The UK-based Cairn Energy and Ravva Oil of Singapore have dragged the Centre to the permanent court of arbitration in London.
This follows a dispute between the two overseas companies and the government over profit sharing in the oil and gas sourced and sold from the Ravva oil and gas field.
Confirming the development, a senior official of the petroleum ministry told Business Standard, "The issue pertains to the dues owed to the government. The matter is now sub-judice and I cannot comment any further on it."
The arbitration is in line with the production-sharing contract between the two sides.
The Ravva oil field is being developed by a consortium comprising the Oil and Natural Gas Corporation, Videocon Petroleum, Cairn Energy and Ravva Oil.
ONGC holds a 40 per cent stake in the oilfield, followed by Videocon, which holds a 25 per cent stake. Cairn Energy and Ravva Oil hold 22.5 per cent and 12.5 per cent stake, respectively.
Typically, in such contracts, the profit from the sale of oil and gas is shared with the government.
Although precise details are not available, it is learnt that the arbitration proceedings relate to issues that affect the calculation of the post-tax rate of return and consequently the profits.
Sources say it will be sometime before an award is announced since any arbitration process has to follow well-established procedures.
The government has suggested to the permanent court of arbitration that the arbitrators could be from countries such as Malaysia, Sri Lanka and Singapore.
The Ravva field produces 50,000 barrels of oil and gas a day. The field was not awarded under the new exploration licensing policy but discovered by ONGC. Later, the other partners joined to form a consortium.
A flare-up
- The arbitration is in line with the production-sharing contract between the two parties.
- The Ravva oil field is being developed by ONGC, Videocon Petroleum, Cairn Energy and Ravva Oil.
