Page 4 - AsianOil Week 31

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Indian upstream attracts unexpected interest
Cairn Energy, which is currently locked in arbitration with the government, has expressed an interest in returning to explore the country’s basins
COMMENTARY
WHAT:
Cairn Energy has said it could be willing to reinvest in the country.
WHY:
The government has made many business- friendly changes to upstream policy.
WHAT NEXT:
Cairn will only return once arbitration over India’s retrospective claims has been resolved.
INDIA’S ongoing efforts to make its upstream more attractive to investors have been given a vote of confidence from a very unexpected quarter.
UK-based Cairn Energy said it would be will- ing to reinvest in the country once it is able to resolve an outstanding tax issue with the govern- ment. Cairn Energy commenced arbitration in the UK in 2015 following retrospective taxation actions undertaken by the Indian Income Tax Department (IITD) in 2014.
The IITD served Cairn Energy with a tax demand of INR102.47bn ($1.44bn) under leg- islation introduced in 2012. It has enforced this claim by seizing dividends due to Cairn Energy from its stake in Vedanta, o set a tax rebate from a separate issue and has sold part of the UK com- pany’s stake in Vedanta.
Cairn Energy led a claim for monetary com- pensation of $1.4bn under the UK-India Invest- ment Treaty in 2015 in order to protect its “legal position and shareholder interests”.
But the company, which discovered and developed India’s largest onshore oil eld in Rajasthan State, now appears willing to return to the country once the legal matters have been resolved.
Open to opportunity
Cairn Energy’s CEO Simon Thomson told Indian newswire PTI on August 4 that the com- pany was “keen to reinvest in India” as long as the retrospective tax issue was resolved. “India is one place where we would like to look at exploration licensing rounds.”
India has launched three exploration bid rounds under the Open Acreage Licensing Pol- icy (OALP), which was introduced as a part of the Hydrocarbon Exploration and Licensing Policy (HELP) in March 2016. OALP allows companies to set the boundaries of the blocks they are interested in from an open pool of acre- age. ese are then put up for bidding.
“We want to reinvest and the sooner we can stop talking about [retrospective tax] and move to talking about something positive, the better it willbeforIndiaandallofus,” omsonsaid. e arbitration tribunal concluded main court hear- ings in August 2018 and is now expected to hand down its decision before the end of the year.
omson noted that Cairn Energy had more than two decades of exploration knowledge and experience. e company developed the RJ-ON- 90/1 block in the Barmer Basin before it sold the majority of its Indian business to Vendanta in 2011.
250 230 210 190 170 150 130 110
90 70 50 30 10
2010-11 2011-12
2012-13 2013-14
2014-15 2015-16 2016-17 2017-18
2018-19
Supply and Demand
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Crude/condensate Oil product production consumption
Data: PPAC
P4
w w w . N E W S B A S E . c o m Week 31 07•August•2019
million tpy