Cairn India, ONGC in dispute over profit petroleum in R'than block
6 Sept 2014 5:37 AM IST
Differences have cropped up between Cairn India and ONGC over sharing of profit petroleum in the Barmer field. This has happened on account of both the partners locking horns over ownership of pit oil produced in the Barmer block.
As per a 2004 order of the Petroleum Ministry, the pit oil (also called test oil) — which is produced during testing of exploratory and appraisal wells — has to be handed over to the licensee, in this case, ONGC, by the operator, Cairn, without any charges.
The disposal of such pit oil rests with the licensee and any statutory payments (royalty) are also to be borne by the licensee. Earlier, Cairn India used to hand over the pit oil produced during testing operations to ONGC for further disposal in line with the Petroleum Ministry's order. But after the company was allowed to further explore the field after the expiry of the development phase, the operator, in view of the changed circumstances, refused to hand over the pit oil to ONGC.
Cairn has subsequently started collecting the pit oil separately, claiming that it is the 'contractor's oil'. It is because of this that the cost and profit petroleum figures submitted to the ministry by both the partners are different from each other. However, to sort out the problem, both the companies have now constituted a task force to look into the matter.
As per a 2004 order of the Petroleum Ministry, the pit oil (also called test oil) — which is produced during testing of exploratory and appraisal wells — has to be handed over to the licensee, in this case, ONGC, by the operator, Cairn, without any charges.
The disposal of such pit oil rests with the licensee and any statutory payments (royalty) are also to be borne by the licensee. Earlier, Cairn India used to hand over the pit oil produced during testing operations to ONGC for further disposal in line with the Petroleum Ministry's order. But after the company was allowed to further explore the field after the expiry of the development phase, the operator, in view of the changed circumstances, refused to hand over the pit oil to ONGC.
Cairn has subsequently started collecting the pit oil separately, claiming that it is the 'contractor's oil'. It is because of this that the cost and profit petroleum figures submitted to the ministry by both the partners are different from each other. However, to sort out the problem, both the companies have now constituted a task force to look into the matter.
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