 |
ENRON FILES LITIGATION ON U.K. NORTH SEA
GAS TRANSPORTATION AND SALES AGREEMENTS
FOR IMMEDIATE RELEASE: Wednesday, April 3, 1996
HOUSTON -- Enron Corp. (Enron) announced today that, together with two of its affiliates, it has filed a petition in the state district court of Harris County, Texas, USA, relating to material breaches of the Capacity Reservation and Transportation Agreement (CRTA) by the Central Area Transmission System (CATS) Group. Enron is seeking a determination by the Court that the CATS Group, by their non-performance, have repudiated the agreement. Transportation under the CRTA was to be used for shipping J-Block gas in the U.K. North Sea. Because the CRTA is the foundation for all of Enron's J-Block related contracts, termination of the CRTA in turn leads to the termination of the J-Block Gas Sales Agreement.
To protect the asset integrity of the gas reservoirs dedicated to Enron under the J-Block contract, pending resolution of the lawsuit, an injunction is being sought to prevent the J-Block parties from further breaching the contract by reinjecting natural gas in J-Block and by flowing gas from adjacent Block 30/6.
"Under the terms of the CRTA, the CATS Group was required to provide facilities capable of accepting, transporting and delivering 300 million cubic feet per day (MMcf/d) of gas from the J-Block field in the Central North Sea," said Kenneth L. Lay, chairman and CEO of Enron Corp. "The CATS Group's breaches include the fact that the pipeline and related facilities have not been built to the required standard nor are they capable of meeting the contract redelivery specification.
"The CATS Group has failed to comply with its contractual obligations, and we are now seeking Court declaration that, by its non-compliance, it has repudiated the CRTA," Lay said.
This action will not affect the 15-year contract for gas from the Everest & Lomond fields for the Teesside Power Station.
"While this action does not preclude the possibility of commercial resolution, Enron believes it must take this action to ensure the protection of its rights," Lay said.
Based upon information currently available and after consultation with its attorneys and outside auditors, Enron continues to believe that the J-Block contract will have no material adverse impact on Enron's financial position.
Enron Corp., one of the world's leading integrated natural gas companies with approximately $13 billion in assets, operates one of the largest natural gas transmission systems in the world; is the largest purchaser and marketer of natural gas and the largest non-regulated marketers of electricity in North America; produces and markets natural gas liquids worldwide; owns 60 percent of Enron Oil & Gas Company, one of the largest independent (non-integrated) exploration and production companies in the United States; owns 52 percent of Enron Global Power & Pipelines L.L.C., which is owner and manager of operating power plants and a natural gas pipeline in emerging markets; and is one of the largest independent developers and producers of electricity in the world. Enron Corp. is traded under the ticker symbol, "ENE."
Notes to editors:
- Enron Corp. affiliates are Enron Europe Ltd. and Teesside Gas Transportation Ltd., both of which are wholly owned by Enron.
- The J-Block owners are: Phillips Petroleum Company Ltd., 36.5%; AGIP (U.K.) Ltd. 33.0%; British Gas Exploration and Production Limited 30.5%.
- The CATS Group consists of Amoco UK Exploration Ltd. (30%); British Gas North Sea Holdings together with British Gas Exploration and Production (51%); Amerada Hess Ltd. (17.5%); Phillips Petroleum United Kingdom Ltd. (0.66%); Fina Exploration Company (0.54%) and Agip (UK) Ltd (0.3%).
- The J-Block Gas Sales Agreement, under which an Enron affiliate contracted to purchase 260 MMcf/d of natural gas from the J-Block owners, was signed in March 1993. In September 1995 Enron announced that, in accordance with its contractual rights, it had notified the J-Block owners that it estimated that its nominations would be zero gas for the year ending September 30, 1997 and would give no estimated nominations for J-Block gas for the contract year ending September 30, 1998. There has been no change in this estimate.
For additional information please contact:
Diane Bazelides
(713) 853-6285
|
