Canoro Resources, the first company to face cancellation of production-sharing contract (PSC) for an oil block in India, has wound up its operations after it withdrew from the arbitration proceedings for a pre-NELP (new exploration licensing policy) block in Assam.
Canoro’s partner in the block, the Kolkata-based Assam Company India Ltd or ACIL, in a letter to the petroleum ministry last month claimed its pre-emptive right on Canoro’s 60 per cent interest.
A ministry official said Canoro participated in one arbitration meeting but did not turn up for the subsequent meeting. “Therefore, the arbitration has been closed,” he said.
Canoro is learnt to have shut its offices in New Delhi and Assam. An email sent to the company did not elicit any response. The New Delhi and Assam telephone numbers given on the website were not operational.
Canoro is a listed company in the Calgary-based TSX Venture Exchange. The Amguri field in Assam produced about 1,000 barrels of oil equivalent per day (BOE) before its closure on December 3, 2010, on technical issues. However, some gas is still being produced due to contractual obligations.
According to Sproule, an internationally recognised body engaged in making resource assessments, the reserve of oil condensate and gas at Amguri stood at 12.287 million BOE. Canoro, the block operator, along with ACIL, invested $150 million in the block.
Last August, the petroleum ministry had terminated the PSC between Canoro and ACIL for the Amguri block. Canoro owned 60 per cent and was the block operator, with ACIL holding the balance 40 per cent.
The termination of the contract, the ministry says, was justified due to a change in Canoro’s shareholding pattern. The order said Canoro had violated Article 29.2 of the PSC by not seeking the government’s consent before making a “material change” in the shareholding of the company.
Earlier this year, the government brought in Oil and Natural Gas Corporation (ONGC) to manage the block pending the decision on a new operator. Canoro had challenged the cancellation in the Delhi High Court, but lost it. It had also filed an appeal with a divisional bench of the court, but later withdrew it.
However, it continued to seek relief, including compensation, in the arbitration proceedings that commenced a couple of months ago. However, in the second arbitration meeting that was scheduled for last week of August, the company did not appear.
