Hedging fiasco: CPC to file fresh appeal in British Court

The Ceylon Petroleum Corporation which lost its appeal case in Britain in its dispute with the Standard Chartered Bank over the controversial oil hedging deals said yesterday it would file an appeal in the British Courts.

The Court of Appeal in London yesterday ordered the CPC to pay nearly $162 million (around Rs. 21.3 billion) along with interest for non-payment of dues to the SCB in the hedging deals.

“The Ceylon Petroleum Corporation (CPC) is appealing against the judgment of the Court of Appeal to the Supreme Court,” the CPC said.

The CPC had petitioned in the Court of Appeal in relation to the claim made by the SCB for $164 million plus interest arising from the hedging deals. This was after a lower court ruled in favour of the bank.

The CPC had refused to make hedging payments to five banks which include the SCB, Citigroup and the Deutsche Bank.The CPC, which imported some 26 million barrels at a cost of $2 billion in 2007 decided 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 prices hit an all-time high of $147 a barrel in July, before crashing to less than $40 a barrel in December of that year.

The SCB argued that the CPC had always been aware that a fall in oil prices would have made it liable to make payments to the UK-based bank.

Last year the CPC won the arbitration case filed by City Bank against it, claiming $194 million plus interest over a derivative transaction.

The CPC was also awarded cost of the arbitration proceedings amounting to $ 2.5 million.