Export of crude detrimental to national interest: Centre to HC

The Centre today told the Delhi High Court that export of country's domestic crude oil cannot be allowed as it would be detrimental to the national interest considering the fact that nearly 85 per cent of required crude was imported.
The government contended this before Justice Manmohan while opposing UK-based Vedanta group company Cairn India's plea for permission to export excess crude from its Barmer oil field in Rajasthan.
Additional Solicitor General (ASG) Tushar Mehta, appearing for the Ministry of Petroleum and Natural Gas, said it was a part of the government policy not to permit export of crude.
"All the natural resources are not only vested in the Government of India but it has to be used for the government of India," he said, adding, "they (Cairn India) can earn profit by selling crude within the country."

To this, the counsel appearing for Cairn India said they are ready to sell crude within India provided they get the benchmark price.
During the hearing, the court asked the ASG, "There has to be some benefit to the government at the end of the day."

"You (ASG) will have to show me that either government is benefited or there is public interest. You are not showing me this. You will have to show it to the court," it said.
Responding to the court's query, the ASG said that most of the Indian refineries were dependent on imported crude.
"They (Cairn India) can sell the crude in domestic market. They have not shown anything that except Reliance and Essar, no one is buying their crude," he said.

"We have nothing to do with Reliance or Essar. Our only contention is that no export of crude is permitted till we attain self sufficiency domestically," the ASG said.
Countering the submissions, Cairn India's counsel said they were getting the rates domestically which were less than that of international market.
"They (Centre) are not allowing us to export. PSUs are not buying it. We have to give it to private players on a lesser rate," the counsel said.
(Reopens LGD 25)
Cairn has a production sharing contract with the government under which the company gets 70 per cent of crude produced from the well and rest goes to the government.

Under the contract, the government or its nominee can pick up the company's share of crude and what is not picked up, could be sold to private players or exported, Cairn said in its plea.
However, after the crude is sold, government gets 70 per cent of the profits, the company contended.
It claimed that as a result of selling the excess crude to private domestic companies like Reliance and Essar, at rates lower than international prices, government was losing about Rs 4.5 crore per day.
Cairn had claimed it had made several representations to Directorate General of Foreign Trade for permission to export the crude, but did not get any response. Prior to this, it had written to the Indian Oil Corporation Limited (IOCL) to "canalise" export of the crude, but got no response from it as well. IOCL is the canalising agent for export of crude.

Canalising agents are those through which a product can be imported or exported by companies which do not have permission to do so directly.