Friday, July 16, 2010

Assam Co, Canoro clash over Amguri

Calcutta, June 14:

Canadian junior oil explorer Canoro Resources and Calcutta-based Assam Co India Ltd have filed law suits against each other in their respective countries over the Amguri oil block in Assam.

The Indian company filed a petition against Canoro in Delhi High Court on May 6; in response, the Canadian company filed a damage suit in the Court of Queen’s Bench, Alberta, on May 17.
Assam Co and Canoro are partners in the producing oil block in Assam where the former owns 40 per cent stake and the latter holds the rest. Canoro also operates the block.
The bone of contention is a financial transaction made by Canoro to obtain C$95 million, or Rs 430 crore, through a mix of debt and equity from an investment firm Mass Financial Corp after rejecting a complete buyout offer made simultaneously by Assam Co. Mass now owns 18 per cent equity in Canoro.
In its petition before Delhi High Court, Assam Co said the deal not only breached the joint venture agreement between Canoro and Assam Co but also violated the production sharing contract (PSC) signed with the petroleum ministry.
Canoro retorted with a damage suit of C$1.2 million saying Assam Co had repeatedly interfered with its contractual relations, including with Mass, and made defamatory statements to financially weaken the company so much that the Indian outfit could either take over Canoro, or the Amguri stake, at a “massively discounted price”.
The oil ministry threw its weight behind Assam Co and slapped a showcause notice on Canaro threatening to cancel the PSC. Simply put, the ministry said the Mass transaction could cost Canoro the Amguri block interest.
Assam Co managing director Aditya K. Jajodia was not available for comment.
Robert S. Wynne, president and chief executive officer of Canoro, defended the deal with Mass and said the transaction did not violate the terms of the PSC. “We have always respected the terms of the PSC and will do so.”
“I have met the ministry officials. We are awaiting a response from the government,” Wynne told The Telegraph. He said it would be “preposterous” to assume that Mass would eventually take ownership of Canoro.
He allayed concerns that Mass was a Chinese company and the eventual operatorship of Amguri in the Northeast would compromise security. “Mass is a Barbados incorporated company, 68 per cent owned by Americans,” he said.
Sources in Assam Co said Canoro declined a superior offer from it while accepting an inferior one from Mass.

Courtesy: http://www.telegraphindia.com/1100615/jsp/business/story_12566701.jsp

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