Message-ID: <4427095.1075840257833.JavaMail.evans@thyme>
Date: Wed, 30 Aug 2000 06:39:00 -0700 (PDT)
From: jeffrey.sherrick@enron.com
To: kenneth.lay@enron.com, jeff.skilling@enron.com, joseph.sutton@enron.com
Subject: India "CPIL" Supreme Court Case
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The Supreme Court hearing for the case in India regarding the alleged 
improper bidding and award of the Panna/Mukta block concluded today.  Our 
legal team's opinion is very optimistic based on the way the proceeding 
progressed and also on the actions of the chief judge during the concluding 
arguments of the case today in India. 

The panel of three judges will now take approximately 2 months to write their 
opinion and that should complete this case.  While I probably shouldn't  
speculate on the outcome, I will summarize my opinion of the important 
points:  1) there is little doubt that the Panna/Mukta award to 
Enron/Reliance/ONGC will stand, and  2) it is highly unlikely that the judges 
will request the PSC to be renegotiated, the contract was portrayed and 
generally accepted by the panel as a very fair deal for the GOI.  According 
to my general counsel, Stephen Wallace, the only concern our team has is that 
the judges were quite critical of the CBI (the government group that 
investigated Reliance for wrong doing in the bid process) during that portion 
of the testimony and there is a possibility that they could request an 
additional investigation.  Our team puts the likelihood of the judges 
ordering a new investigation at less than 50%.  There is downside to such a 
decision in that it creates uncertainty, but the focus would be on Reliance, 
not Enron. 

Enron was very prepared on the commercial and the legal front and our team, 
as expected, carried the load for this case even though we were not the 
primary defendants.  Enron presented the major rebuttal to the CPIL 
assertions because the others were not prepared and then later "coached" the 
others to help them prepare appropriately.   This was a much more intensive 
case than people were assuming it would be last year and we were very 
fortunate to be extremely well prepared and well represented.   

Based on the above information,  I do not think this issue "CPIL lawsuit"  
should  impact any future decisions we make regarding the Panna/ Mukta/Tapti 
assets.  This outcome basically eliminates one of the two issues impeding the 
progress of  the  project I showed Joe, our proposal to sell 
Panna/Mukta/Tapti, that we call Project Janus.  We believe we have a unique 
opportunity to realize exceptional value for these assets through an 
arrangement with our partner.  The strategy we have mapped out should  allow 
us to close the transaction prior to year-end and it has very positive cash 
flow and neutral financial implications (minimal if any gain due to the 
step-up last year) for the company.   The only remaining hurdle is a tax 
issue that we are currently working. 

jeff