BPCL's Group Company Challenges In London High Court Against Arbitral Award
Following the Arbitration Tribunal ruling against BPCL's group company, the oil refiner and explorer has recognised an exceptional item of Rs 1,798 crore as an impairment loss in Q4FY24.
BPCL's group company Bharat PetroResources Ltd. has challenged in the London High Court against the award issued by the International Chamber of Commerce Arbitration Tribunal favouring PetroRio -- operator of the Block BM-C 30 in Brazil.
Following the Arbitration Tribunal ruling against BPCL's group company, the oil refiner and explorer has recognised an exceptional item of Rs 1,798 crore as an impairment loss in Q4 FY24 against the book value of the asset in Brazil.
BPRL took PetroRio to the ICC tribunal after they went ahead with the exclusive development work at the project site without the former's consent. BPCL has 35.714% participating interest in the BM-C 30 project, with PetroRio as the operator. Production from the block was expected in 2026-27, as per earlier estimates.
"The dispute with the operator arose over two issues in FY22: first, the data sharing for field development work was insufficient to take any commercial decision, and the crude handling charges demanded was significantly higher than the market rates," said G Krishnakumar, chairman and managing director of BPCL, in an analyst call.
BPRL did not participate in the ballot for development work, after which PetroRio went ahead with the development activities without former's consent.
"Yesterday was the last day to challenge in the London High Court. We have filed the challenge and now the issue is with the respective authority," Krishnakumar said.
BPCL has a gross carrying value of investment of around Rs 10,926.37 crores in its wholly owned upstream subsidiary, Bharat Petro Resources Ltd. BPRL has investments in oil and gas blocks globally and in India, either directly or through its subsidiaries (including step-down subsidiaries), joint ventures and associates.
"During FY24, BPRL has impaired investments in its subsidiary company due to change in prospects of its blocks. Accordingly, impairment testing has been carried out on equity investment made by Corporation in BPRL and an impairment loss of around Rs 1,798.02 crore has been recognised, based on the value in use of assets as on March 31, 2024," BPCL said in its profit and loss accounts.
"The accumulated impairment loss on investments in BPRL as of March 31, 2024 is Rs 5,190.77 crore," the P&L note said.
Correction: Made changes across story to include name of BPCL's group company Bharat PetroResources (BPRL).
