Ministry blocks ONGC compensation for PY-3

Vol 4, PW 16 (13 Sep 00) Exploration & Production
     

It seems unlikely ONGC will receive compensation from the government for the cess (tax) and royalty it has paid on production from the PY-3 oilfield offshore Chennai.

A senior oil ministry official on a visit to Chennai tells a correspondent for this report that it is unlikely the oil ministry will accede to ONGC's demand, which is being pursued vigorously by the corporation's Chennai office. He said the 'file' was lying in the oil ministry but that no decision has been made to respond " one way or the other" to the ONGC demand for compensation.

A convenient way of saying no is to say nothing, he said. A correspondent adds: What irks ONGC is that none of the other joint venture partners at PY-3 have been required to pay cess (tax) and royalty on production." Till March 2000, ONGC claims it has 'lost' Rs142.42cr ($33m) in cess and royalty payments for crude produced at PY-3.

Joint Venture (100%) ONGC (40%) Capital Expenditure Rs313.08cr ($72.94m) Rs121.70cr ($28.35m) Operating Expenditure (to July 1999) Rs224.03cr ($52.2m) Rs85.57cr ($19.93m) Total Rs537.11cr ($125.14m) Rs207.27cr ($48.29m) Cess & Royalty N/A Rs121.23cr ($28.24m) Amount received on crude sales Rs465.70cr ($108.5m) Rs186.28cr ($43.4m) (Source: Southern Regional Business Centre, ONGC)