These would help monetise additional resources and would create incremental value for all stakeholders, particularly Cairn India shareholders.
Cairn India Limited has on 11th December 2015 approached the High Court of Delhi at New Delhi invoking the writ jurisdiction of the Court seeking early decisions from the Government of India w.r.t. matters relating to provisions of the Rajasthan Block’s (RJ-ON-90/1) Production Sharing Contract and to seek fair pricing for its crude. Both these matters are presently pending with the Government.
Thereby extension of tenure of PSC for the Rajasthan block is valid till 2020. Consistent with the terms of the PSC and given that Cairn India also producing Natural Gas at Rajasthan block, Cairn India is eligible to seek extension of the PSC for a period of upto 10 years i.e. uptil 14th May, 2030.
They have been making regular representations for extension of the term of the PSC to the GoI over the past few years. However, apart from seeking further technical and financial details on the matter, the GoI has not provided any firm decision on the matter.
The reliefs sought from the Court in this regard are in the form of directions to Goi either to grant an extension of the PSC for 10 years within a time frame stipulated by the Court or for necessary decision in the matter.
The fair pricing of RJ Crude India presently produces 1,70,000 bbl/d of Crude from the RJ Block. 20% of the Crude is sold to IOC, the government nominee and the balance 80% is sold to some private refiners, as per approval of GoI.
Given the nature and composition of RJ Crude, it has the potential to be valued far higher by refineries in other markets. As per the terms of the PSC and the extant policies for export of Crude, we have periodically requested IOC and the MoPNG for export of the RJ Crude, however there had been no firm response from them.
Most recently we have also written to the DGFT to intervene in the matter, which has also not been successful. The reliefs sought from the Court in this regard are in the form of directions that DGFT/IOC approve export of the RJ Crude to the extent that the GOI nominees are unable to lift such products.