ISLAMABAD, July 9: The Lahore High Court (LHC), Rawalpindi bench, has directed the Oil and Gas Development Company Limited (OGDCL) to maintain status quo on the development of $3.5 billion Chanda oilfield as the government has rejected Zaver Petroleum’s request to replace OGDCL as operator.
Director and spokesman OGDCL Irfan Babar told Dawn that the OGDCL has also been directed by the court to present its point of view before the court on July 15 and till such time maintain a status quo.
He said that joint venture partners of $3.5 billion Chanda oilfield had rejected on Monday a move by a private petroleum firm Zaver Petroleum to remove OGDCL as its operator with 85 per cent shareholding.
He said that under the OCM decision not only that OGDCL will remain operator of the oilfield with 10 per cent stakes but the OGDCL has separately served a notice on the 10 per cent joint venture partner Zaver Petroleum Limited (ZPL) for violating the clause 4.2 of the joint venture agreement.
On the other hand, the ZPL was able to secure a temporary injunction from the Lahore High Court (LHC) Rawalpindi bench to maintain status quo that meant the OGDCL could not go ahead with the development work plan till hearing of the case, he said.
OGDCL director and spokesman said that the LHC has issued a notice to the OGDCL to appear before the court on July 15 to present its point of view.
At the same time, the Government Holding Limited (GHL), the 5 per cent shareholder of the oilfield, has also been directed by the court to present all the relevant record on the same date.
Irfan said that the operating committee meeting (OCM) presided over by director general petroleum concessions G.A. Sabri flatly rejected the ZPL’s request for change of operator. The OCM also expressed its displeasure over disclosure of the dispute to the press by the private company.
He said that under clause 4.2 of the joint venture agreement, no partner could take any dispute to the press or issue a statement without approval of the other partners. He said that OGDCL, as lead shareholder and operator of the field, has separately been served with a notice.
He said the OCM also noted that ZPL was in default for violating the relevant clause but did not press further.
To a question, the OGDCL spokesman said that the question of liquidity damages did not arise in the OCM meeting because the government had recently approved the work plan and there was no default on part of the operators in meeting any milestone.
Irfan said that OGDCL was hopeful that the LHC would vacate the status quo injunction on July 15 as the Civil Court Islamabad had refused to entertain the ZPL’s request for stay order.
He quoted the relevant judgment of the civil court that turned down the ZPL’s petition and held that there was no need for any temporary injunction. He said that ZPL wanted to delay the development of the field to cause losses to the government and the OGDCL, and in fact wanted to get a contract for laying a pipeline.
The ZPL, which has $7 million investment in the Chanda oilfield had sought to replace the operator OGDCL early this month.
Meanwhile, the government spokesman said here in a written statement that no change of operatorship or transfer of working interest from one party to another can take place without approval of the government.
The spokesman said that under the rules all development plans are required to be approved by the government upon submission by the respective operators. He said that in case of Chanda development plan, all partners including ZPCL jointly signed and filed an application for grant of development of production lease over Chanda field along with its development plan in January 2002.
The spokesman said that the ministry of petroleum and natural resources considered the same and granted the lease over Chanda field besides approving its development plan.
Shakardara field with estimated oil reserves of around 100 million barrels and gas reserves of around 15 million cubic feet is valued at $3.5 to $4.5 billion at the current international oil price at $25 per barrel.
OGDCL with 85 per cent shareholding is the operator of the field, followed by ZPL with 10 per cent and five per cent shares are owned by Government Holdings Limited (GHL), a holding company with 100 per cent government holdings.
Chanda-I was discovered in early 1990’s while discovery of Chanda-II was announced by the President Pervez Musharraf in early 2000.