Schlumberger fights ONGC for $11m shale fine

Vol 21, PW 2 (19 Oct 17) People & Policy

Schlumberger's bitter dispute with ONGC over time and cost overruns for a shale pilot drilling programme has reached the Delhi High Court, where the next hearing is expected on October 27.

At issue is a Rs73.5cr ($11m) penalty imposed by ONGC for a 229-day overrun on a contract awarded to Schlumberger on August 16, 2010 for a 'pilot' shale gas exploration project at the Raniganj North and North Karanpura CBM blocks. Legal sources disclose to this report that Schlumberger filed a petition against ONGC in the Delhi High Court on April 10, 2017.

Schlumberger's action comes after its claim against ONGC was rejected by an e-tribunal, an information and communication technology enabled court at Dehradun. "Schlumberger says the e-tribunal judgment was wrong," we hear.

"But ONGC rejects this claim." ONGC awarded the contract to Schlumberger without tender to ensure world class quality instead of opting for an open tender that it believed would compromise quality, according to court papers. In its petition Schlumberger does not dispute the number of days delay, but challenges the penalty amount.

According to the contract, argues Schlumberger, a penalty is imposed only if the project is not completed. Not because of any delay in completion.

Of the $11m under scrutiny, ONGC is claiming $835,822 as penalty for Phase-II; $111,620 for Phase-VI; $4,751,919 for 'short certification of service day rates' and $5,660,524 for uncertified claims for Phase-II and Phase-VI.

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