GSPC blocks Niko sale of Hazira equity to Sun

Vol 20, PW 24 (24 Aug 17) People & Policy
     

Once upon a time Niko Resources was one of the most successful foreign operators in India.

Not any more! Today, the Calgary-based Canadian explorer is struggling to exit. Niko's plan to sell its 33.33% stake in the 50-sq km Hazira gasfield and former 'jewel in the crown' of its portfolio to Sun Petrochemicals has been derailed by partner GSPC.

Niko and Sun missed their self-imposed July 7 (last month) deadline to finalise the stake sale in line with the "preliminary agreement" signed on December 7, 2016. This agreement is today invalid.

A Sun source tells us the deal awaits oil ministry approval. But others say the ministry refuses to sign off because GSPC insists all outstanding disputes it has with Niko are settled before it grants a No Objection Certificate (NOC).

"GSPC is using this opportunity to twist Niko's arm," says a source. One of the oldest battles dates back to 1999 and centres on Niko's claim for cost recovery on a 36-inch diameter, 14-km gas evacuation pipeline it laid from the Hazira gasfield to Mora village in Surat district.

After years of litigation, this case still awaits a Supreme Court decision after the DGH ruled out cost recovery saying it had not authorised the pipeline. Despite Niko's opposition, GSPC later transferred ownership of the partly laid pipeline to subsidiary GSPL.

"GSPC has not honoured an agreement to transfer pipeline ownership to Niko," says a source.