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UK’s Hardy Oil has said it is disappointed with the government’s appeal in the Delhi High Court against an international tribunal’s award for the firm in a dispute involving its Cauvery Basin oil and gas block.
“The appeal is in contravention of the production sharing contract, which states the arbitration process is final and binding on all parties, and inconsistent with the latest Supreme Court precedent that such international awards are not appealable under Indian laws,” Hardy Oil Chairman Alasdair Locke said while announcing a review of the company’s activities in 2014-15.
Hardy Oil Chief Executive Officer Ian MacKenzie said the government’s appeal had been listed for hearing in the high court eight times over 22 months and had been adjourned five times on the government’s request. “We anticipate the process to continue through 2015,” he added.
Hardy Oil holds a 75 per cent participating interest in — and along with GAIL and ONGC is a party and operator of – an 859 sq km gas block in the northern Cauvery Basin off the Pondicherry coast. Hardy Oil and GAIL had announced a discovery, Ganesha 1, in January 2007 that qualified as non-associated natural gas under the production sharing contract.
In March 2009, the government informed Hardy Oil that the block had been relinquished because the company had failed to declare commerciality within two years of the find, as set out in rules for oil discovery. Hardy Oil argued what it found was gas and it was entitled to five years from the date of discovery to declare commerciality.
The dispute went into arbitration and the tribunal ruled in February 2013 in favour of Hardy Oil. The arbitrators ordered the block be restored to Hardy Oil and GAIL and they be allowed three extra years for appraisal. The tribunal also asked the oil ministry to pay Hardy Oil and GAIL 9 per cent interest on the Rs 500 crore spent on the block.
Hardy Oil holds a participating interest in two other offshore blocks in the Saurashtra and Cauvery basins. Along with Reliance Industries, Hardy Oil recently relinquished a block in the Krishna Godavari Basin due to access restrictions imposed by the government. It is in talks to buy Reliance Industries’ 90 per cent stake in the Saurashtra Basin block.
“The appeal is in contravention of the production sharing contract, which states the arbitration process is final and binding on all parties, and inconsistent with the latest Supreme Court precedent that such international awards are not appealable under Indian laws,” Hardy Oil Chairman Alasdair Locke said while announcing a review of the company’s activities in 2014-15.
Hardy Oil Chief Executive Officer Ian MacKenzie said the government’s appeal had been listed for hearing in the high court eight times over 22 months and had been adjourned five times on the government’s request. “We anticipate the process to continue through 2015,” he added.
Hardy Oil holds a 75 per cent participating interest in — and along with GAIL and ONGC is a party and operator of – an 859 sq km gas block in the northern Cauvery Basin off the Pondicherry coast. Hardy Oil and GAIL had announced a discovery, Ganesha 1, in January 2007 that qualified as non-associated natural gas under the production sharing contract.
In March 2009, the government informed Hardy Oil that the block had been relinquished because the company had failed to declare commerciality within two years of the find, as set out in rules for oil discovery. Hardy Oil argued what it found was gas and it was entitled to five years from the date of discovery to declare commerciality.
The dispute went into arbitration and the tribunal ruled in February 2013 in favour of Hardy Oil. The arbitrators ordered the block be restored to Hardy Oil and GAIL and they be allowed three extra years for appraisal. The tribunal also asked the oil ministry to pay Hardy Oil and GAIL 9 per cent interest on the Rs 500 crore spent on the block.
Hardy Oil holds a participating interest in two other offshore blocks in the Saurashtra and Cauvery basins. Along with Reliance Industries, Hardy Oil recently relinquished a block in the Krishna Godavari Basin due to access restrictions imposed by the government. It is in talks to buy Reliance Industries’ 90 per cent stake in the Saurashtra Basin block.
