ONGC to drag Cairn to Sebi

Oil and Natural Gas Corporation (ONGC) is planning to drag Cairn Energy India to the Securities and Exchange Board of India (Sebi) for not fulfiling its obligations under the production sharing contract (PSC) signed by the two companies.

A top ONGC executive said Cairn was not right in claiming that it had no obligations to invest in a refinery or a pipeline to evacuate crude from its oil fields in Rajasthan and claiming that these issues were exclusively in the domain of the government nominee for crude oil offtake "� Mangalore Refinery and Petrochemicals Limited (MRPL).

ONGC, which has a 72 per cent stake in MRPL, claims that the proposed pipeline and refinery are a part of the production sharing contract (PSC).

Cairn denies it. In response to the queries by 'Business Standard', Cairn Energy spokesperson said, "There is nothing in the PSC about the refinery or pipeline."

"They don't want to invest in the pipeline or the refinery. That is why they are saying that the entire midstream is the responsibility of the government nominee, MRPL. The responsibility for building the pipeline and the refinery lies with both the partners, so they have to participate in it," the ONGC executive said.

The official indicated that Cairn's share of the refinery cost alone would be around Rs 10,000 crore.

Cairn Energy last week had indicated that it was considering investing $500 million in a joint venture company with ONGC for the proposed pipeline from Barmer to Mundra.

The ONGC executive also claimed that Cairn India was obliged to pay 70 per cent cess under the India Oil Industry (Development ) Act (OIDA) 1974.

"They have to bear their portion of the cess. Since they hold 70 per cent stake in the fields, they will have to bear proportionate cess," he said.