The Delhi High Court on Tuesday dismissed oil company Cairn India's plea to export crude from its Barmer oil field in Rajasthan. The court has allowed Cairn India to invoke dispute resolution mechanism under the production-sharing contract (PSC).
Cairn was seeking international pricing for the crude produced from the Barmer oil field and was looking to export the crude for better monetisation from global pricing. About 70 percent of the crude produced from Barmer is meant to be sold to government-led oil PSUs and the remaining can be exported. If the state PSU fails to buy, Cairn India could sell it to private refiners.
Cairn India argued that sale of oil to private refiners was also done at government-set prices on its plea. The High Court, however, dismissed the plea saying that the argument doesn't hold any merit. The government had clarified that according to national policy unrefined oil cannot be exported as India is an oil-starved nation.
Commenting on the development, Prakash Diwan of Altamount Capital said that the PSC could give Cairn India a mechanism for redressal which would be time-consuming affair.
He added that the HC ruling wouldn't have much of an impact on Cairn India stock.
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