Peculiarities of the recovering the "depletion of expenditures''

The return of a subsoil area after the industrial development and extraction procedure is accompanied by the bearing of costs by investors.

In order to compensate for costs, Investors declare their demands for indexation thought returning the subsoil area from governments as parties to the production sharing agreement.

Ukraine, as a party to a production sharing agreement, is not aware of the institution of cost reimbursement in the "depletion" part, since the completion of accounting and allocation of costs to a joint accounting account is terminated by the investor from the moment of completion of hydrocarbon production, and not the conservation of the subsoil area.

It is obvious that indexation issues cannot be raised by the investor in writing to the state.

At the same time, the concept of "depletion expediture" is known in Indian practice in resolving disputes with investors in production sharing agreements.

According to the judge George Mathan of Income Tax Appelate Tribunal, in the case of 2154/Mds/2010, the investor has no right to the natural resources, and therefore he is not entitled to reimbursement of costs as compensation.

This aspect was examined in detail by the Court of Appeal in Sit&Anr. Vs Enron Oil& Gas India Ltd.

Thus, according to Article 297 of the Constitution, all natural resources are vested in the government.

The international principle of permanent sovereignty over all natural resources was approved by UN General Assembly Resolution/ 1803.

The subsoil user of the natural resources has no right to marketing, evaluation, or any compensation.

Acquiring a property interest in ownership of natural resources constitutes additional costs for the investor.