Climax nears in GeoGlobal row with GSPC

Vol 14, PW 1 (01 Jul 10) People & Policy
     

GSPC and GeoGlobal Resources are heading for a major showdown in their ‘carried interest’ row about exploration costs at the Deen Dayal discovery block KG-OSN-2001/3.

PETROWATCH learns relations between the two companies have turned so sour that GSPC is “actively” considering either seeking arbitration or initiating legal proceedings against the Canadian explorer. GeoGlobal, meanwhile, is anticipating GSPC’s attack and has begun building its defence with help from top Indian lawyer Harish Salve, senior counsel for Mukesh Ambani in his battle with brother Anil.

“Stalemate (between GSPC and GeoGlobal) continues,” says an observer. This row has persisted since 2008.

At stake is around $150m plus interest, which GSPC demands from GeoGlobal as its share of exploration cost at Deen Dayal. But GeoGlobal insists it should pay nothing because GSPC is responsible under a Carried Interest Agreement signed on August 7, 2003 for all costs incurred during the exploration phase right up until first commercial production.

In the first week of June, senior GeoGlobal representative Paul Miller was in India to meet GSPC managing director Tapan Ray to hammer out a solution. “Miller was obviously not on a sightseeing tour,” says a source.

“He had a single item on the agenda, and that was to meet Ray.” But Ray, it seems, refused to entertain Miller’s request for an appointment, haughtily announcing he wasn’t free until after GSPC’s proposed stock exchange launch, which has since been aborted, to huge embarrassment.

Our source believes Ray’s refusal to meet GeoGlobal is a clear sign of GSPC’s growing hostility towards the Canadian company, which holds a 10% stake in KG-OSN-2001/3. GSPC operates the block with 80% and Delhi-based Jubilant Energy holds the remaining 10%.

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