But says new investments will depend on progress being made in the existing portfolio
UK’s Hardy Oil and Gas Plc, the India-focused upstream oil and gas company, has said it is not pulling out from India.
The clarification comes a fortnight after the firm announced it will re-evaluate its current India focus in case “tangible progress” is not made on its India assets.
“To clarify, Hardy has no plans to exit its Indian exploration and production assets. The company has invested over $100 million to date in India,” the company told Business Standard in response to a detailed email questionnaire.
“However, new investments in India will depend on progress being made in the existing portfolio,” it added.
Hardy Chairman Alasdair Locke, while announcing the financial review of 2014-15 on 11 June, had said the company has clear deliverables for each asset and the management is fully accountable for the implementation of the agreed plans.
“Should the status quo in India remain and tangible progress not be made in a reasonable time-frame we will re-evaluate our current India focus,” Locke had said.
He had also said the company’s Board and management could change its geographical focus. “The Group remains in a strong financial position from which to either fund its planned work activity for the Indian asset portfolio or to implement a change of geographical focus.”
Aberdeen-based Hardy had stated in a June 11, 2015 statement it is disappointed with the Indian government’s appeal against an international tribunal award that ruled in its favour. It also raised objections to successive requests for adjournments by the government in a dispute involving itsCauvery Basin block CY-OS/2 off the east coast.
According to Locke, the government’s appeal is in contravention of the Production Sharing Contract (PSC), which states the arbitration process is final and binding on all parties, and inconsistent with the latest Supreme Court precedent that such international awards are not appealable under India laws.
Hardy Oil Chief Executive Officer Ian MacKenzie said the government’s appeal had been listed for hearing in the high court eight times over 22 months and had been adjourned five times on the government’s request. “We anticipate the process to continue through 2015,” he added.
Hardy Oil holds a 75% participating interest in — and along with GAIL and ONGC is a party and operator of – an 859 sq km gas block in the northern Cauvery Basin off the Pondicherry coast. Hardy Oil and GAIL had announced a discovery, Ganesha 1, in January 2007 that qualified as non-associated natural gas under the production sharing contract.
In March 2009, the government informed Hardy Oil that the block had been relinquished because the company had failed to declare commerciality within two years of the find, as set out in rules for oil discovery. Hardy Oil argued what it found was gas and it was entitled to five years from the date of discovery to declare commerciality.
The dispute went into arbitration and the tribunal ruled in February 2013 in favour of Hardy Oil. The arbitrators ordered the block be restored to Hardy Oil and GAIL and they be allowed three extra years for appraisal. The tribunal also asked the oil ministry to pay Hardy Oil and GAIL 9% interest on the Rs 500 crore spent on the block.
Hardy Oil holds a participating interest in two other offshore blocks in the Saurashtra and Cauvery basins. Along with Reliance Industries, Hardy Oil recently relinquished a block in the Krishna Godavari Basin due to access restrictions imposed by the government. It is in talks to buy Reliance Industries’ 90% stake in the Saurashtra Basin block.