No end in sight to Hercules lawsuit in Delhi High Court

Vol 12, PW 18 (12 Feb 09) Exploration & Production

Away from the cold waters off India’s east coast, where jack-ups Hercules-258 and Hercules-260 are drilling, a lawsuit in Delhi alleging irregularities in ONGC’s contract for the two rigs is turning nasty.

PETROWATCH learns from legal sources that lawyers for En Quest Projects, which acted as agent to ONGC in the deal with US-based drilling contractor Hercules Offshore, will argue in court that estranged and former En Quest partner Mukesh Gupta committed â€کperjury’ when he alleged discrepancies in the contract. Unfazed, Gupta’s lawyers, we hear, will seek to stop payment of the Hercules commission to En Quest at the next hearing on February 25.

Last month Gupta, who once held 19% in En Quest, filed a case in the Delhi High Court, alleging that ONGC’s deal with Hercules breaches payment norms to agents. The allegation and lawsuit, both reported by us, prompted En Quest principals JS Anand and Sanjeev Mittal to reply to PETROWATCH with a denial and a detailed brief to the court by their lawyer, Delhi-based senior counsel Rajeev Nayar, on January 27.

“Nayar replied to Gupta’s allegations,â€‌ we hear. But lawyers for Gupta told the court they needed more time to study and reply to the En Quest legal challenge.

At issue is a dispute over commission payments to En Quest by ONGC for securing the Hercules deal. Gupta said in a court petition filed on October 15, 2008, that not only was he denied his cut of the commission, but that his former firm (En Quest) earns 3% commission - double the 1.5% allowed by ONGC in its code of conduct.

Gupta also alleges that the value of the commission was not clearly notified because it included seven boats hired by ONGC from Hercules for offshore support services. Court documents reveal that the total value of the contract for the two rigs is around $350,000/day – from which $10,000/day is the commission for En Quest from the three-year contract.