Angry words as GSPC blocks payment to GAIL

Vol 15, PW 9 (03 Nov 11) People & Policy

GAIL says it is being bullied by Gujarat chief minister Narendra Modi’s favourite company GSPC at onland Cambay basin block CB-ONN-2000/1, where each holds 50% stake.

As proof GAIL tells us GSPC is withholding its 50% share of revenue from the 850 b/d production sold from this NELP-II block to IndianOil for its Koyali refinery. IOC buys this oil at a discounted rate, up to $10/barrel cheaper than the Nigeria Bonny Light Crude benchmark.

But ever since April this year, GSPC has not been paying GAIL its share of revenue, withholding nearly Rs21cr ($4.6m) till date. “GSPC refuses to pay us,” confirms a GAIL source.

“They argue we (GAIL) owe it money at other blocks. But we say each block should be dealt with separately.

” In its defence, GSPC says it is owed approximately Rs25cr ($5m) for expenditure at three exploration blocks where it is sole operator and where GAIL also has a stake: · CB-ONN-2003/2 - 448-sq km NELP-V onland Cambay basin · KG-ONN-2004/2 - 1140-sq km NELP-VI onland KG basin · MB-OSN-2004/1 - 1520-sq km NELP-VI Mumbai offshore Angry GAIL accuses GSPC of unilaterally spending beyond the approved budget at these blocks. “We’ve paid, and continue to pay all expenses approved in the budget,” we learn.

“How can we pay for unapproved expenditure When we ask GSPC officials for clarification they don’t give details. We don’t have any control.

” Worse, says GAIL, is that the additional amount GSPC demands keeps increasing every month. During NELP-II, CB-ONN-2000/1 was one of the most fiercely contested blocks, originally won by a consortium of GSPC, GAIL and US-based minnow Joshi Technologies.

Signed on July 17, 2001, the PSC kicked in on from January 7, 2002. Joshi later quit, leaving GSPC and GAIL with 50% each.