Ravva partners row over 'Profit Petroleum'

Vol 5, PW 21 (05 Dec 01) Exploration & Production
     

Dispute is simmering between Indian and overseas members of the prolific Cairn Energy-operated Ravva oil and gasfield.

At issue is whether profit petroleum should be calculated on an aggregate basis for the unincorporated joint venture or on the basis of individual companies in the consortium. ONGC and Videocon Petroleum - Indian members -insist it should be on an aggregate basis but Cairn and Marubeni-owned Ravva Oil - overseas members - insist it should be separate for each company, based on its independent and different net cash flow and also notional tax rates.

Why Indian companies pay corporate tax of 35% and thus more profit petroleum to the government. Foreign companies pay 48% corporate tax and pay less profit petroleum.

Given the stakes involved, there's no meeting ground. What does the DGH think We understand the DGH reckons profit petroleum should be calculated on an aggregate basis.

But foreign companies don't agree. "We have asked the DGH several times to come up with a formulato resolve the dispute," we learn.

"But nothing has happened so far." What does the oil ministry think "That profit petroleum should be on an aggregate basis". Why "We signed the production sharing contract with the contractor, not with individual companies.

Profit petroleum was bid by the contractor, not by individual companies. How it is split between individual companies is an internal matter between the partners."