Essar and Premier told to resolve Ratna differences

Vol 4, PW 14 (16 Aug 00) Exploration & Production

Why has the Indian oil ministry laid down a menacing deadline of September 18th in its negotiations with Essar Oil and Premier Oil for the Ratna and R Series of oilfields offshore Mumbai Quite simply because it is fed up at the inability of Essar and Premier to agree on the shape and form of the Production Sharing Contract.

"A decision has been taken by the oil ministry to conclude the negotiations one way or the other," reveals an observer, "Either the two parties agree to a common draft, which is thereafter initialled, but if they do not agree on a common draft then the negotiations stand terminated." He adds: "These negotiations can not be endless." Such talk reflects a steely determination by the oil ministry to conclude the Ratna negotiations fast. Contrary to speculation, ONGC is not responsible for the impasse and appears to have accepted the inevitability of 'losing' Ratna to the private sector.

"ONGC is not the problem," reveals an insider, "It only has a carried interest." When awarded, ONGC's stake in Ratna (as silent partner) was 40%, Essar Oil 50% and Premier Oil as operator 10%. Little is known about the exact nature of the disagreement between Essar and Premier.

'Commercial Confidentiality' prevents those at the sharp end of talks divulging details to this report. What is known is that both companies say they are still committed to the award.

By September 18th we should know if this 'commitment' translates into a contract.

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