In a blow to Cairn India Ltd, a plea of the UK-based Vedanta group company to export its share of crude oil from Barmer oil field in Rajasthan was today rejected by the Delhi High Court on the ground that domestic crude cannot be exported till India attained “self sufficiency”.
Justice Manmohan said that in the instant case, as no notice of India attaining self-sufficiency was given to Cairn, it can only claim compensation from the government for not picking up its share of crude from the oil field.
Under the production sharing contract (PSC) between Cairn and the Centre, the company gets 70 per cent of the crude produced from Barmer, with the rest going to the government. The government or its nominee can pick up the company’s share of crude and what is not picked up can be sold to private players or exported, Cairn had said during arguments.
The government, represented by Additional Solicitor General Tushar Mehta and the Centre’s standing counsel Anurag Ahluwalia, had opposed Cairn’s plea saying that an empowered committee had decided that export of the domestic crude oil cannot be allowed as it would be detrimental to India’s energy security.
The court agreed with the decision of the Empowered Committee of Secretaries denying permission to Cairn to export its share of crude oil, saying the reasons given by the panel “are legal, germane and valid grounds”.
The empowered committee had denied Cairn’s request for exporting its share of the crude oil, saying till India attained self sufficiency, domestic crude cannot be exported as it would be detrimental to energy security of the country and also violate the provisions of the PSC.
Referring to the provisions of the PSC, the court said that under the contract, Cairn “gets the right to lift and export its participatory interest or share of crude oil and condensate only when a notice regarding attainment of self sufficiency by India is given by the government to the petitioner (company), and that too, subject to the government exercising the option to purchase entire production in a particular year”.
The court further said, “Only when the government has elected not to purchase, the petitioner shall be entitled to freely lift, sell and export any crude oil and condensate.”
The court was also of the opinion that while a state trading enterprise (STE) like Indian Oil Corporation Ltd (IOC) can import or export crude oil, any other person who intends to do so will have to apply to IOC.
The government had said that export of domestic crude oil cannot be allowed as it would be detrimental to national interest, considering that nearly 85 per cent of required crude was imported.
It had claimed that as a result of selling excess crude to private domestic companies like Reliance and Essar, at rates lower than international prices, the government was losing about ₹4.5 crore per day. Cairn had claimed it had made several representations to the Directorate General of Foreign Trade for permission to export the crude, but did not get any response.