Jubilant Energy goes bust leaving ONGC worried

Vol 20, PW 15 (20 Apr 17) People & Policy
     

When ONGC reluctantly agreed to buy 80% held by GSPC at KG-OSN-2001/3 it probably never imagined handling the whole block alone.

But now that worrying scenario is a distinct possibility. Dutch-incorporated Jubilant Energy N.

V., which holds 10% in the block, wrote to ONGC this month (April) announcing its insolvency.

"This letter has created a stir," reports a source. "ONGC is taking on the operator role and Jubilant's letter is worrying." On receipt of the letter, ONGC chairman DK Sarraf pointedly asked colleagues to study the impact that Jubilant Energy N.

V.'s exit will have. "Everyone knows the deal was forced on ONGC," we hear.

"It's a difficult field to operate; there is little chance ONGC can ever recover the money it paid GSPC." In December 2016, ONGC announced it would buy GSPC's stake for an upfront payment of $995.26m plus $200m for six other discoveries. "If Jubilant (Energy N.

V.) exits," adds a source, "ONGC might be burdened with its 10% unless someone else buys it." If Jubilant's exit wasn't bad enough, ONGC has also inherited a 'carried interest' dispute between GSPC and bankrupt Canadian explorer GeoGlobal Resources, which also holds 10%, and stopped paying cash calls years ago.

By contrast Jubilant has paid all its cash calls, totaling nearly $300m. Three years ago parent company Jubilant Group tried to sell its 10% stake to ONGC and unsuccessfully lobbied the ministry to push the deal through.

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