Enron Ascending

Chapter 12International Ambitions

Global energy projects—big or small, integrated or stand alone, even natural gas or not—were integral to Enron’s vision of becoming a new energy major. Ken Lay’s model for a natural gas major looked to the example of the so-called oil majors, which he defined as “integrated companies that are able technically and financially to do virtually any and all aspects of the oil business anywhere in the world.”

By the mid-1990s, Enron pointed to its power and pipeline projects in Western Europe, South America, and India as “beachheads” for further development. Upstream integration could involve Enron Oil & Gas Company (EOG), then in Trinidad and India, with negotiations to drill in Venezuela, Mozambique, Qatar, Uzbekistan, and China. Enron Capital & Trade Resources (ECT) could develop a merchant business of buying and selling spot and term gas. And Enron Engineering & Construction (EEC) was ready to design, build, and operate anywhere. Enron Renewable Energy Company, first offering solar and then wind, could participate too.

Enron International (EI) was by all appearances a successful new business line for Enron. Income before interest and taxes (IBIT) increased from $33 million in 1992 to $132 million in 1993, $148 million in 1994, $142 million in 1995, and $152 million in 1996. Compared to 1989, when approximately 2 percent of Enron’s earnings came outside of North America, International in 1996 accounted for 12 percent. But asset selldowns and spin-offs, ...