Indian customs block 3D data import

Vol 4, PW 3 (15 Mar 00) Exploration & Production

Imagine this.

It's May 1999 and you're a foreign explorer with a Production Sharing Contract (PSC) for an offshore concession on the west coast. You do your 3D seismic, then try to enter it through customs at Mumbai.

Prem Dutt (not his real name), a junior customs officer, clears the formalities. You pay a nominal $50 for the paperwork (foreign explorers are exempt from paying customs duty on equipment and materials) and return to your hotel.

Days later, you receive a 'Show Cause' notice from a local judge, asking why you 'illegally imported' 3D seismic. The notice demands immediate payment of $1.2m in customs duty.

Shocked, you return to customs and explain to 'Big Boss' Shyam Lal (not his real name) that under the PSC, seismic data shot in Indian territorial waters does not attract duty. Lal doesn't listen.

He wants a bribe. The Directorate General of Hydrocarbons (DGH) hurriedly despatches an official to Mumbai to help the operator.

Lawyers present, the operator and the DGH explain the technicalities of the PSC to Lal - to no avail. "I don't understand what you are saying," he screams, "Get out of the room!" Tail between his legs, the DGH official leaves the room, leaving the operator alone with the official.

Confused, the operator leaves the room too, leaving it to the lawyers. A week later, they issue a 270-page response to the 'Show Cause' notice, including photocopies of a technical book on 3D seismic.

End of story Hardly. The matter is pending in court, causing harm to the operator and crucially, India's much-vaunted aim of encouraging exploration.

Lal, meanwhile, still wants his bribe.