Essar oil deal lands on Law Ministry lap

The Finance Ministry has thrown the issue of production sharing contract of Essar’s Ratna-R series field in the court of the Law Minist...

The Finance Ministry has thrown the issue of production sharing contract of Essar’s Ratna-R series field in the court of the Law Ministry saying if found favourable, North Block would not have any objection.

The Finance Ministry on March 31 wrote to the Ministry of Petroleum and Natural Gas that it had no objection for the finalisation of production sharing contract with Essar Oil Ltd subject to the approval of the Ministry of Law and compliance of required procedure.

However, at the March 25 meeting of the negotiating team of secretaries (NT), the ministry representative had said that the oil fields off the Mumbai coast should be reverted to the state-run Oil and Natural Gas Corporation.

The negotiating team of secretaries that deliberated a letter from Essar group’s lenders led by ICICI stating that all charges on the Ratna-R series fields for funding its Vadinar Refinery have been withdrawn, asked the Law Ministry to examine the legality of the letters submitted by lenders, according to sources.

The Ratna-R series fields were awarded to Essar Oil in 1996 but the production sharing contract could not be signed till now as doubts were raised on the company’s financial capability to fund the exploration and development cost.

Essar has 50 per cent interest in the oil fields while ONGC has 40 per cent. The remaining is with Premier Oil of UK. Essar’s share of investment in developing the fields is anticipated at $149.09 million.