Why the govt asked a court to restrain $15 bn Saudi Aramco-RIL deal

• Posted in OilGas
• on December 24, 2019
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The government has taken the unusual step of asking a court to restrain a $15 billion deal in which the world’s most profitable company and top oil exporter Saudi Aramco would acquire a stake in India’s biggest conglomerate Reliance Industries Ltd, controlled by India’s biggest billionaire Mukesh Ambani. ET looks at the issues involved.

The Dispute
Govt has a dispute with Panna, Mukta and Tapti oilfield contractors Shell and RIL (which holds 30%)

Govt has accused them of wrongly accounting for costs and profits in the fields, which reduces the state’s share of income

Govt says cos calculated state’s share of profit by deducting higher income tax than actually paid

It also says contractors reduced govt share by not including marketing margin in field revenue

The tribunal’s rulings so far favour the govt in many points, and the companies in a few

Timelines
The 25-year old contract for oil and gas fields expired last week

The depleting fields are now under full control of ONGC

The dispute is under international arbitration for 9 years

Initial ruling that upheld several points of the govt came in 2016

Next ruling in 2018 upheld some issues raised by the contractors

Final phase of arbitration is in March and April 2020

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