Gail, HOEC bury hatchet, sign deal for PY1 gas

Hindustan Oil Exploration Company (HOEC) today said its ongoing dispute with state-run gas utility GAIL, in relation to sale of natural gas from PY1 field in the Bay of Bengal, has been settled.

In a filing to the Bombay Stock Exchange, HOEC said that as the operator of PY1 field, it has executed a tripartite settlement agreement with Gail India and PPN Power Generating Company in this regard.

The tripartite settlement agreement entails the termination of the natural gas sale and purchase agreement with PPN and settlement of the ongoing dispute with Gail in relation to the sale of natural gas from PY1 field.

HOEC has a 100 per cent operated participating interest in PY-1 Field, and expects it to generate annual revenues of more than $65 million when it reaches the first plateau production.

Gail and HOEC have a contract for the supply of natural gas from the PY1 field, which will mainly be used for a power plant in Tamil Nadu. The GSC between the two state-owned companies covers a primary term of 15 years, which can be extended by mutual agreement. For the first six years, gas supplies are expected in the range of 51,000 mmbtu per day. Gail is also entitled to receive additional gas, if any, from the field under the terms of the contract.