Delhi HC reserves judgement on Cairn India’s plea to export surplus crude oil

Under a production sharing contract between Cairn India and ONGC, it can sell surplus crude oil only to government and its nominees


Under the PSC, Cairn gets 70% of crude from the well while the state-owned company gets 30%. Photo: Reuters
Under the PSC, Cairn gets 70% of crude from the well while the state-owned company gets 30%. Photo: Reuters

New Delhi: The Delhi high court on Wednesday reserved its judgement on Cairn India’s plea seeking export of surplus crude from its 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 can sell surplus crude oil only to government and its nominees.

This condition was waived in one instance in 2009 and Cairn was permitted to sell crude to two private domestic refineries.

Under the PSC, Cairn gets 70% of crude from the well while the state-owned company gets 30%.

The company through the hearings 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.

Additional solicitor general Tushar Mehta, appearing for the Centre, reiterated that the country’s no-export policy on crude as long as the country does not attain self sufficiency could not be changed.

In response to this, Cairn India, represented by lawyer C.A Sundaram, told Justice Manmohan who was hearing the case that the company held a vested right to export under India’s export-import policy.

“The exim policy which is the gospel for such a case allows us to export. This cannot be changed unless the policy is amended. A direction by the ministry of petroleum asking the director general of foreign trade (DGFT) to not allow export would not amount to amending the policy,” Sundaram added.

He also said that the Centre’s contention of permitting export being detrimental to the interest of citizens could not be accepted as crude oil served as a raw material and was not a finished product.

Cairn had earlier stated that despite repeated orders by the court, ONGC had failed to clarify if it would pick up its share of the crude oil, forcing the company to sell it to domestic companies at a loss.

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