Arbitration with Reliance and ONGC

I was in India last week meeting with partners and we all agreed that the
best thing to do to move ahead regarding the old unrecovered cash calls
("joint interest billings") was to file an arbitration proceeding and get an
objective third party to settle the issue. As you know, Reliance and ONGC
owe EOGIL approximately $7.1 and $10.3 million, respectively (including
interest on non-payment). The arbitration notices reflected only the
non-payment numbers which are $5.8 and $7.3 million for RIL and ONGC
respectively. We finalized the drafting and dated the notices on July 29th
and we delivered the official notice during business hours Monday July 31,
2000. This was the final step in a very long effort to resolve this issue in
other means, but as I noted to the OOC after the June meetings this was the
only solution in the end. While nobody likes to file arbitration, the good
news is in the end all parties seen this as the only solution and as best as
I can tell, at least internally ONGC and Reliance support this decision. If
the issue gets external, I don't know how any of the parties will respond.
Our goal is to keep it as low keyed as possible, but this is India and I
would expect someone to try to make a big issue out of it.

I will be in contact with John Ambler today to discuss the details of the
submittal and to prepare for any response to the media that may be
necessary. While both parties were expecting the notice, it may leak into
the media over the next few days. Please defer any questions or comments to
either John Ambler, Larry Morse or myself regarding this issue. Until John
advises us otherwise, our comment will be as follows;

" The parties (ONGC, Reliance and Enron Oil and Gas India Limited) have had a
dispute on certain cost items and together we have agreed it is best for the
joint venture to have this dispute resolved by an independent third party
using the guidelines as set forth in the Joint Operating Agreement."

Mike Smalling in our office will coordinate this matter with John Ambler and
the appropriate staff. I will be available to respond if necessary and my
contact numbers are as follows;

office-713-853-5934
pager 888-493-1770
cell 713-569-4713
home 281-320-2198

Larry, please make sure our office understands that only you are to comment
on this and any other official E&P business in India and Wade/Sanjay would
you share this note with the appropriate people in your office so nobody is
surprised if something comes up. Mike Smalling, John and/or I will keep you
informed of any relevant events.

jeff