to oil production) – Bought from PDVSA’s associated gas production (no dedicated source or reserve risk) – World only LNG export project with no exploration/production risk or investment • Gas contract with PDVSA at all-in price that includes transportation to Jose – Gas contract and other in-country documents under a PDVSA-Corp guarantee • Target LNG markets: – U. S. East Coast • Elba Island, Lake Charles, Cove Point, Boston and South Florida (ENE project in Bahamas) – Puerto Rico, Brazil and other Caribbean (Dominican Republic) – Portugal/Spain • Estimated all-in capital cost (excluding IDC): $688 MM – Enron initial equity of approximately $120 -$140 MM (65/35 - debt/equity ratio) • Enron 50%, PDVSA 25% and other buyers (UF) 25%

Proposed Project Structure ENE to continue sell-down strategy to accomplish off. Balance Sheet treatment and MTM. 75% off-take (225, 000 MMBtu/d) 25% off-take (75, 000 MMBtu/d) Off-Take Agreements ENE Net Off-take 300, 000 MMBtu/d 75%-$157 MM Equity Financing 25%-$53 MM Off-take to be split between ENE & PDVSA Debt Financing $490 MM 70% Equity $210 MM 30% Equity PDVSA EPC Contract Turn-Key PDVSA Turn-key $580 MM EE&CC to provide Turn-Key for the project. EPC price and EPC contract in final negotiation. Other potential EPC options to be explored if necessary. LNG Project Approx. 4% of EPC PDVSA-Gas to provide gas supply and site Gas Supply PDVSA-Gas Site & Pier PDVSA-Gas All PDVSA-Gas obligations are backed by parent PDVSA-Corp Guarantee Debt from bank and bond market. Basic assumptions are: T-650; 14 -y tenor, ; fees of 200+75; coverage ratio 1. 50 x O&M Contract Turn-Key ENRON to provide O&M services to project. Several options available for adding third parties to O&M Contract. Most O&M activities could be contracted to third parties, while keeping a core senior management team at the project level for relationships and expansions

Key Transaction Documents PDVSA Transaction Documents Scope of Transaction Documents Involved • Methane Gas Supply to the Plant • Sale of NGL back to PDVSA-Gas • Gas Supply Agreement Final, ready to sign • Rights to Plant Site at Jose • LNG Sites & Pier Agmt • Rights to use existing Pier • Usufruct and Servitude Agreements Both final, ready to sign • PDVSA Participation in Project (equity option, commercial oversight) • Participation Agreement Near final • PDVSA Parent Guarantee Final, ready to sign

Price Exposure Analysis LNG Markets MOL EXMAR Leir Hoergh HH + Basis 70% Flat 30% @ CPI Various Hedging Instruments ENA Off-Take ENE-PDVSA Terminal Services 70% Flat 30% @ CPI Pricing to match $ Debt Principal/Interest EPC Price $ Equity $ 1. 00 Flat Jose LNG Project Basic Price Return $ 0. 20 @ CPI Gas Supply O&M Fee CPI based $0. 65 @ HH $0. 15 @ flat 1% $0. 15 @ CPI Minimum Price Bonus Structure PDVSA Corp. All inlet gas: Basic price, floor and bonus O&M costs escalation Capital recovery and return (Flat)

Project Timeline Nov. 2000 Participation Agreement Completed Estimated Key Dates April 2001 Executed EPC Contract NTP Dec. 2000 Execution all Documents Feb. 2001 Permits Obtained July 2001 Financial Closing PDVSA Option May 2001 Executed O&M Shipping Arrangement Jan. 2002 PDVSA Option May 2004 Commercial Operations - Up to 7 mos - ENE’s Commitments GSA LC - $4 MM (pre-construction) GSA LC - $1. 25 MM (pre-construction) LNG Off-take structure established/ final commitment before FC O&M - Cancellation Fees Shipping commitments GSA LC - $20 MM (construction) EPC - Cancellation Fees for owner and Completion Guarantee for EE&CC PDVSA option expires Equity commitment - FC may be bridge financing PDVSA equity option starts Off-take final commitment GSA LC - $30 MM (operations) EPC - Performance Guarantee from EE&CC

General Economic Value Drivers • Off-take agreements will provide a substantial portion of Enron’s income – Currently working on ability to MTM transaction – Next year income will come from both MTM of transaction of the marketing company level and from trading operations • Project company return of approximately 18% (equity at project level) – Excellent return level for equity risk with current structure – Equity sell-downs at promotes are expected to occur before year-end 2001 • Expansion rights will provide Enron w/ tool to manage 3 rd party supply – Addition trains a clear possibility under current structure and at much lower cost – Sellable rights w/ project company • Marketing fee for services provide to PDVSA under Participation Agreement • Significant construction profits (assumes EPC by EE&CC) – Expected to be approximately US$39 MM, plus contingency • Maximize utilization of Enron’s current positions in Elba Terminal and shipping capacity – Elba capacity is approx. 55% of Jose volume (Jose could use 100% of the capacity) – Depending on routes, a significant portion of Enron’s current shipping capacity could be used to move Jose volumes

Next Steps • 4 th Q’ 2000 extremely pivotal. Scheduled to conclude Venezuela in country agreements, permits, and finalize Elba Island documents • Specific near term activities – Complete Jose LNG Venezuela agreements – Finalize Elba Island documents (Doug Arnell and Les Weber) – Advance conversations with El Paso (Cove Point) and CMS (Lake Charles) – Decision on EPC Contractor (EE&CC vis-à-vis third party contractor) – Follow-up with Banks for project financing package (Larry Lawyer and Martin Rees) – Approach possible Equity investors after all key contracts in place (Larry Lawyer) • Internal approval process: – Decision on approach for PDVSA’s Participation Agreement (LNG off-take arrangement) – Obtain MTM treatment for transaction – RAC process