Message-ID: <9095600.1075848120925.JavaMail.evans@thyme> Date: Sun, 17 Dec 2000 12:39:00 -0800 (PST) From: steven.kean@enron.com To: linda.robertson@enron.com Subject: EGEP/EOGIL Customs Duty Inquiry on Offshore Production Cc: richard.shapiro@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: richard.shapiro@enron.com X-From: Steven J Kean X-To: Linda Robertson X-cc: Richard Shapiro X-bcc: X-Folder: \Steven_Kean_June2001_4\Notes Folders\Discussion threads X-Origin: KEAN-S X-FileName: skean.nsf 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