Selan told it must sign both PSCs or none

Vol 5, PW 14 (29 Aug 01) Exploration & Production

Selan Exploration and oil ministry officials are deadlocked over the company's unsigned PSCs for Ognaj and Karjisan.

Selan was to sign the two PSCs on 23rd February along with others but it pulled out at the last minute citing "business decisions." Since then, the oil ministry has turned hostile. Why did Selan pull out "The crude offtake and supply agreement given to us a couple of days in advance obliged us to pay transportation costs," the company tells PETROWATCH.

"This was not acceptable. We are willing to sign the PSC minus Ognaj.

We want only Karjisan, which is a gasfield." An oil ministry source retorts: "Either they sign for both or they sign for none. There is something called sanctity of contract.

They bid aggressively for both fields, drove out all their competitors and now they want to pull out Why did they initial the PSC and the crude supply agreement in the first place If we give into their demand there will be protests from other companies that signed. This kind of thing is just not done." Our source tells us that top officials are angry at Selan's attempt to publicly embarrass the minister a day before the PSCs were signed.

"They told us: 'We will go and tell the whole world about this and embarrass you.' The minister was upset. He wanted to know if we had done anything wrong.

We explained the case to him, showed him the papers and he took a firm stand." On 23rd August oil secretary Vijayendra Kaul held an inconclusive meeting to discuss Selan's two awards.