NEW DELHI, DEC 25: The Ratna saga for Essar Oil has not ended and the signing of production sharing contract (PSC) for the Ratna and R-series oilfields in Gujarat is all set to suffer further undue delays.Top government officials said that in a recent letter, the ministry of finance has asked the petroleum ministry to appoint Industrial Credit and Investment Corporation of India (ICICI) as the consultant for assessing the financial capability of Essar Oil."Before finalising the PSC for this prestigious field, we have to do a financial evaluation of the consortium partners, Essar Oil in this case. Even the Negotiating Team of Secretaries (NTS) in its recent meeting had suggested that ICICI should be consulted over this matter. A meeting is being arranged with ICICI", petroleum ministry sources said.It may be noted here that ICICI is also the lead funding institution for Essar's 10.5 million tonne per annum refinery in Gujarat, expected to cost over 70 billion rupees. This refinery has been delayed due to lack of fund.The Ratna-R Series medium size oilfields block consist of a cluster of discovered oilfields. The Ratna offshore has recoverable reserves of around 500 million barrels of oil per day. As in the case of other fields like Panna-Mukta and Ravva, the actual yield could end up being much higher.Essar has a participating interest of 50 per cent in the oilfields, while Oil and Natural Gas Corporation (ONGC) holds 40 per cent and the balance 10 per cent is held by Premier Oil Plc of UK. Essar's share in the oilfield is valued between Rs 7.74bn and 8.60bn.Despite the fact that these fields were awarded to the Essar Oil led consortium way back in 1996, the project did not take off due to various reasons.Earlier, it was being alleged that the tender evaluation committee, which appraised the bids for the Ratna-R Series oilfield, was skewed in Essar's favour. Reliance was one of the main contenders for this field.However, reasons cited by ministry officials over the delay in signing of agreements relates to political uncertainties following change of governments at the centre since 1996.Financial institutions led by ICICI namely IDBI, IFCI, LIC, GIC and UTI, have agreed to sanction additional loans of Rs 3.50bn to Essar Oil Ltd, leading to the financial closure of the 10.5 mtpa refinery project in Jamnagar.As per the rumors doing the rounds of the industry, Essar Oil was planning to assign its rights in the Ratna oilfields to financial institutions in order to obtain necessary funds for its refinery project.In this background, ICICI, sources said, will be asked to check the finance capability of Essar Oil before the government finally inks a contract with the consortium to develop the Ratna R-series oilfields.
