Subject: EGEP/EOGIL Customs Duty Inquiry on Offshore Production
From: [email-masked]
To: [email-masked]
Cc: [email-masked]
Date: Sun, 17 Dec 2000 12:39:00 -0800 (PST)

FYI.... Jane Wilson is our government affairs person in Mumbai.
----- Forwarded by Steven J Kean/NA/Enron on 12/17/2000 08:38 PM -----

	Jeffrey Sherrick
	12/15/2000 06:28 PM
		 
		 To: Cliff Baxter/HOU/ECT@ECT, James Derrick/Corp/Enron@ENRON, Steven J 
Kean/NA/Enron@Enron, Rebecca McDonald/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, 
Mike Stewart/Corp/Enron@ENRON, Larry Morse/Corp/Enron@Enron
		 cc: Jack Harmuth/Corp/Enron@ENRON, Dominic Carolan/NA/Enron@ENRON, John 
Ambler/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Jane Wilson/Enron@Gateway, Wade 
Cline/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Stephen Wallace/Corp/Enron@ENRON
		 Subject: EGEP/EOGIL Customs Duty Inquiry on Offshore Production

We were served summons by the Customs Office in Surat asking for meetings 
with our platform managers and on Dec.12th we sent two representatives 
(operations mgr & legal) to answer their questions.  Over a two day period 
they inquired about production and logistical issues and asked a number of 
questions regarding product delivery points, pricing formulas, etc.   In 
summary, they are trying to build a case that the gas and maybe even the 
crude we sell in India is subject to a 10-12% customs duty since it is 
produced outside of the 12 mile territorial limit.  They are trying to make 
the case that we are importing the gas and oil into India.  Obviously this is 
not the case and there is no merit for such consideration, but we don't want 
to let this idea get entered as a show/cause filing against Enron and our 
partners.  There would be remedies such as court or arbitration, but the 
timing to resolve this is probably 1-2 years.  Furthermore, this issue would 
most likely impact current efforts we have on-going.  Therefore, we are 
taking the issue very seriously and plan to meet in Mumbai next Thursday to 
chart an appropriate course of action.  Once we meet, we will get back to 
Cliff and Jim Derrick regarding our recommendation on Thursday morning 
December 21st Houston time.  Cliff and Jim, if you are planning to be out of 
the office, please drop me an e-mail where you can be reached.

Meeting in Mumbai next Thursday will be Chris Walker of Linklaters, local 
Indian counsel (Saberwal ?), myself, Mike Stewart, Dominic Carolan (EGEP 
legal), and certain representatives from EOGIL.  We would also like to have 
Jane Wilson(EIPL Gov't & Regulatory affairs for India) present if she is 
available.  Jane it is not mandatory that you are present, but if you can't 
attend could you send me an e-mail where I could reach you if necessary.  The 
meeting will be at EOGIL's office and Fatima Samuel will confirm the time and 
place once Chris Walker's schedule is known.  It is my understanding that 
Chris Walker will be in India on Tuesday and Wednesday working with Wade's 
group on other matters. 

This issue came up originally in 1997 right after we started producing gas at 
Tapti.  At that time we had 3 legal opinions prepared and the legal team 
tells me the positions were very strong in our favor on a variety of fronts.  
After a few meetings and a couple of letters the issue went away and never 
resurfaced again until now.  We suspect that this issue has been an open item 
since that time and for a variety of reasons (ongoing activities ?) someone 
feels it needs to be checked off the list.  Hence, the revived interest at 
this time.  

The reason we are giving this such a high level of attention is probably 
obvious, but the reason we want to act upon our plan immediately once we get 
together next Thursday may seem less necessary.  However, today our office 
received 3 more summons for 3 different people to report to Surat next 
Tuesday, Wednesday and Thursday.  This time they have asked for our 
production manager, logistics manager and lead accountant.  We have requested 
an extension due to the short notice and holiday season and expect to have it 
granted, but we will not know if it is postponed before Monday.   (If we have 
to go we will have legal counsel attend with the individuals named)  This 
level of back to back activity for a government office at this time year is a 
concern.  Going into the meeting with the legal guys on Thursday, we are 
thinking that we need to have a highly respected person(such as Saberwal) 
deliver  our message (to multiple groups, i.e., Surat customs, Ministry of 
Finance, Mopng) as to the lack of validity for this potential claim and what 
we would do if they proceed.   By Thursday I think we will have all of the 
necessary "color" on this issue and with the team mentioned above we will be 
able to develop the right plan of action.  However, due to the level of 
interest and activity of the Surat Customs group, we anticipate that our 
recommendation will be to move quickly, hence, my desire to contact Cliff and 
Jim next Thursday for approval to proceed.  

I have included Wade and Rebecca(EIPL) as well as Steve and John(PR) for 
information purposes at this time.    
This first stage plan we will be seeking approval for next Thursday will be 
to meet with certain people in an attempt to keep this from becoming an 
issue.  This should be a fairly quiet issue (for Indian standards) next week 
and even the subsequent meetings that I'm anticipating would take place in 
the following two weeks ought to be very low keyed items.  However, in India 
you never know and considering some of the existing press of recent we should 
get prepared and make sure we are co-ordinated.   John, following our 
Thursday decision we should probably talk about our plan so if you'll leave 
me a note where you can be reached, I'd appreciate it.  

In summary, the odds are we will be able to manage this and it won't become a 
big issue.  However, we need to take this very seriously and deal with it 
proactively and quickly before someone files something without understanding 
the consequences of the action.  I am leaving for India on Sunday and when 
possible I will pick up my mail.  I will also be checking voicemail if you 
need to leave a message.   I will be the Mumbai office on Tuesday, Thursday 
and Friday and in Delhi on Wednesday. 

Jeff