Canoro challenges oil ministry over Amguri

Vol 13, PW 26 (17 Jun 10) People & Policy
     

Canadian explorer Canoro Resources is on a collision course with the oil ministry over allegations by partner Assam Company that it has breached the PSC for the Amguri oil and gasfield.

Assam Company challenged Canoro in the Delhi High Court on May 18, angry at the Canadian explorer’s sale of 24.798m shares totalling 18% of its stock to Chinese company Mass Financial Corp at 13 Canadian cents ($0.129) a share to raise $3.18m. Assam Company was particularly incensed because it wanted to acquire Canoro itself.

But the Delhi High Court refused to issue an injunction against Canoro for its transaction with Mass Financial. Then on June 1 the oil ministry sent Canoro a ‘show cause’ notice saying Canoro should have sought government approval before going ahead with the Mass Financial deal.

Worse, the oil ministry threatened to terminate the Amguri PSC. PETROWATCH learns Canoro’s president and CEO Robert Wynne has since responded with a strongly worded letter to oil ministry director (exploration) Partha Sarathi Das on June 6, disputing the following oil ministry queries as mere “assumptions”: · “There has been a material change in the shareholding of Canoro Resources and that a controlling relationship with Mass Financial Corp has come into existence.

” · “Prior consent of the government was required to be obtained by our company for such change in the shareholding and alleged controlling relationship with Mass” · “Article 29.2 of the PSC imposes an obligation on the company to obtain prior consent from the government in the above case” Wynne argues the ministry is wrongly interpreting the PSC. “A proper interpretation of Article 29.2 of the (Amguri) PSC,” writes Wynne, “would show there’s no need for a contractor to seek prior consent of the government in case of a material change in the shareholding of the company” Wynne adds the ministry is wrong to assume the Mass Financial deal constitutes a takeover.

Oil ministry approval, says Wynne, is only needed if Mass Financial is given a participating interest in Amguri.