Delhi High Court Refuses To Allow Cairn India Export Surplus Crude From Rajasthan Oil Field

Delhi High Court Refuses To Allow Cairn India Export Surplus Crude From Rajasthan Oil Field

In a setback for Cairn India Ltd., the Delhi High Court rejected the company’s plea to export surplus crude from its Rajasthan oil fields.

Cairn India can “invoke dispute resolution under the production sharing contract,” Justice Manmohan said while pronouncing the judgment.

Cairn India had sought the court’s nod to sell surplus crude from Barmer oil fields in Rajasthan under a production sharing contract with government run Oil and Natural Gas Ltd., as domestic refineries were offering prices that were below prevailing international rates.

The company should be allowed to export crude to players outside India as there were not enough takers for sweet crude in India, Cairn’s counsels had argued. Only two Indian private companies, Reliance Industries Ltd. and Essar Oil Ltd., purchased crude, that too at a 20 percent discount to international market prices, Cairn India had informed the court.

The Ministry of Petroleum and Natural Gas opposed the Vedanta Group company’s plea, with Additional Solicitor General Tushar Mehta arguing that it is against the government policy to permit exports till India’s needs were met. “The production sharing contract prohibits export till India attains self sufficiency,” Mehta argued in court.

The Centre also took a stand that permitting export falls within the purview of policy decisions that are taken in larger public interest.

Refuting allegations of discrimination against Cairn India, the Petroleum Ministry told the court that no other private player has been allowed to export crude. “The government is the custodian of crude and it is our duty to protect a scarce natural resource,” argued ASG Mehta during several hearings.

In a separate case, Cairn India has been at loggerheads with the government regarding extension of its production sharing contract with ONGC for the Rajasthan oil fields. The High Court has asked the government to take a final decision and inform the court.

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