HC directs govt to issue list of particulars to Cairn

Firm had filed a plea requesting extension of its PSC till 2030

The high court here on Monday issued time-bound directions to the Centre, Oil and Natural Gas Corporation (ONGC) and Cairn India, a subsidiary of the UK-based Vedanta group, to help the government take a decision on extension of a contract the companies have with the government to produce oil from a Rajasthan block.

Judge Rajiv Sahai Endlaw directed the Centre to give Cairn India a list of particulars the government needs to take a decision on the company's request for extending till 2030 the production sharing contract (PSC) it and ONGC have with the government.

The court also directed the government to seek from Cairn details ONGC requires for consenting to commercial terms of the project, which is being run as a joint venture by the two companies.

Cairn was asked to provide these details to ONGC in two weeks and the latter is to take a decision in six weeks on about Cairn's proposal.

If there is a consensus between the two, the documents would be forwarded to the government, which will take a decision in three months on whether to extend the PSC, set to expire in May 2020, the court said.

If a difference of opinion, the court directed that the matter be listed before it on April 5, 2016.

The court issued the directions in order to "enable time-bound decision-making." Cairn had contended in its plea that delay by the government to take a decision was preventing it from infusing further investment of Rs 30,000 crore and more into the project. The court said that by having a fixed schedule for the exercise, further production might not suffer.

Cairn, represented by advocate C A Sundaram, argued that ever since 2009, when commercial production from the block commenced, it has been after the government to extend the PSC, but till now no decision has been taken.

Cairn said according to the terms of the PSC, if commercial production starts, then the contract has to be extended for a term that has to be mutually agreed upon by both parties of the joint venture.

It contended during arguments that there was a consensus between it and ONGC on extension of the PSC for 10 years. This claim was disputed by the government and ONGC.

The government said prior to taking any decision it needs various particulars, including envisaged plan of action, estimated reserves, how much can be recovered and what would be the government's share, amongst others. The government also said it needs to see that both Cairn and ONGC are "on the same page" with regard to the proposal.

Cairn said when no state-run company could find oil in the block, it had invested around Rs 10,000 crore in exploration in 1995, when the PSC was entered into, and added that the government had earned around Rs 80,000 crore from commercial production.

It said it was committed to bringing in more investment. However, it needed a confirmation from the government that the PSC would be extended.

In its plea, Cairn had said estimated recoverable assets in the block are about 1.2 billion barrels of oil equivalent, of which 466 million barrels are expected to be recovered beyond the current PSC period. At present, it is producing natural gas from the block and supplying it to government companies.