ONGC picks a fight with Niko over crude charges

Vol 7, PW 9 (16 Jul 03) Exploration & Production

NOT ONLY is IOC forcing GSPC and Niko to pursue a mindless paper chase, so too is ONGC.

In a June letter to Niko-GSPC, ONGC is demanding "handling and processing charges" for the additional crude it is storing at North Kathana. Unsurprisingly, the consortium is refusing to pay arguing that this is IOC's liability.

"IOC deducts handling and processing charges from our oil and condensate receivables, and makes net payment to GSPC who in turn makes payment to Niko for its share of sales," reveals GSPC-Niko. We understand GSPC-Niko is "quite surprised" that ONGC has raised this issue because until now ONGC's Cambay project has been raising all handling and processing charges on GSPC-Niko's account to Indian Oil.

More, GSPC-Niko has the relevant invoices to back its argument. "Therefore Indian Oil is accountable for paying handling and processing charges, not us," claims the consortium.

Meanwhile, GSPC-Niko has drawn up estimates of crude production, royalty and profit petroleum from Bhandut, Cambay, Hazira and Sabarmati. See below table.

Crude oil production, royalty and profit petroleum for 2003-04 (source: Niko Resources) Month Field Royalty amount Crude production Field Royalty amount Crude production Field Royalty amount Crude production Field Royalty amount Profit petroleum Crude production April Bhandut Nil Nil Cambay $89 7.5tonnes Sabarmati $447 37.49tonnes Hazira $1.35m $2.39m 25.53tonnes May $5,539 464.81tonnes $91 7.63tonnes $909 76.31tonnes $1.38m $2.39m 26.33tonnes June $5,307 445.32tonnes $87 7.27tonnes $867 72.74tonnes $1.32m $2.39m 25.43tonnes July $5,429 455.56tonnes $88 7.40tonnes $882 74.03tonnes $1.35m $2.39m 26.22tonnes August $5,375 451.01tonnes $87 7.29tonnes $869 72.92tonnes $1.34m $2.39m 26.17tonnes September $5,150 432.10tonnes $83 6.95tonnes $828 69.51tonnes $1.29m $2.39m 25.28tonnes October $5,268 442.03tonnes $84 7.08tonnes $843 70.75tonnes $1.31m $2.39m 26.07tonnes November $5,047 423.50tonnes $80 6.74tonnes $804 67.44tonnes $1.26m $2.39m 25.18tonnes December $5,163 433.24tonnes $82 6.86tonnes $818 68.65tonnes $1.29m $2.39m 25.96tonnes January $5,111 428.90tonnes $81 6.76tonnes $806 67.62tonnes $1.27m $2.39m 25.91tonnes February $4,734 397.22tonnes $74 6.23tonnes $743 62.31tonnes $1.18m $2.39m 24.24tonnes March $5,010 420.37tonnes $78 6.56tonnes $782 65.60tonnes $1.37m $2.39m 1,422.33tonnes Total $57,133 4,794.06tonnes $1,004 84.27tonnes $9,598 805.37tonnes $15.71m $28.64m 1,704.65tonnes