Mumbai/Ahmedabad: Australia-based Oilex Ltd has issued a notice to Gujarat State Petroleum Corp. (GSPC) asking it to surrender its controlling stake in the Cambay basin block where both companies are partners. Oilex had in a notice issued on 29 May, 2018, warned GSPC to settle the outstanding dues within 60 days, failing which it would be deemed that GSPC had transferred all its participating interest in the production sharing contract (PSC) to Oilex. GSPC owes $3,054,832 or around Rs20 crore to Oilex.
GSPC, the exploration and production arm of the GSPC group, holds a 55% stake in the Cambay field while Oilex holds 45%.
“In accordance with the joint operating agreement, GSPC has not remedied its default by settling the outstanding default amount within 60 days. Accordingly, upon exercise of the option effective today, GSPC shall be deemed to have transferred all of its right, title and beneficial interest in the Cambay project," said Oilex in the notice.
Oilex has also formally requested the Directorate General of Hydrocarbons and the ministry of petroleum and natural gas to affect the transfer of GSPC’s participating interest (PI) in the Cambay PSC to Oilex.
“While the company is confident in its position, should transfer of participating interest fail to be reasonably achieved, it may be necessary for Oilex to consider other remedial strategies," Oilex said in the notice.
In an emailed response, GSPC said it did not owe any dues to Oilex as claimed by the company.
“In fact, GSPC has rejected Oilex’s May 29 letter and asserted that it is not a valid default notice since it pertains to amounts not approved by GSPC as part of joint operation and for amounts pertaining to sole operations of Oilex. Oilex has also in the past admitted to such non-approval of GSPC. Therefore, all actions that Oilex is attempting to take in furtherance of its May 29 letter are invalid," said GSPC in its response.
The joint venture partners have been sparring over investments in the Cambay field with GSPC failing to meet its investment target for the field for over two years.
Oilex added that an increase in its participating interest in Cambay from 45% to 100% would help the company in future strategic farm-in discussions with third parties.
Oilex said it had received several informal expressions of interest from parties to participate in the ongoing work programme.
“Oilex remains committed to unlocking the significant resource potential at Cambay by achieving commercial gas flow rates in the EP-IV formation. The development of new oil and gas fields such as Cambay is essential to meeting the Government of India’s policy to reduce reliance on imports," Oilex said in its notice.
GSPC has been struggling to reduce its debt for over two years now. This March, the company sold a 28.4% stake in Gujarat Gas Ltd, its city gas distribution business, to its subsidiary Gujarat State Petronet Ltd (GSPL).
This helped it reduce its Rs16,500 crore debt by over Rs3,250 crore. Both Gujarat Gas and GSPL are subsidiaries of GSPC.
GSPC has invested $3.5 billion (approximately Rs20,000 crore) in the Deen Dayal block in the offshore Krishna Godavari (KG) basin, which has saddled the company with debt.
Last year, state-run Oil and Natural Gas Corp. Ltd agreed to pay $1.2 billion to GSPC for the purchase of its 80% stake in the Deen Dayal block.