Owing USD 1.4 billion to British firm Cairn Energy, the Indian government is considering giving one of the surrendered oil fields such as Ratna R-series in lieu of the amount. It will help the government prevent seizure of foreign assets in case of default as well as get an experienced operator in struggling E&P sector, sources said.
Cairn Energy gave India its biggest onland oil discovery but exited the country after it was slapped with a Rs 10,247-crore tax demand using a legislation that gave the government the powers to tax companies retrospectively.
The firm has now won an international arbitration against the tax demand and the government has been ordered to return the value of shares of Cairn it had sold, dividends it had seized and tax refund it had withheld to recover the tax demand.
For a government struggling to find revenue to boost the economy, options of appeal against the arbitration award are limited and it may not have the financial bandwidth for such a payout, two sources with knowledge of the development said to PTI. "One option is to give Cairn one or more of the oil and gas fields that the government now owns after they are surrendered by operators for various reasons," one of them said.
"The government could give the Ratna and R-Series oil and gas field in the Arabian Sea that taken away from Essar Oil-Premier Oil consortium in 2016 because contractual terms had changed."
The Barmer oilfield in Rajasthan, which was originally discovered by Cairn Energy, could be another option. Vedanta Ltd, which now operates the field after it bought out Cairn's Indian subsidiary a decade back, has so far not agreed to the government conditions for getting an extension of contract beyond its original end day of May 2020.
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