22 hydrocarbon production-sharing contracts under arbitration

As many as 22 arbitration cases have been initiated in the last 15 years relating to production-sharing contracts entered into by the government with companies for exploration of hydrocarbons in India, the Lok Sabha was informed.

Petroleum Minister Dharmendra Pradhan told the lower house of parliament on Monday that the government has entered into 310 production-sharing contracts (PSCs) so far in the pre-New Exploration and Licensing Policy (NELP) field and exploration bidding rounds and NELP exploration bidding rounds.

While 11 arbitration cases pertain to the 2001-2010 period, the other 11 have come during 2011-2015, the minister said.

Among the companies which have initiated arbitration are Hindustan Oil Exploration Company Limited, Niko Resources, Cairn India, Videocon Industries, Reliance Industries and British Petroleum Exploration (Alpha) Limited, Pradhan added.

"Prompt action is being taken in all the cases by the government for early resolution as per the provisions of the PSC," Pradhan said.

The high-profile cases also involve multinationals and claims running into several billions of dollars.

The Directorate General of Hydrocarbons has submitted suggestions for improving the dispute resolution mechanism, Pradhan said.

A ministry source told IANS on Tuesday that a DGH strategy paper suggests that the government's over-cautious approach in evaluating disputes and an exterme focus on protecting its share rather than technical merit has provoked a rash of arbitration cases against the government.

The paper suggests a more professional approach with emphasis on preventing differences from blowing up into a full-fledged legal wrangle.

Meanwhile, the government will soon auction 69 marginal oil and gas fields to be surrendered by state-run Oil and Natural Gas Corp and Oil India, a top official said on Tuesday.

"Marginal field policy will have approval soon for 69 fields which ONGC and Oil India have agreed to give. We hope to put them up for bidding," Petroleum Secretary Saurabh Chandra told reporters here on the sidelines of a conference on hydrocarbons organised by industry chamber FICCI.

The ministry is expected to unveil a new bidding mechanism based on the revenue-share model as recommended by the C Rangarajan Committee for the 69 small and marginal fields. It is also expected to auction hydrocarbon acreages under the next - 10th - round of NELP on the revenue-sharing model.