ONGC takes offshore India block costs dispute with Rocksource to arbitration

Offshore staff

OSLO, Norway – ONGC has issued a legal notice to Norwegian independent Rocksource invoking arbitration in regards to disputes over historical costs in the CY-DWN-2001/1 production-sharing contract (PSC) offshore India. Rocksource maintains it is not liable for any costs on the block.

In 2008, the company executed a memorandum of understanding (MoU) with ONGC, to be followed by signing of an agreement to farm into the PSC. The farm-in carried a contingent license commitment for the first phase comprising a three-well work program.

However, Rocksource claims the process for assignment of its participating interest did not complete within the time allowed for in the agreement. As such, it has not signed the PSC or joint operating agreement, and therefore never formally became a partner in the block.

In 2011, ONGC relinquished the PSC and, according to Rocksource, breached the intent of the MoU and terms of its agreement on numerous occasions. For those and other reasons Rocksource considers it is not liable for any costs on the block.

ONGC is claiming $20 million for Rocksource’s share of the completed work program and maintains that around $15 million of this sum was due in February 2010, based on invoices.

Based on advice from two India-based legal firms, Rocksource says the prescription period for such claims under Indian contract law is three years and that the $15 million of the $20 million claimed is now prescribed.


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