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Dominican Republic LNG and Power Plan Facility

Initial concept to bring LNG to Dominican Republic, creating demand and involving Enron & Unión Fenosa in a joint venture for a LNG regasification terminal and combined cycle power plant. Business premise is integration between partners throughout value chain. Project structure includes value added services and contractual agreements. The project status involves permits, concessions, and discussions for power purchase contracts. Proposed strategy aims for single terminal scenario with optimized power plant size and minimal equity exposure for Enron.

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Dominican Republic LNG and Power Plan Facility

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  1. LNG Offsite November 20, 2000 Dominican RepublicLNG and Power Plan Facility

  2. Initial Concept • Bring natural gas/LNG to Dominican Republic • Creates LNG demand for the Atlantic Region/Jose LNG Project • Construct an LNG regasification terminal located on the south coast • Enron & Unión Fenosa to build a 500MW combined cycle power plant next to the terminal • Joint Development Agreement executed in August 2000 • Fundamental business premise in the JDA is the integration between Enron & Unión Fenosa throughout the value chain • Co-owners of power plant (large PPA with Unión Fenosa’s Discos) • Co-owners of LNG terminal • Provides regasification services to power plant and eventually to other gas consumers • Unión Fenosa to become a minority partner in Jose LNG project

  3. $33MM UF $72.5MM ENE UF 50% 50% 50% 50% Banks Equity Debt Equity 65% $398 35% $66 35% $145 LNG Supplier LNG Terminal Power Plant 500MW UF’s Discos PPA Gas Supply Agreement Project Structure

  4. Value Added Chain & Project Contracts Up-stream Mid-stream Down-stream Fuel Supply Contract PPA Contract Shipping Agreement EDENORTE & EDESUR Shipping Fee - Fixed Fuel Supply - ToP Basis - Variable Long term power purchase (20-y) Capacity obligation, plus 70-80% energy commitment Jose LNG Project LNG Shipping LNG Terminal Power Plant 500MW Vaporization & Storage Services - Fixed 20-30% of energy will be sold to spot market Tolling Agreement Spot Market Market Deliveries

  5. Project Status • Land Option secured • Major permitting obtained • Environmental permits • Generation concession • SHA and PPA between the parties currently under discussion • Discos have to bid Energy purchase contracts • GSA draft just started last week • RFP’s for EPC of the power plant to be issued by end November • No financing activities yet Existing Scheduled Proposed Proposed Gas Pipelines Enron 500MW Cogentrix 300MW AES 270MW AES-Destec 220MW Haina 100MW Airport Port Site Itabo 105MW Punta Caucedo

  6. Current Circumstances • AES is developing a similar Project, which is more advanced • Same location • 300 MW power plant • COD April 2003 • Two LNG Terminals scenario • Competition between terminals will drive prices down (limited upside potential) • LNG market is limited – Currently not more than 1,500 MW • Substantial LNG demand growth beyond that unlikely • Highly lucrative, more creditworthy alternative markets for Jose’s LNG are being identified • Very strong gas market • Under current conditions, Jose will be absorbed easily in US terminals with very high net- backs • Credit worthiness of US and/or European buyers improve financiability of Jose • Enron’s appetite for large power assets has decreased

  7. Proposed Strategy • Aim for a One Terminal situation – Sit-down with AES with Action Plan • Requires that we have our main permits in hand (Environmental, Generation, and Fuel Imports and Sales). If not, we are not a serious competitor • We are almost there • Unión Fenosa wants the JV to negotiate with AES quickly • Results: • Lower equity exposure • Taking a position in the natural gas monopoly in the island • Optimize size of the power plant • Explore alternatives to minimize/eliminate Enron’s equity exposure in the power project • Substantial turnaround of the deal as it stands • Unión Fenosa an important counterpart of Enron in several markets

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