M/s Sanwaria Gas Ltd. v. Union of India and Ors., Case No. Legal/111/2014
March 2, 2015

On the basis of submissions made by the Complainant and Respondents, the PNGRB considered among other issues, ‘whether contiguous change area of Govardhan and Vrindavan can be authorized to M/s Sanwariya Gas Ltd.’?

The Board observed that Mathura Geographical Area was awarded to the Complainant through competitive bidding of the Board as envisaged under relevant Regulation of authorizing entities for CGD work and in the invitation of the bids, Geographical Area of Mathura was clearly demarcated. The reading of the said Regulation confirms that Geographical Area which is under the bid has to take into consideration any contiguous issue at the time

of invitation of bid. The Regulation never empowers the Board to consider authorization of contiguous area after finalization of the bid and award of authorization process. In the Board’s view, any issue of contiguity and economic viability of the left out area should have been raised by the Complainant at the time of consideration of bid for Mathura Geographical Area and therefore, the request of Complainant for extending authorization to contiguous area of Govardhan and Vrindavan does not merit consideration. In view of these findings, the complaint stood dismissed.

Make up gas provision under a Gas Sales Agreement (‘GSA’) enables the buyer to moderate/lessen its take or pay commitments in light of unpredictable operational requirements. Buyer may request to take during a particular year all or part of the annual take or pay commitments then outstanding and for which buyer has paid seller (i.e., the ‘Make Up Gas’). Seller shall endeavor to supply such make up gas quantities subject to seller’s operational flexibility.

It would be prejudicial on the part of buyer that when the buyer has made a take or pay payment in respect of an annual deficiency the seller receives payments and is also able to retain the gas which it was otherwise prepared to deliver to the buyer. The buyer can contend that make up gas rights are a vital quid pro quo of the take or pay commitments.

Parties normally agree that when in respect of a particular year, the buyer has made take or pay payment, that payment will be credited towards a notional make-up gas account.

When in the following year the buyer has taken a quantity of gas equal to the buyer’s annual take or pay commitment for that year, the buyer can thereafter take a quantity of gas equivalent to the quantity of gas represented by the make-up gas account up to the limit of the annual contract quantity for that year. The quantity of gas so taken is called makeup gas and any amounts of make-up gas so taken will reduce the accrued balance in the buyers’ make up gas account. Annual take or pay commitments shall be requested by buyer as make up gas in the same chronological order in which such annual take or pay annual take or pay commitments were incurred.

Make up gas is also called as free gas which is a misnomer. Where the buyer is recovering make up gas the buyer will give nominations for the delivery of gas in the usual manner and this gas will be thereafter be invoiced for at zero contract price. 

Although the buyer is entitled to take delivery of that gas without an obligation to make payment, make up gas is recognition that since a take or pay payment represents a pre- payment by the buyer for gas then make up gas represents buyers’ subsequent recovery of that prepaid amount of gas.

The recovery of make-up gas by the buyer during a period of rising gas prices might expose the seller.

If the buyer has made a take or pay payment and later seeks to recover make up gas at a time when the applicable price has arisen then the seller will arguably be missing an opportunity to earn greater revenue in the gas which is being delivered as make up gas at a zero contract price. The seller therefore usually requires that when the buyer exercises its right to recover make-up gas, it should be reimbursed the difference between the value of the gas within the amount paid by the buyer as a take or pay payment and the value of the make-up gas at the time of its recovery. Similarly, the buyer may seek a reciprocal measure of protection from the seller where the contract price has moved the other way but the seller may reject this as a risk which the buyer should have taken into the account when deciding whether or not to go on to take or pay rather than to take and pay for gas.

The ability of the buyer to recover make-up gas may be limited by;

i. seller’s inability to deliver the buyer’s accrued make-up gas entitlements due to physical capacity constraints affecting the seller’s gas production or transportation facilities or

ii. contractual limitations, for instance, make-up gas is usually recoverable by the buyer in a year, when the buyer has already taken delivery of gas equal to that year’s annual take or pay quantity.

A GSA must contain a clause that the buyer must exercise its make-up gas entitlements within a specified time from their accrual.

It is important to note that the ‘pay for’ obligation if not taken, is in essence ‘liquidated damages’, which in law is required to be ‘just fair and reasonable.’ The seller will always be very particular about covering this aspect in the GSA, lest the buyer decides to require the seller to demonstrate that the liquidated damages so claimed by the seller is indeed ‘just, fair and reasonable’.

Next Issue

August, 2015

 In-house contributors

  • Sakshi Bawa, Oil & Gas Team – Downstream Sector
  • Neha, Oil & Gas Team – Downstream Sector


  • Norwegian Petroleum Directorate
  • S. Energy Information Administration
  • The International Energy Agency
  • Organisation of the Petroleum Exporting Countries
  • The Oil and Gas Journal
  • Official web-sites of various oil & gas companies

Alaya Legal presents its seventh issue of the Oil and Gas: Ezine to its Readers. Web-links are provided for ready access to certain reference material. The contents are presented with a view to allow comprehensive update in a systematic manner, from the legal perspective.


Reference Material

  • Categories of proven reserves of oil and natural gas across the globe may be accessed at, 
  • Explanation with respect to broad categorisation in the Oil and Natural Gas Industry may be accessed at,,%20Midstream%20and%20Downstream.html


MRPL to Set Up a Petroleum Terminal at Mauritius
December 2, 2014

ONGC subsidiary MRPL has entered into a Memorandum of Understanding with State Trading Corporation (‘STC’) Mauritius and Indian Oil Corporation Limited, to set up a Petroleum Terminal at Mauritius. This Joint Venture Terminal, to be constructed with an investment of around USD 130 million, will facilitate re-export of Petroleum Products from Mauritius to Indian Ocean Islands and Mainland Africa, thereby making Mauritius a petroleum hub, besides enhancing the oil supply security status of Mauritius.

Chevron Announces First Oil from Jack/St. Malo Project in the Gulf of Mexico
December 2, 2014

Chevron Corporation announced that crude oil and natural gas production has begun at the Jack/St. Malo project in the Lower Tertiary trend, deepwater U.S. Gulf of Mexico. The Jack and St. Malo fields are among the largest in the Gulf of Mexico. With a planned production life of more than 30 years, current technologies are anticipated to recover in excess of 500 million oil-equivalent barrels. Chevron, through its subsidiary, Chevron U.S.A. Inc., has a working interest of 50 percent in the Jack field, with co-owners Statoil (25%) and Maersk Oil (25%).

Reliance Industries Limited (‘RIL’) Signs Memorandum of Understanding (‘MOU’) with Petroleos Mexicanos (‘PEMEX’)
December 5, 2014

RIL and the Mexican state owned company, PEMEX have entered into a MOU. As per the MOU, RIL will cooperate with PEMEX for assessment of potential upstream oil and gas business opportunities in Mexico and jointly evaluate value added opportunities in International Markets. The MOU envisages sharing of RIL’s pioneering expertise in deep water development & best practices in East Coast of India and RIL’s experience in shale gas in United States. RIL will also provide technical support and share experience with PEMEX for refining value maximisation and other technical optimization strategies.

Chevron Acquires Blocks Offshore New Zealand, Frontier Exploration Offers Long-Term Opportunities For Growth
December 9, 2014

Chevron New Zealand Exploration Ltd., a Chevron Corporation subsidiary announced that it has been granted exploration rights to three blocks located offshore New Zealand, in a frontier basin with water depths ranging from 2,600 feet (800 m) to 9,800 feet (3,000 m). The three petroleum exploration permits 57083, 57085 and 57087 in the offshore Pegasus and East Coast basins, cover more than 6.26 million acres (25,300 sq. km), and are located southeast of North Island. Chevron New Zealand Exploration Ltd. will be the operator of the blocks with a 50 percent working interest. Statoil will hold the remaining 50 percent interest.

ONGC Videsh Limited Awarded Exploration Permit in Offshore New Zealand
December 10, 2014

ONGC Videsh Limited has won an Exploration Block- 14TAR-R1 in New Zealand in the Bidding Round Block Offer-2014 by the Government of New Zealand. The bidding round was launched in April 2014 offering five offshore and three onshore release areas for competitive bidding. ONGC Videsh submitted bid for one exploration block located in the Taranaki offshore basin in October 2014.

ONGC Notifies Three Discoveries
December 13, 2014

ONGC has notified three discoveries made recently;

  1. GD-11-1 in KG offshore In KG Basin offshore, ONGC has made a significant gas discovery from its nomination deep water block, KG-OS-DW-III. The discovery well GD-11-1, located about 43 Km to the South of the nearest coastal town Odalarevu in the state of Andhra Pradesh, was drilled down to a depth of 2810 m in water depth of 812 m to explore the hydrocarbon potential of Pliocene sands.

    b.  WO-5-11 (WO-5-G) in Mumbai offshore

In Mumbai offshore ONGC has made a new pool discovery in the well # WO-5-11 (WO-5-G) in BOFF PML block. The well, situated around 160kms west from the nearest coastline in the state of Maharashtra, was drilled down to a depth of 2265m in water depth of 83m with the objective to explore hydrocarbon potential of Mukta and Bassein Formations.

   c.  Thirunagari Gas Discovery in Cauvery Basin

In Cauvery Basin, in the southern state of Tamil Nadu, ONGC has made a significant gas discovery in the well MD-5; the second hydrocarbon discovery made by ONGC in the NELP-IV block CY-ONN-2002/2.

Chevron Announces Oil Discovery in Deepwater U.S. Gulf of Mexico
January 6, 2015

Chevron Corporation announced a significant oil discovery at the Anchor prospect in the deepwater U.S. Gulf of Mexico. Anchor is Chevron’s second discovery in the deepwater Gulf in less than a year.The Green Canyon Block 807 Well No. 2 encountered oil pay in multiple Lower Tertiary Wilcox Sands.

Schlumberger to Acquire Minority Share in Eurasia Drilling Company
January 20, 2015

Schlumberger Limited announced an agreement to acquire a minority equity interest in Eurasia Drilling Company Limited (‘EDC’). The agreement extends the successful long-term relationship enjoyed by the two companies within the strategic alliance signed in 2011, which has enabled deployment of a range of drilling and well engineering services to customers in the Russia land conventional drilling market. In connection with the agreement, the principal shareholders of EDC will take the company private. Upon delisting of the company from the London Stock Exchange, Schlumberger, through one or more subsidiaries, will acquire a minority equity ownership interest of 45.65% in EDC, in exchange for consideration of $22 per share. The total cost of acquiring this minority interest, including the cost of a call option and various non-competition agreements, is approximately $1.7 billion. The call option will allow Schlumberger, at its election, to purchase the remaining shares in EDC during a two-year period commencing three years from the closing of the transaction. This transaction is expected to close during the first quarter of 2015, and is subject to customary closing conditions.

Chevron and SK LNG Trading Sign Gorgon LNG Supply Agreement
January 20, 2015

Chevron Corporation announced that its Australian subsidiaries have signed a binding Sales and Purchase Agreement (‘SPA’) with SK LNG Trading Pte Limited (‘SK’). Under the SPA, SK LNG Trading, which is part of a leading industrial conglomerate in South Korea, will receive 4.15 million tons of LNG over a five-year period starting in 2017.

The Gorgon Project combines the development of the Gorgon Field and the nearby Jansz-Io Field. Facilities being built on Barrow Island include a liquefied natural gas (‘LNG’) facility with three processing units capable of producing 15.6 million metric tons of LNG per year, a carbon dioxide injection project and a domestic gas plant.

Chevron Expands its U.S. Gulf of Mexico Leasehold Position with Acquired Deepwater Acreage
January 28, 2015

Chevron Corporation announced that its subsidiary, Chevron U.S.A. Inc., will work with BP Exploration and Production Inc. (‘BP’) and ConocoPhillips Company (‘ConocoPhillips’) to explore and appraise 24 jointly-held offshore leases in the northwest portion of Keathley Canyon in the deepwater Gulf of Mexico. Chevron will be the operator. The transaction encompasses the Tiber and Gila discoveries, and the Gibson exploratory prospect.

Chevron Acquires Exploration Interests in Mauritania
February 4, 2015

Chevron Corporation announced that its wholly-owned subsidiary Chevron Mauritania Exploration Limited has reached an agreement to acquire a 30 percent non-operated working interest in Blocks C8, C12 and C13 offshore Mauritania from Kosmos Energy. The transaction is subject to the approval of Mauritania’s government. The deepwater blocks off the coast of Mauritania cover a contiguous area of approximately 6.6 million gross acres in water depths ranging between 5,249 feet (1,600 meters) and 9,842 feet (3,000 meters).

Indian Oil Corporation Limited (‘IOC’) Launches High Productivity HDPE grade Propel HDPE 080M60
February 6, 2015

IOC launched a high productivity HDPE grade, Propel HDPE 080M60, for injection moulding applications on February 5, 2015. The new high productivity polyethylene grade in injection moulding sector is being introduced for the first time by a polymer resin manufacturer in the world, thereby bringing cutting edge competitive advantage to end customers. It offers significant improvement in product performance in injection moulding applications such as material handling crates, caps and closures, household articles and thin walled products, resulting in increased productivity, energy saving, enhanced product aesthetics and excellent dimensional stability.

Keeping in view the growth momentum in Indian petrochemicals industry, it offers a huge potential for future. Sizeable opportunities also exist for the export of petrochemicals in Asian region.

ONGC Videsh’s Sakhalin-1 Project Commences Production from Arkutun-Dagi
February 13, 2015

The flagship project of ONGC Videsh ‘Sakhalin 1’ in Far East Russia have commenced production from Arkutun Dagi, the third and final field being developed as part of the larger Sakhalin 1 project. The Arkutun-Dagi oil and gas field is located 25 km offshore Sakhalin Island in water depths ranging from 15 to 40m. The commercial oil production at the Arkutun-Dagi field commenced in strict compliance with the approved schedule, defined technological specifications and adherence to all industrial and ecological safety legislations.

Financial Backer of Fraudulent Ecuador Litigation Withdraws Support, Settles
February 16, 2015

Chevron Corporation has reached a settlement agreement with James Russell DeLeon, the principal funder of the fraudulent lawsuit against Chevron in Ecuador. Chevron brought claims against DeLeon for his role in funding and advancing the fraudulent lawsuit. In the settlement, DeLeon has resolved those claims by withdrawing financial support from the Ecuador litigation and assigning his interests in the litigation to Chevron. Chevron, in turn, has agreed to release all claims against DeLeon. In filings with the Gibraltar court, DeLeon previously disclosed having invested approximately $23 million in the case in exchange for an approximate 7 percent stake in the $9.5 billion Ecuadorian judgment against Chevron. DeLeon’s funding entity, Torvia Limited, and his associate, Julian Jarvis, are also parties to the settlement.

Schlumberger Introduces Industry-First Fully Dissolvable Plug-and-Perf System
February 16, 2015

Schlumberger announced the release of the Infinity dissolvable plug-and-perf system. This unique solution uses fully degradable fracture balls and fully degradable seats instead of plugs to isolate zones during well stimulation.

The first-ever fullbore interventionless plug-and-perf system eliminates the need for milling operations and leaves nothing behind in the wellbore. The technique eliminates lateral length restrictions, which maximizes reservoir contact and estimated ultimate recovery, and it greatly reduces intervention-related risks and costs.

HP-HiGAS Unit Inauguration by HPCL CMD at Vizag Refinery
February 17, 2015

HPCL inaugurated ‘HP-HiGAS Unit’, a new commercial scale unit developed based on HPCL R&D technology at Visakh Refinery. HP HiGAS is a first of its kind unit / technology in the refining industry and is based on the concept of Process Intensification for Distillation / Absorption Processes. The new technology finds main use for gas processing and is named as HP-HiGAS technology. The operation of the HP-HiGAS involves removal of H2S from Refinery Fuel Gases from a level of 5 wt% to 100 ppm using Amine as the absorbent, which is similar to that of the existing Fuel Gas Amine Absorption Unit (‘FGAAU’) column in the Visakh Refinery. The breakthrough achieved with this technology is plant size reduction by 10 times, with a 2.5 metres HP-HiGAS unit replacing the existing conventional trayed FGAAU column of 23 metres.

The HP-HiGAS technology is based on intensifying the mass transfer processes by carrying them in rotating packed beds in which high centrifugal forces occur.

ONGC Signs an Important Memorandum of Understanding (‘MOU’) for Research & Development
February 18, 2015

ONGC entered into a MOU with Super Wave Technology Private Limited (‘SWTPL’) for doing research on alternative technology for hydraulic fracturing.
With this partnership ONGC will provide assistance to SWTPL for developing Shock Wave Assisted Fracking Technology, an alternate to the conventional hydraulic fracturing which if proven effective as a substitute to hydraulic fracturing, in particular for shale gas exploitation, will be a game changer for the oil & gas industry.

In the present project with ONGC, SWTPL proposes to use shock/blast waves for initiating fractures/features in sandstone/shale reservoirs located initially at depths of 1000-1500m.

ONGC’s Oil Production From Its Western Offshore Breaks 5 Years Record
March 5, 2015

Crude Oil Production from ONGC’s Western Offshore Fields touched 325,000 barrels oil per day (BOPD) on 3rd March, 2015. This is the highest production from Mumbai Offshore during the last 5 years. The production has started increasing from average 315,000 BOPD in February 2015 to over 325,000 BOPD in March, 2015. Addition of couple of high producing new wells in a marginal field B-193, installation of high volume Electrical Submersible Pumps (ESP) in D1-field, undertaking massive hydro-fracturing job are among some exclusive hi-Tech initiatives which have resulted in additional oil gain. However, the diversion of well fluid from Cluster – 7 fields to the newly engaged FPSO, Sterling-II, is the primary contributor behind this recent rise in production.

Schlumberger Releases New Ultrahigh-Temperature Drilling Technologies
March 17, 2015

Schlumberger announced the launch of TeleScope ICE ultrahigh-temperature measurements-while-drilling service and PowerDrive ICE ultrahigh-temperature rotary steerable system (RSS). These new technologies enable standard drilling operations in reservoirs with extreme temperatures, expanding the applications and the range of the field-proven PowerDrive RSS and Scope measurement services. These two technologies are the first two members of the ICE ultrahigh-temperature drilling services family

Schlumberger Launches Two New Full-Azimuth Multiclient Surveys in the US Gulf of Mexico
March 20, 2015

Schlumberger announced the completion of the acquisition of approximately 2,750 sq km of two new full-azimuth multiclient seismic surveys over the Garden Banks and Green Canyon areas in the Gulf of Mexico. These acquisitions are the initial phase of the Revolution X and Revolution XI surveys and will provide full-azimuth, high-density broadband data to optimize future operational decisions.

When completed, the Revolution X and Revolution XI surveys will provide more than 3,800 sq km and 2,940 sq km of 3D data respectively for suprasalt and subsalt targets, and deeper subsalt Miocene and Wilcox formations.

Chevron Subsidiary Signs Production Sharing Contract in Myanmar
March 24, 2015

Chevron Corporation announced that its subsidiary, Unocal Myanmar Offshore Co., Ltd., has entered into a Production Sharing Contract (‘PSC’) with Myanma Oil & Gas Enterprise (‘MOGE’), the national oil and gas company, to explore for oil and gas in the Rakhine Basin. The new PSC area, Block A5, lies 125 miles (200 km) offshore northwest of Yangon, and covers more than 2.6 million acres (10,600 sq. km).  Unocal Myanmar Offshore Co., Ltd. will be the operator of the block with a 99 percent interest.  Royal Marine Engineering Co., Ltd. (‘RME’), a Myanmar company, will hold the remaining interest in the block.

Chevron Concludes Sale of Interest in Caltex Australia Ltd
March 29, 2015

Chevron Corporation announced that its wholly owned subsidiary Chevron Global Energy Inc. has completed the sell down of its 135 million shares in Caltex Australia Limited at a share price of AUD$35.00. Chevron will receive the cash proceeds upon settlement on April 2, and reflect the gain in second quarter 2015 results.

Reliance Industries Limited (‘RIL’) Signs Production Sharing Contracts for Two Offshore Blocks in Myanmar
March 31, 2015

RIL and Myanma Oil & Gas Enterprise (‘MOGE’), an enterprise of the Government of Myanmar, have signed production sharing contracts for two offshore blocks i.e., M17 and M18. RIL won both the offshore blocks after its bids in Myanmar Offshore Block  Bidding Round – 2013 were declared successful by the  Ministry of Energy (‘MOE’) of the Republic of the Union of Myanmar. RIL will be the operator of the blocks with a 96 per cent participating interest. United National Resources Development Services Co. Ltd. (‘UNRD’), a Myanmar company, will hold the remaining interest in the block. Both the blocks are located offshore in the Tanintharyi basin of Myanmar in water depths upto 3000 ft. and together encompass total area of 27,600 sq. kms.


The information in this private circulation is not legal advice and should not be treated as such. The information is taken from public domain and is purely for private and non- commercial purposes. We do not represent that the information is correct, accurate, complete or non- misleading.

This disclaimer will be governed by and construed in accordance with laws of India, and any disputes relating to this disclaimer will be subject to the exclusive jurisdiction of the courts of the Republic of India.

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