ONGC, Rocksource in Legal Dispute

Norway’s Rocksource ASA has received a legal notice from Oil and Natural Gas Corporation of India (ONGC) invoking arbitration related to disputes over historical costs in the CY-DWN-2001/1 Production Sharing Contract (PSC) offshore India.

Image source: Kittisak/
Image source: Kittisak/


Rocksource said it was evaluating its response but added that the company’s view was that Rocksource is not liable for any costs on the block.

In 2008, Rocksource executed a memorandum of understanding (MoU) with ONGC, and later that year signed an agreement to farm into the CY-DWN-2001/1 PSC. The farm in carried with it a contingent licence commitment for the first phase of the PSC consisting of a three well work programme.

“The process for assignment of Rocksource’s Participating Interest did not complete within the time allowed for in the agreement, and Rocksource has not signed the PSC or Joint Operating Agreement, and therefore never formally became a partner to the block. ONGC relinquished the PSC in 2011. Furthermore, Rocksource’s position remains that ONGC breached the intent of the MoU and breached terms of its agreement with Rocksource on multiple occasions. These are some of the key reasons that contribute to Rocksource’s view that it is not liable for any costs on the block,” Rocksource said.

The cost claimed by ONGC for Rocksource’s share of the completed work programme is approximately USD 20 million. According to invoices sent by ONGC, approximately USD 15 million of this amount became due in February 2010.

Rocksource has said it has received advice from two reputable, India-based legal firms, that the prescription period for such claims under Indian contract law is three years.

“It therefore remains the Company’s position that, in addition to its legal arguments relating to failure to complete assignment in time and breach of terms, USD 15 million of the 20 million claimed by ONGC is now prescribed. Rocksource has earlier communicated that in the event that ONGC decides to send the dispute to arbitration, it is the Company’s understanding that it is likely to take at least three years before arbitration would be completed and any eventual ruling could be enforceable against Rocksource in Norway. This remains the Company’s view,” Rocksource concluded.

January 10, 2014


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