New Delhi: State-owned explorer Oil and Natural Gas Corp. Ltd (ONGC) said on Thursday it was not liable to pay $1.57 billion profit-share dues to the government from the Panna-Mukta-Tapti fields until litigation pending before an arbitral panel and an English commercial court reach a conclusion.
ONGC, therefore, did not make a provision for the disputed dues in its first quarter financial statement, it said in a statement issued to stock exchanges.
It reported an 8.2% decline in net profit for the April-June period to Rs3,885 crore because of higher depreciation and impairment losses. Revenue rose to Rs19,074 crore, a 7.2% jump from a year ago.
ONGC stated that upstream oil and gas regulator, the Directorate General of Hydrocarbons, in May this year, asked the company and its joint venture partners Reliance Industries Ltd and Shell India to pay differential profit share allegedly payable as per the government’s interpretation of a final partial award of a UK arbitration panel in October 2016.
Reliance and Shell India have a 30% stake each in the field, while ONGC holds the remaining 40%. Companies are asked to pay as per their stake in the Panna-Mukta-Tapti fields.
“Pending final quantification of liabilities by the arbitration tribunal and decision of the English commercial court, the company is not liable to implement the final partial award, being premature, and therefore no provision for the same has been considered necessary," ONGC stated.
Mint reported on 19 July that the consortium of Reliance-Shell India and ONGC had disputed the demand and will not pay up till the tribunal gives its final award in the ongoing arbitration case, including the method of quantifying the alleged shortfall. The two private companies have also moved a court in the UK against the tribunal’s partial award favouring the government of India.
ONGC is not party to the dispute as instructed by the government, but the outcome of the litigation is applicable to the state-run company as it is a consortium partner.