Ceasefire in Nikoآ’s war with Gujarat Petroleum

Vol 4, PW 23 (20 Dec 00) People & Policy

Happy endings are nice, so it's good to see that Niko Resources and Gujarat Petroleum have agreed a ceasefire in their bitter war of words over the Hazira gasfield.

It comes in the form of a three-page Memorandum of Understanding, signed by both companies on 3rd December, and a copy of which is with this report. Briefly, the MoU: Commits Gujarat Petroleum to restoring operatorship of the Hazira gasfield to Niko.

[On 20th November, Gujarat Petroleum stripped Niko of operatorship after accusing the Canadian company of halting normal petroleum operations by stopping gas production] Commits Niko to withdrawing the default notices against Gujarat Petroleum for failure to pay its bills under the terms of the Joint Venture agreement. [On 14th September Niko issued a default notice to Gujarat Petroleum under Article 6.5A of the Joint Operating Agreement] Commits Gujarat Petroleum to pay all its outstanding dues - believed to be Rs1.56cr ($343,000) - to Niko by December 8th.

[This report learns a sum of approximately Rs10cr ($2.2m) has already been paid by Gujarat Petroleum to Niko] Commits Niko to honour all gas sales contracts, signed by both companies. [Not just those signed jointly by Niko and Gujarat Petroleum, but also those signed alone by Gujarat Petroleum, including a resumption of gas supplies to Essar Power and Essar Steel] Crucial to note is that this MoU does not mark an end to the Niko dispute with Gujarat Petroleum.

Far from it. The core issue of who owns the disputed 14-km, 36-inch pipeline from Hazira to Mora is still undecided, and the MoU makes it clear that the two companies will agree to disagree on this issue until the Delhi High Court passes judgement.