Canadian company Canoro Resources has filed an appeal with a larger bench of the high court here against last week’s single-judge order that upheld termination of the production sharing contract (PSC) of the Amguri oil field in Assam.
This was the first-ever termination of a PSC by the petroleum ministry. It came after Canoro transferred stake to another company, leading to change in ownership.
Canoro had challenged the termination of its PSC with Assam Company India Ltd (ACIL). It had sought an injunction against the termination at the court. After being granted an interim injunction, this was withdrawn in the final order.
In August last year, the petroleum ministry had terminated the PSC between Canoro, a listed Canadian company, and ACIL for the oil block. The government filed a petition against the injunction from termination sought by Canoro.
The termination, the petroleum ministry claims, was justified due to a change in the shareholding pattern of Canoro. In the termination order of August 28 last year, the ministry said Canoro had breached Article 29.2 of the PSC by not seeking the government’s consent before making a “material change” in the shareholding of the company.
Canoro owned 60 per cent and was the block operator, with ACIL holding the balance 40 per cent. In April last year, Canoro raised C$95 million through a mix of debt and equity from Barbados-based Mass Financial Corp, without the ‘required consent’ of the government. Mass Financial initially got 18 per cent equity in Canoro but after the closure of the rights issue, it now holds 52.9 per cent.
The Amguri field in Assam was producing about 1,000 barrels of oil equivalent per day (Boe) before its closure on December 3, 2010, on technical issues. According to Sproule, an internationally recognised body engaged in making resource/reserve assessments, the reserve of oil condensate and gas at Amguri stood at 12.287 million Boe.
