Delhi High Court rejects Cairn India's export plea

Cairn argues selling its excess crude to domestic companies is costing govt Rs 4.5 crore each day

The Delhi High Court on Tuesday refused to allow Cairn India Ltd to export surplus crude oil from its Barmer oil fields in Rajasthan.

The court had earlier reserved its verdict on a petition filed by Cairn seeking to export the surplus crude, produced under a production sharing contract (PSC) with Oil and Natural Gas Corporation Ltd, as benchmark prices offered in India were far lower than the prevailing global rates.

Cairn had previously mentioned that as a result of selling the excess crude oil to domestic companies such as Reliance and Essar at a rate that was 20 per cent lower than international prices, the government alone (which receives 70 per cent of the sale profits) was losing about Rs 4.5 crore each day, in addition to the losses suffered by the company.

Cairn had claimed to have made several representations on this behalf to the director general of foreign trade on previous occasions, but failed to invoke a response. The company had also contended that there was no bar on the export of surplus crude under existent foreign trade policies.

The Ministry of Petroleum and Natural Gas had opposed Cairn’s petition by stating that no unrefined petroleum product had previously been allowed to be exported from the country and that such sales would be detrimental to India’s national interests, as nearly 85 per cent of crude requirements were already being imported.

The Additional Solicitor General Tushar Mehta had also highlighted relevant provisions of the PSC which prohibited the export of crude till India attained self sufficiency in oil production, to support the ministry’s stance.

While rejecting Cairn’s plea on Tuesday, Justice Manmohan said that the company could invoke the dispute resolution mechanism under the PSC instead. The setback for the Vedanta Group entity comes at a time when the company is already battling with the government in the high court, for the timely extension of the same Barmer oil fields PSC.