Law: Regulations of Mines and Oilfields and Mineral Development (Government Control) Act, (XXIV of 1948)

Section: 3B

Law: Petroleum Policy, 1997

Section: Cl.2.1.5(a)

(a) Regulation of Mines and Oilfields and Mineral Development (Government Control) Act (XXIV of 1948)--- ----S. 3B---Petroleum Policy, 1997, Cl. 2.1.5(a)---Petroleum exploration ---Petroleum Concession Agreement---Additional share in working interest of Government---Scope---In terms of the subject Petroleum Concession Agreement ("the agreement"), petitioner-company had 5% working interest in the agreement, whereas the respondent-company which was wholly owned and controlled by the Government also had 5% working interest---'Agreement' provided inter alia that as of the date of commercial discovery, respondent-company shall have a right to increase its working interest up to a maximum of 25% in any discovery area, and it will reimburse the expenditure corresponding to 5% carried working interest related to such discovery area up to the date of commercial discovery out of the commercial production in five annual instalments in accordance with the provisions of the Petroleum Policy, 1997---Subsequently when commercial discovery of petroleum took place respondent-company exercised its right to increase its working interest from 5% to 25% in accordance with the agreement---Petitioner-company called upon respondent-company to grant 5% working interest out of respondent's share in accordance with Cl. 2.1.5(a) of the Petroleum Policy, 1997---Respondent-company denied the petitioner's claim by contending that there was no provision in the agreement for an increase in the petitioner's working interest after commercial discovery; that incentive given to local companies in para. 2.1.5 (a) of the Petroleum Policy, 1997 had not been incorporated in the subject agreement; and that the petitioner-company was affiliated with another company, which was a foreign working interest owner; held, that although petitioner-company did have a foreign based subsidiary, but such subsidiary was neither claiming nor was it entitled to the benefit envisaged under Cl. 2.1.5 (a) of the Petroleum Policy, 1997---Such benefit was only meant for the local petroleum exploration and production companies, like the petitioner-company---Denial of the benefit under Cl. 2.1.5 (a) of the Petroleum Policy,…

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