New Delhi: The Delhi high court on Thursday asked Vedanta Ltd to approach the Centre under the revised March 2017 policy for an extension of its production sharing contract (PSC) with state-run Oil and Natural Gas Corporation Ltd for the Barmer block in Rajasthan which is set to expire on 14 May 2020.
An application for extension of a PSC has to be made two years before its expiration date, the court was informed.
The bench of Justice Rajiv Shakdhar was hearing Vedanta’s plea seeking a direction from the court about the policy under which an extension was to be preferred, without affecting a pending litigation between Vedanta, ONGC and the Centre with respect to the terms and conditions that would apply to the period so extended.
Cairn India, which is part of the Anil Agarwal-led Vedanta Group, had moved the high court in December 2015 seeking an extension of the PSC for the Barmer block.
However, the union cabinet had in March 2017 granted extension of 10 years or the economic life of the field, whichever is earlier, to PSCs for 10 oil and gas blocks, including the PSC between Cairn India and ONGC for the Barmer block, under different terms and conditions.
The new policy mandated higher profit sharing with the government, a no-litigation clause and a compulsory clause on arbitration, among others.
During the course of hearing, ONGC supported the government, arguing that the terms and conditions as per the new policy of March 2017 should be applied as the mutual agreement to extend the PSC on existing terms was before the new policy came in.
The PSC between Cairn India and ONGC for the project was signed on 15 May 1995 for 25 years. While Cairn India operates the block with 70% participating interest, ONGC has the remaining 30%. The Barmer block comprises the Mangala, Bhagyam, Aishwariya and Raageshwari oil and gas fields.
The decision of the court on application of the revised policy to the extended PSC is pending.