Cairn India steps up fight for Ravva cash calls

Vol 20, PW 8 (12 Jan 17) People & Policy

Cairn India is stepping up efforts to force Videocon and other partners at the eastern offshore Ravva oil and gasfield to pay their cash calls.

On January 11, the Delhi High Court heared Cairn argue that customers for oil and gas from Ravva should be ordered to pay only Cairn and not its partners Videocon, ONGC and Marubeni-affiliate Ravva Oil. After all, believes operator Cairn, it is the one paying for operational costs.

Blame the current deadlock on Mumbai-based Videocon, which since September 2013 has failed to pay Rs178cr ($26m) as its share of costs. Until January 2016, ONGC and Ravva Oil were paying their share of costs but along with Cairn were also paying Videocon's costs.

"Under the Joint Operating Agreement (JOA)," explains a legal source, "if one party defaults the other partners must pay its share of costs." But in return, he adds, ONGC, Cairn, and Ravva Oil had the right to take Videocon's share of oil and gas sales revenue. All this changed in January 2016 when Videocon asked the government to begin deducting its profit petroleum contributions (to the government) from its Ravva sales revenue.

Angry, ONGC and Ravva Oil stopped paying their share of operational costs altogether, arguing they could no longer recover what they were spending on Videocon's behalf from its share of sales revenue. With no option, Cairn resorted to legal action against all three partners.

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