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Process Guide for JVA Transactions

OPERATED VENTURE

1. Cash Call to be Raised


For each Operated Venture, a Cash Call needs to be raised on partners, by using the
transaction codes:
 GJ02 (Cash Call at the total venture level)

The Cash Call can be raised in any of the funding currencies, maintained in the venture
masters. Cash calls for blocks operated in India to be preferably raised in funding
currency INR to maintain uniformity.The accounting entry in the Operated Venture is:

Account Account Description Customer Amount INR


560201 Cash Call Request JV-OIL(Operator) 2,100,000
560201 Cash Call Request JV-RIL(Non Operator) 900,000
560202 Cash Call Offset JV-OIL(Operator) -2,100,000
560202 Cash Call Offset JV-RIL(Non Operator) -900,000

The accounting entry in the Non-Operated Venture (OIL Share) is:

Account Account Description Amount INR


203501 Cash Call Offset -2,100,000
203502 Cash Call Request 2,100,000

Scenario: An Operated Venture with JV-OIL (Operator) share 70% & JV-RIL(Non-
Operator) share 30% & Cash Call raised for 3,000,000 INR. The system converts the INR
cash call into the USD currency using the conversion rates maintained in SAP.

2. Cash Call Received


Money received from the Non Operator as well as own contribution (OIL) needs to be
accounted & cleared against the Cash Call Request, by using the Transaction code F-28
(Post Incoming Payments). The entry passed for the same is:

Account Account Description Amount INR


560201 Cash Call Request -900,000(Recd from the Non Operator, cleared
against the CC Req.)
560201 Cash Call Request -2,100,000(Recd from the Operator-OIL cleared
against the CC Req.)
1001 IUT-Rec/Pay 3,000,000(Recd in OIL Co Code Bank A/c)
3. Routine Transactions:
The routine transactions need to be booked in the system. Care should be taken that
expenses are identified with correct Work break down structures pertaining to
specific joint venture.Please note that expenses for joint venture operations are
booked to work breakdown structures only and not directly to cost centres.
Inter company transactions needs to be carefully booked. They normally arise in the
following transactions:
 Payment of Royalty & Sales Tax
 Collection of JV Sales amounts
 Payment(Non Operated JV) & receipt (Operated JV) of Cash Call amounts
 Payment for Material Purchases (Imported & Indigenous)
 Payment for Services
 Consumption of Materials(withdrawal from other Companies)
 Stock Transfer from other Companies
 Payment of TA & Advances

4. Main Office Expenditure


The Main Office Expenditure needs to be charged for the Operated Ventures, by using
the Transaction Code ZJVGJ94.
. The Main Office Expenditure is calculated on the basis of the actual expenses booked in
the concerned cost objects at the approved rates for the year.

The following entry will be booked in each of the cost objects wherein the costs have
been booked.
Accounts Account Description Amount INR
786000 Main Office Expenditure 80,000
786001 Main Office Expenditure- -80,000
offset
A/C
Scenario: Actual allowable expense (GL A/c 730000-Cont-2D Seis. Process) of
200,000,000 INR (4,000,000 USD) was incurred during the period. Hence PCO (80,000
INR) is calculated as 2% (approved rate for theyear) of the cost.

5. Cutback
Once all the FI& CO process are completed, the Cutback process need to be executed, by
using the partners, in the ratio, specified in the JOA.
The following 2 entries are passed in the Operated Venture books:
Account Account Description Customer Amount INR
739985 Cont-Shadow GL -200,000,000
560200 JV Customer JV-OIL 140,000,000
560200 JV Customer JV-RIL 60,000,000

By this the total expenses are distributed in the ratio 70% JV-OIL & 30% JV-RIL and the
Operated Venture books are nullified.
OIL share of the expenses is transferred to the Non-Operated Venture books. The system
entry passed for the same is as follows:
Account Account Description Vendor Amount INR
739985 Contract Costs - JV-OIL 140,000,000
Shadow Account

203500 JV Vendor JV-OIL -140,000,000

Users are requested to carefully check the entries flowing as shown while doing the
Cutback in the test run first. Then only the update/final run is to be executed.

NON-OPERATED VENTURE
1. Cash Call Request
For each Non-Operated Venture, a Cash Call Request received from the Operator, needs
to be accounted in the books by using the transaction codes:
 GJ05(Cash Call at the Venture level)
The accounting entry in the Non-Operated Venture is:
Account Account Description Vendor Amount INR
203501 Cash Call Request JV-OIL(Operator) 2,000,000
203502 Cash Call Offset JV-OIL(Operator) -2,000,000

Scenario: Non Operated Venture with shares JV-OIL(Non Operator) 20% & JV-
OIL(Operator) 30% & Cash Call request received for 2,000,000(OIL Share).

2. Cash Call Payment


Our contribution (OIL) paid to the Operator needs to be accounted & cleared against the
Cash Call Offset, by using the Transaction code F-53(Post Outgoing Payments). The
entry passed for the same is:
Account Description Amount INR
1001 IUT Account -2,000,000(Paid through OIL Co Code Bank A/c)
203502 Cash Call Offset 2,000,000(Paid to the Operator cleared against the CC Off
3. Non Operated Invoice booked
At the end of the period, we get an actual invoice from the Operator, toward our share of
actual expenses for which necessary entries to be passed in the system.
The following entry is passed.
Account Account Description Vendor Amount INR
203500 JV Vendor JV-OIL -2,500,000
7***** Expenses GL 2,500,000

4. WBS Settlement & Asset Capitalisation


WBS settlement needs to be done at the month end, by using the transaction code CJ88.
The same needs to be settled to an AUC and then capitalized to the respective assets, by
using the transaction code CJ88.
Depreciation run for the blocks is being done centrally at Fields.

For work instruction manual(screenshot of transactions) please see in the path


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