CPC loses $162 mln appeal against London ruling

Sri Lanka’s state-run oil company lost an appeal against a London court ruling which ordered it to pay nearly $162 million plus interest for non-payment of dues to Standard Chartered Bank linked to hedging deals, government officials said on Friday.

Last year, Sri Lanka’s state-run Ceylon Petroleum Corp(Ceypetco) appealed against the ruling in favour of Standard Chartered, which went to court after the oil firm refused to make hedging payments to the bank.

“It has been reported that the order is against us,” the island nation’s Attorney General Palitha Fernando told Reuters. “First of all we have to see what the order was, then we are looking at (the) possibilities of appealing in the House of Lords.”

Oil Minister Susil Premajayantha said: “We are in consultation with the Attorney General’s department to appeal against the judgement.”

Ceypetco had refused to make hedging payments to five banks including Standard Chartered, Citigroup and Deutsche Bank .

The state oil company, which imported some 26 million barrels at a cost of $2 billion in 2007, needed to hedge its purchases of crude oil and refined products on the international market.

It was exposed to the record oil rally of 2008, when oil hit an all-time high above $147 a barrel for U.S. crude CLc1 in July, before crashing to less than $40 a barrel in December of that year.

Standard Chartered argued that Ceypetco had always been aware that a fall in oil prices would have made it liable to make payments to the UK-based bank. (Reuters)