Centre gets more time to decide on extension of Cairn's Barmer PSC

Firm wants current PSC to last till 2030, has moved court over govt delay in decision on the matter

The Delhi High Court on Tuesday granted the Central Government time till February 28 to take a decision on Cairn India’s application seeking the extension of a production-sharing contract (PSC) for extraction of oil in Barmer, Rajasthan.

Cairn India, a subsidiary of the UK-based Vedanta group, currently has a PSC with Oil and Natural Gas Corporation Limited (ONGC) for producing oil from the Barmer fields till 2020. The company wants the present PSC to be extended up till the year 2030 and has filed a petition in Delhi High Court, after being dissatisfied with inordinate delays by the government in arriving at its decision.

Cairn holds a 70 per cent stake in the Rajasthan block, while ONGC has the remaining 30 per cent share. Barmer is the largest onshore oil-producing project in India, producing about 166,000 barrels of oil equivalent per day and accounting for 27 per cent of the country’s overall oil production. The company estimates that the block has recoverable assets of approximately 1.2 million barrels, 466 million of which is expected to be extractable only after 2020. On November 7, 2016, the court had already allowed the Centre an extension of two months to reach its decision on the Cairn application.

 

The counsel appearing on behalf of the government began Tuesday’s proceedings by urging the court to grant a further extension till February 28, submitting that the Centre had already made significant progress on the issue. The counsel highlighted before the court that the decision involved co-operation between several ministries and that a draft note for consideration by an inter-ministerial committee had already been prepared to address Cairn’s request.

In response to the government’s submissions that a period of three years still remained before the expiry of the PSC, Cairn’s counsel countered by highlighted how it was the government which itself recommends applications for such extensions to be made six years in advance. The company’s advocate then stressed upon the urgency in the matter by stating that there were a further $3 billion in investments on the block, which have been put on hold as a result of the Centre’s delays.

After hearing the submissions, Justice Sanjeev Sachdeva, before whom the matter is under consideration, allowed the government an extension till February 28 as requested and directed the government to positively take its decision by that date. The bench has listed the matter again on March 31.