Valero Interstate Transmission Company

First Revised Volume No. 2

Effective Date: 11/01/1991, Docket: GT91- 42-000, Status: Effective

Original Sheet No. 27 Original Sheet No. 27 : Superseded

GAS SALES AGREEMENT

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THIS GAS SALES AGREEMENT ("Agreement"), entered into as of this 1st day

of September, 1990 between VALERO INTERSTATE TRANSMISSION COMPANY, a

Delaware corporation, hereinafter referred to as "Interstate", and EL PASO

NATURAL GAS COMPANY, a Delaware corporation, hereinafter referred to as

"Buyer".

W I T N E S S E T H:

WHEREAS, Interstate and Buyer have heretofore entered into a Gas Sales

Contract dated January 28, 1981, whereby Buyer agrees to purchase and

receive certain quantities of natural gas to be delivered and sold by

Interstate from supplies of natural gas which it will acquire from various

sources;

WHEREAS, Interstate owns and operates an interstate pipeline system

which traverses a number of counties in South Texas and has available

certain gas supplies and may acquire additional gas supply which it is

willing and desires to continue to sell to Buyer;

WHEREAS, Buyer owns and operates an interstate pipeline system which

is located in several states, but does not extend into South Texas, and

desires to continue purchase gas supplies to be acquired by Interstate;

WHEREAS, Buyer will make arrangement for the continuation of the

delivery of gas purchased hereunder to its pipeline system from the

delivery point specified herein; and

WHEREAS, Buyer and Interstate desire to continue with the purchase and

sale of gas covered by the prior contract, as modified herein;

WHEREAS , Buyer and Interstate have agreed to numerous changes in the

prior contract, all for purpose of settlement of disputes among the parties

and vendors under the January 28, 1981 contract, including resolution of

Interstate's recovery of take-or-pay buy out and buy down costs paid to

certain gas producers whose contracts were dedicated to Buyer under the

January 28, 1981 Agreement,

WHEREAS, Buyer and Interstate agree to terminate the January 28, 1981

contract and substitute this contract for the purpose of effectuating the

intent of the parties;