Cairn India cannot export surplus crude from Barmer oilfields: Delhi HC

Delhi HC cites a production sharing contract between Cairn India and ONGC to bar the Vedanta group firm from exporting surplus crude to any third party


Cairn India argued that the country’s foreign trade policy did not bar export of crude. Photo: Reuters
Cairn India argued that the country’s foreign trade policy did not bar export of crude. Photo: Reuters

New Delhi: In a setback to Cairn India, the Delhi high court on Tuesday rejected its plea seeking permission to export surplus crude from Barmer oil fields in Rajasthan.

Under a production sharing contract (PSC) between Cairn India, a Vedanta group company, and state explorer Oil and Natural Gas Corp. (ONGC), it could sell surplus crude oil only to government and its nominees.

The terms of the PSC allowed Cairn get 70% of crude from the well while the state-owned company would get 30%. “The plea is bereft of merits, stands dismissed,” said Justice Manmohan who pronounced the order.

He added that company could resort to dispute resolution mechanism under the PSC to address the issue of export of surplus crude.

The oil and gas exploration company through the hearings had maintained that it should be allowed to export its surplus crude as private domestic refineries in India were not offering competitive prices with respect to the international market.

It said that they were agreeable to offering the domestic players in the country the first option to buy the crude, but at international prices.

Due to neither the government, nor its nominees or public sector refineries willing to purchase its crude, Cairn contended that it was forced to sell to two private refineries—Reliance and Essar, at a loss since these prices were not internationally competitive.

The Centre had reiterated that the country’s no-export policy on crude as long as the country does not attain self sufficiency could not be changed.

Additional Solicitor General, Tushar Mehta, appearing for the Centre told the court crude oil per se was not allowed to be exported. He said that India had a total refining capacity of 223 million tonnes. However, at present only 38 million tonnes of crude oil was available. It would not be in the interest of the country to export crude, he argued.

Cairn India, however, argued that the country’s foreign trade policy did not bar export of crude.

More From Livemint