IPI Pipeline: Significant progress made

May 8: Petroleum Minister Murli Deora`s meeting with his counterparts in Islamabad on the Iran-Pakistan-India (IPI) pipeline seems to have made some progress, though negotiations are stuck on the sticky business of transit fees. The following are the details:
8Delivery point: India informed that the delivery point for Indian gas should be the India-Pakistan Border, while Iran has been insisting on the delivery at the Iran-Pakistan Border and therefore, the ownership of gas flowing through Pakistan territory was to be determined so as to mitigate the risk involved in transit. The Pakistan side agreed with this position and to participating in trilateral discussions with Iran for facilitating resolution of the issue.
8Project structure of pipeline in Pakistan: The Indian side informed that they would prefer a joint venture approach with a consortium of Indian and Pakistani companies to implement the project in Pakistan and offered the participation of GAIL from the Indian side. This would not only allow cost-effectiveness and enhanced accountability, but will also help as a confidence-building measure and in pipeline security. The Pakistani side noted the offer and expressed that they have an open mind on this issue and would respond shortly.
8Transportation tariff: The Pakistani side informed that the transportation tariff for the Pakistan portion of the IPI pipeline would be based on the cost of service to be achieved through international competitive bidding in project execution. A reasonable rate of return in the pipeline (15 to 18%) was sought to be built into the project. An SPV would be formed with government of Pakistan having a majority stake through their PSUs. The Indian side informed that the principles of transportation tariff as already discussed and agreed should form the basis for tariff determination. The Indian side agreed to the Pakistan proposal that the final tariff would be based on rate received in response to the tender to be floated for award of work through the international competitive bidding process. India reiterated its offer on the consortium approach for the project. 
8Transit fee: India asserted that the offer earlier made was reasonable and justified, as Pakistan is also an offtaker at 80% of the pipeline length. Pakistan also agreed that the transit fee should not be linked to the price of gas and requested Indian acceptance of he transit fee of $200 Million per year at the rate of $2/1000M3/100KM. India again informed that its offer of $0.15/mmbtu as a transit fee was reasonable and in line with international practices. After a discussion, it was agreed by the two ministers that the two issues -- viz. pipeline company structure in the JV format and an appropriate transit fee -- will be taken up by them in consultation with their respective hovernments and both sides will revert shortly, so that an agreement will be finalised on all the issues.   Details

Shortfall in crude output in 2008-09: Sharma provides an explanation

May 8: In a briefing to the board of directors of ONGC, chairman R.S. Sharma owned up to a sharp shortfall in crude production against targets for FY2007-08. The company was able to achieve an output of only 25.945 MMT of crude, which was only 95.53% of target. Sharma blamed the following factors for lower output:
8Project executing delay in G1/GS-15: ONGC is involved in severe litigation with contractor Clough Engineering of Australia and there is no sign that the dispute is going to end in hurry.
8Unilateral withdrawal of FPSO from Western Offshore: The FPSO set sail from Indian waters without any notice, leaving ONGC high and dry.
8Environmental reasons and decline in base production at North-east: Oil India Ltd too seems to have a similar problem with its acreages in the North-East.
8Air leakage incident at Mehsana (Balol#45): Crude production suffered as a result of the leakage.
Comment: The fact that crude output was down by a significant 4.5% vis-à-vis targets is a serious lapse. As Sharma explained, some of the factors for the shortfall were outside the control of the company, but do they explain all the variables that were at play? A thorough analysis of the shortfall is required to ensure that output continues to grow in the current year. For, not only will ONGC have to make up the gap, but will also have to produce more to achieve the target set for 2008-09.   Details

Seminar on emerging investment environment in E&P: Presentations

May 8: The website carries here, for our readers' perusal, a series of presentations made by energy consulting firm PFC Energy at a seminar on the “Emerging Investment Environment in E&P," in New Delhi on April 28, 2008. The seminar was organised by the Petroleum Federation of India (Petrofed). A presentation was made by PFC Energy partner Michael Rodgers, who noted that even though global oil prices will remain volatile, it will remain at significantly higher levels than in the 1990s. A presentation was also made by upstream asset valuation manager Torsten Wucherpfennig, which highlighted that declining crude production poses significant financial and technical challenges to National Oil Companies (NOCs). He further emphasised that even though the international oil company (IOC) model included relatively small R&D spend compared with other industries, the IOCs are dramatically increasing R&D spending of late. A case study on India was presented by PFC Energy's senior upstream consultant Gauri Jauhar. Jauhar suggested that restricted access to worldwide reserves creates a favorable “push” towards Indian E&P and that India's gas reserves growth has been faster than worldwide levels. She also cited rising deepwater prospective as a favourable "pull" factor for Indian E&P and made a comparative analysis of India, Libya and Angola. (Click on Reports to download the complete set of presentations)

Heera Reconstruction Project-I: Rs 457 crore initiative will cater to new oil and gas output from development projects

May 8: 8ONGC plans to kick off a new Rs 475.02 crore ($118.75 million) project for reconstruction of facilities in its Heera Asset in the Western Offshore to cater to peak production of 55,695 bopd of oil and total separator gas of 6.313 MMSCMD of gas expected to accrue through development projects being undertaken in the field by 2010-11. To finalise the detailed turnaround scope of work, a study was carried out by Triune Projects Pvt. Ltd on the adequacy of process and piping facilities of the Heera Process Complex with respect to the future production profile vis-a-vis the developmental schemes so that requirements could be addressed during the facility upgradation project. ONGC also carried out HAZOP and MDT studies and a lot of in-house surveys to look into the physical condition of the surface facilities, their obsolecence and adaptability with new norms, particularly in light of the untoward incident involving the BHN platform in Mumbai High in 2005, which  drastically impacted production in the Western Offshore.
8ONGC has noted that various hot works are being executed on the Heera Process Complex for day-to-day repairs and maintenance work. However, hot work on a larger scale at the HRG, HRC, HRA and HA platforms in the Heera field has been resisted by the E&P major. It was felt more prudent to complete all necessary hot works on barges and install these during a shutdown of the Heera Asset. ONGC hopes to accomplish maximum erection of the new facilities during the non-shutdown period, with only hook-up of the platforms to be done with the new facilities in the planned shutdown period of 34 days.
8The scope of work will involve:
--HRG HP separators A&B, HRC HP separator and HRA HP separator, LP separator and surge tank: The upgradation of the separation facilities aims to enhance the life of the facilities for a minimum of 15 years. Upgradation of the HRG HP separators and the HC HP separator will enable the handling of up to 6.313 MMSCMD of gas. ONGC also wants to upgrade the LP separator to a de-gasser, the surge tank to an electrostatic dehydrator and conversion of the existing HRA HP separator to a  surge vessel, besides upgradation of associated instrumentation and control systems with the latest proven systems.
--PWC system: ONGC wants to install a new capacity flash vessel with a capacity of 100,000 barrels of water per day and a hydro cyclone-based conditioning system of 25 ppm and optional 10 ppm specification. The older system with lower capacity will become obsolete and will be removed.
--LP flare: Installation of new flare and vent line of surge tank, as well as removal of the old, corroded one.
--Hot oil system; This will be installed on new tanks, pumps, waste heat recovery systems and coil dampers, with actuators and blanketing by N2 cylinder. The old system will be removed.
--HVAC system of WIH and HRG platforms: A new and upgraded HVAC system will be installed at both platforms.
--Diesel lines: ONGC wants to remove the old lines and install new diesel transfer and receiver lines and pumps.
The project will also involve the upgradation and installation of new sump caissons, cooling water facilties, piping, valves, F&G systems, UPS, fuel gas skids, sea water lift pumps, ESDVs in the main oil and gas lines, a life boat at the HRA platform and two new cranes. (Click on Details for more information)   Details

Heera Reconstruction Project-II: Financials

May 8: 8ONGC plans to execute its Heera Reconstruction Project through an Open International Competitive Bidding (ICB) tender under a two-bid system with notification of award by August 20, 2008, and completion within a 20-month time frame by April 30, 2010. The expenditure will be phased out over the period, with estimated expenditure of Rs 50 crore in 2008-09, Rs 400 in 2009-10 and Rs 52 crore in 2010-11.
8In its viability analysis of the project, ONGC has noted that the objective is to meet the increased separation gas requirement as per production profiles up to 2030, to enhance the life of static equipment by another 15 years, to improve produced water handling and processing and to phase out obsolete equipments. Hence, the financial economics for the turnaround can not be estimated as a standalone project. However, the economic evaluation shows that the investment made in the field will be sufficient to sustain oil output within an economic paradigm.
8At an oil price of $50 per barrel and gas price of Rs 3,240 per thousand cubic metres -- while taking into account discounting factors -- the net present value of the Heera field at the discount rate of 12% on a global basis works out to Rs 6,098.13 crore but the Internal Rate of Return (IRR) is indeterminant. In this light, ONGC has not had the project economics appraised by a financial institution, as no incremental gain in oil and gas production is envisaged.
8The website carries here, for reference purposes, a detailed financial analysis of the development of the Heera fields in its entirety over the 2006-07 to 2029-30 period. The data is disaggregated for each of the interim years in terms of the facility cost, capex development costs, depreciation at the rate of 15%, well cost, work-over costs, operating costs, gas revenue, oil and condensate revenue, total revenue, taxable revenue, costs towards abandonment and tax revision following abandonment, the cumulative taxable revenue and net present value discounted at the rate of 12%. (Click on Details for more information)   Details

Indraprastha Gas Ltd seeks intervention of petroleum ministry to clear "authorisation status" bottlenecks

May 8: 8Crying foul over the Petroleum and Natural Gas Regulatory Board's (PNGRB) decision making it mandatory for existing city gas players to seek authorisation from the board for expansion of their city gas distribution networks, Indraprastha Gas Ltd (IGL) has sought the intervention of the petroleum ministry to resolve the issue expeditiously. The GAIL joint venture company has noted that the regulatory board has not taken cognisance of the earlier directives of the  petroleum ministry as well as the recent orders of the Supreme Court -- which have authorised IGL to supply CNG in National Capital Territory of Delhi -- and this is likely to lead to inconvenience for the public. Clearly, the City Gas Distribution (CGD) company appears to be perturbed over the fact that the board has now placed the company in the same bracket as other private sector players like Adani Energy Ltd and Haryana Gas Distribution Ltd.
8The root cause of the confusion seems to be the ambiguity of the term "authorised by the central government" in the PNGRB Act, 2006, which has been construed to imply that the board can only accept and recognise a specific and formal authorisation by the central government to the company at any time before the appointed day for laying, building or expanding any city of local natural gas distribution network as authorisation for CGD operations. Apparently the information furnished by IGL does not establish that it received explicit authorisation from the central government for its CGD project in the National Capital Region. 
8Readers will recall that the PNGRB appears to have created quite a stir by questioning the authenticity of authorisation by the central government for city gas companies like IGL and Mahanagar Gas Limited (MGL) to implement their CGD projects. It has directed these companies not to undertake any new or incremental activity relating to laying, building, operating or expanding CGD network without prior authorisation by the Board, threatening to invoke penal provisions under the PNGRB Act in case its orders are not complied with. (Click on Details for more information)   Details

L&T begins detailed engineering work under ONGC's Phase-II Mumbai High South Redevelopment Project

May 8: Larsen & Toubro has begun detailed engineering work for ONGC's Phase-II Mumbai High South Redevelopment Project at its facility in Bangalore after having completed topside modification survey work on the Rs 1,252.75 crore redevelopment project which envisages production of 20.7 MMT of oil and 3.32 BCM of gas from the Mumbai High South field by 2029-30. The facilities envisaged under the project include the installation of one process platform, five well platforms, six clamp-on structures, modifications at four existing platforms, 28 new electrical submersible pumps (ESPs), submarine pipelines and drilling of 86 new wells and 39 sidetracking jobs. Readers will recall that the Notification of Award (NOA) for the project was issued to Larsen & Toubro, Mumbai, on February 13, 2008, with completion scheduled for June 30, 2009, including a grace period of 60 days. A kick off meeting was held on February 26, 2008, and the contract was signed on March 17, 2008. (Click on Details for more information)   Details

N.K. Mitra's tour to Australia-I: Opportunities in LNG and natural gas projects identified for investment

May 8: ONGC offshore director N.K. Mitra's recent tour to Perth and Sydney in Australia from April 7-11, 2008, to assess the prospects for tying up with experienced firms for exploration and exploitation of hydrocarbons appears to have been extremely rewarding in terms of the business development opportunities that have been identified, which included cooperation in natural gas and CBM, conversion of gas to liquefied form and the transfer of LNG to India. Some of the promising companies which have evinced an interest in working alongside the Indian E&P major include:
8LNG Ltd: The company provides an "energy link" between stranded and flared proven gas reserves and existing LNG buyers, as well as niche energy markets. The company's business model is based on the development of highly efficient small and mid-scale LNG plants located near the gas reserves, then shipping or trucking the LNG to identified markets secured by long-term LNG sales agreements. The company plans to develop a mid-scale LNG plant of 2.6 MMTPA capacity at Fisherman's Landing in the Port of Gladstone. The project's estimated development cost is $400 million. Mitra has noted that this is an interesting project for ONGC to invest and participate in, with firm timelines and uninterrupted supply of LNG.
8MEO Australia and Petrofac Energy Developments Oceania Ltd: Both companies are shareholders in Australia's E&P acreage, known as the Heron prospect. Petrofac is an international provider of facilities solutions to oil and gas production and processing industries while MEO is an E&P firm which is currently focused in methanol and LNG projects in the Timor Sea. Mitra has had discussions for an ONGC stake in the Heron Prospect which has shown indications of containing a large volume of gas. (Click on Details for more information)

N.K. Mitra's tour to Australia-II: ONGC to look at partnership with E&P companies in prospective acreages

May 8: Some of the other companies identified by ONGC offshore director for cooperation in upstream and downstream projects during his recent tour to Australia include:
8Santos: Santos is a major Australian oil and gas exploration and production company with interests and operations in every major Australian petroleum province and in Indonesia, Papua New Guinea, Vietnam, India, Bangladesh, Kyrgyzstan and Egypt. It is the largest domestic gas producer in Australia, supplying gas to all mainland Australian states and territories, ethane to Sydney and oil and liquids to domestic and international customers. The company also holds a participating interest in the Darwin LNG project, which exports LNG to Japan. Notably, the Cooper Basin -- which Santos and its joint venture partners have developed -- is Australia's largest onshore E&P project. Mitra has opined that it is worth tying up with Santos for joint bidding on newly released acreages in Australia, considering the synergies between the two companies.
8New Guinea Energy Ltd: This Australian company holds six petroleum prospecting licenses (PPL) in Papua New Guinea, which cover a total area of about 52,000 sq km. The company is on the lookout for joint venture partners in exploration and development of these areas, on account of the high costs involved due to extremely difficult logistics. This makes the venture very risky, with the possibility of rich rewards through planned exploration. Mitra has noted that New Guinea Energy holds one of the last available highly prospective onshore acreage positions in Papua and New Guinea. (Click on our Reports section for more information)

Cambay onland: HOEC takes steps to begin production from SPD well; proposes two-km long pipeline

May 8:

Hindustan Oil Exploration Company Ltd (HOEC) has drawn up plans to initiate work for the development and production of hydrocarbons from its latest well in the prolific Cambay block CB-ON/7. "The operator has proposed to lay a 2.23 km long underground pipeline from its well SPD-1 to Palej Early Production System (EPS) at Makan in Vadodara," senior petroleum ministry sources, familiar with block developments, revealed to our website on Thursday (May 8, 2008). The proposed project has recently been cleared by a high-powered government committee sources added.
8HOEC encountered hydrocarbon-bearing sands in SPD-1 during April, 2007. Testing of Hazad formation sands resulted in a flow of crude oil at a rate of 50 m3/day, along with associated natural gas through a 5-mm beam. Following successful test results from the exploratory drilling, HOEC formulated a Field Development Plan (FDP) for submission to the the petroleum ministry..

N.K. Mitra's tour to Australia-III: ONGC keen to tie up with Sydney Gas Ltd on coal seam gas ventures, University of New South Wales offers assistance too

May 8: 8Sydney Gas Ltd (SGL), a leading Australian energy company focused on the production of coal seam gas (CSG) from vast coal deposits in the Sydney Basin, was short-listed by ONGC offshore director N.K. Mitra during his recent visit to Sydney and Perth as a good company to rope in as a partner in CSG ventures, as well as for joint bidding on acreages in Australia. The company has already formed a joint venture with Arrow Gas Ltd (AGL) for exploiting CSG from two petroleum prospecting license (PPL) areas in New South Wales. As per the latest reports, the certified proven reserves of the JV amount to 59 PJ, while proven + probable reserves are 82.8 PJ and proven + probable + possible reserves amount to 108.8 PJ.
8ONGC offshore director took time to interact with officials of the University of New South Wales during his visit to Australia, noting that the university is in an advantageous position to provide assistance in appraising the potential of various acreages in Australia. It can also provide names of domain experts and consultants for the E&P major to engage during the appraisal of the potential of various projects and acreages in Australia. Given that the university has expressed a desire to cooperate with ONGC and Petronet LNG Ltd in projects in and around Australia, Mitra has asserted that these interactions will be strategic in bringing the best technology and minds to secure India`s energy security. It will also aid in the creation of a value chain for technology transfer. PLL has already been provided with a copy of Mitra`s tour report for consideration. (Click on our Reports section for more information)

With breakthroughs on the horizon, ONGC extends MOU with Ashok Leyland Projects Services Limited

May 8: 8With Ashok Leyland Projects Services Limited (ALPS) reportedly close to achieving a breakthrough in its efforts to source LNG from Iran and Qatar within the next few months, ONGC has extended its MoU with the Hinduja Group company for mutual collaboration and cooperation in the promotion of a joint venture company to procure of LNG on a long-term basis for one more year with effect from May 5, 2008. ALPS has been pursuing the allocation of LNG with the concerned authorities in Qatar and Iran under the MoU, but while discussions have been satisfactory, no concrete deal has emerged as yet.
8However, ALPS has now confided that it is confident in achieving a fruitful result in the coming months. Notably, ALPS had earlier suggested that the MoU should be extended for a period of six months, but keeping in mind the tight position of LNG in the global market and protracted negotiations involved in firming up a definitive agreement for sourcing of LNG, ONGC had suggested extending the MoU for a period of one year.
8Readers will note that the MoU also provides for joint exploration of E&P opportunities in countries where ALPS's business presence can be leveraged. With the facilitation of ALPS and the Hinduja Group, ONGC and OVL are now holding discussions with the National Iranian Oil Company (NOIC) for development of South Pars Block-12. ALPS has indicated that a definitive agreement on this opportunity is also expected in the next few months. (Click on Details for more information)   Details

Tendering begins for ONGC's Rs 2,230 crore Assam Renewal Project

May 8: Tendering has begun for ONGC's Assam Renewal Project, which envisages re-engineering and revamping of most of the Indian E&P major's facilities in the northeastern state which are more than 20 years old and are in poor condition. The scope of work under the Rs 2,230.15 project has been divided into three turnkey packages, namely:
8Installation of facilities and establishment of associated pipeline network in the Lakwa-Lakhrnani fields and Moran CTF.
8Installation of facilities and establishment of associated pipeline network in the Geleki field.
8Installation of facilities and establishment of associated pipeline network in the Rudrasagar, Borholla, Koraghat fields and Jorhat crude tank farm.
The last date of submission of technical bid offerings is May 21, 2008. Till date, a total of 17 companies have purchased the tender documents. The completion deadline for the project has been fixed at June 15, 2012, which approximately 48 months from the planned date of notification of award. (Click on Details for more information)   Details

ONGC approaches Clough Engineering's lawyers to broker out-of-court settlement on dispute over G-1 and GS-15 field development project

May 8: 8The legal battle between ONGC and Clough Engineering Ltd over the termination of the Australian firm's contract for integrated development of the G-1 and GS-15 field in the KG Offshore appears to be taking far too long for the Indian E&P major's comfort, with its investment of over Rs 1,000 crore in the field hanging fire without any production and revenue while the two firms fight separate court and arbitral proceedings to pin the blame for the stoppage of work on the project. ONGC is now tipped to be exploring its options for settlement of the squabble outside the courts. The oil PSU is believed to have approached Clough's lawyers, Murray & Roberts, to try and wangle an early settlement of the dispute. A specific and concrete settlement deal will subsequently be put up for the approval of the company board after routing the proposal through the Committee on Disputes, bringing out the most favourable option for settlement along with the merits and demerits of the various options.
8ONGC`s G-1 and GS-15 field development project appears to be in limbo as the Indian E&P major finds itself bogged down in the legal battle with Clough Engineering Ltd over the termination of the engineering and construction contract for its G-1 and GS-15 field development project on account of non-performance. ONGC's attempts to speed up the project received a set back after the courts ordered maintenance of status quo on the custody of the project materials. Clough is currently in possession of the materials.
8ONGC`s inability to mobilise the materials lying with Clough for the project is likely to delay the project further. For example, ONGC had hired Larsen & Toubro to complete the balance works on its onshore terminal at Odalarevu within nine months, but only on the condition that public sector E&P major would handover the material with Clough to the private sector contractor. Other sub-contractors which it had approached for resumption of the work at the risk and cost of Clough had also declined to commit themselves to the project until the courts arrived at a verdict.
8Meanwhile, litigations continue: the Federal Court of Australia, for example, has given a long date -- May 28, 2009 -- for the next hearing on Clough`s appeal against invocation of the performance bank guarantee (PBG) under the contract by ONGC. Back in India, separate arbitration proceedings are dragging on. Clough CEO John Smith and COO Kevin Cain -- who are facing contempt charges in the Mumbai high court over the alleged removal of some of the materials from the project site in violation of its express orders -- have still not been granted exemption from personal appearance during the hearings. (Click on Details for more information)   Details

ONGC's projects appraisal committee concerned that company does not appear serious about developing CBM

May 8: 8V.P. Singh, chairman of ONGC's Projects Appraisal Committee (PAC) made a allegation -- in a meeting of the commitee -- that the E&P major is not serious about developing its coal bed methane (CBM) blocks in the country. The PAC's concerns seem to have been prompted by the slow progress on the company's pilot CBM development project in the Central Parbatpur Block in Jharia. No inputs should also come in on a proposed Catch-up Plan to make up for the delay.
8However, ONGC chairman R.S. Sharma has staunchly defended the due priority attached by the company to the project. He said that a team of 36 ONGC officials posted is posted at Bokaro (ONGC's CBM headquarters), headed by an executive director posted at Kolkata to work on CBM projects.
8In response, the Audit Committee subsequently advised that a comprehensive presentation be made to it outlining the status in each of the CBM blocks awarded to ONGC in terms of implementation of the Minimum Work Programme (MWP), along with a detailed analysis of slippages and a catch-up plan for drilling 36 wells in the Parbatpur block under an integrated turnkey contract.
8It also asked for details on the induction of new drilling technologies like air drilling to reduce the drilling time in the vertical portion  of the wells and minimise exposure to the coal seam, as well as a PERT analysis of the project with critical paths and milestones and the sales strategy for CBM gas. (Click on Details for more information)   Details

Tenders awarded by ONGC during April, 2008: A summary

May 8: For reference purposes, this website carries here detailed information pertaining to contracts awarded by ONGC during the month of April, 2008, to various national and foreign contractors. A total of 260 major and minor contracts were awarded during the month. The data is disaggregated in a tabular format on the basis of each individual tender, outlining the item/nature of work, mode of tender inquiry, date of publication of NIT, type of bid system, last date of receipt of tender, number of tenders received, names of bidders qualified, number of bidders not qualified, whether the contract was awarded to the L-1 bidder, the name of the contractor and the value of the contract. (Click on our Tenders section to download the complete report)

OEC recommendations to be put up before competent authority: ONGC

May 8: 8In future, ONGC will not contest the recommendations made by an outside expert committee (OEC) on any disputes, after the board of directors of the Indian E&P major took a policy decision in this regard on account of concerns being voiced over delayed implementation of OEC suggestions as these were not accepted. OEC recommendations will henceforth be accepted without examination and put up for the perusal of the competent authority in the Fortune 500 company.
8The decision of the board was warranted as the company has turned down the recommendations of OECs several times in the recent past, which has led to questions over the objectivity of asking for intervention by the OECs in the first place. The company board has made a point that OEC recommendations should be brought under the examination of executive committee (EC) or board of the company-- which is the competent authority -- by the legal head of the company. In case the competent authority is board, the recommendations should be channeling through Committee of Directors (COD).
8The OEC mechanism is intended to resolve disputes between oil PSUs and contractors through conciliation rather than arbitration and court proceedings. The conciliation agreement is enforceable as an award once accepted by both the parties. (Click on Details for more information)   Details

News Briefs-I

May 8: 8The petroleum ministry has sought clarification from the Directorate General of Hydrocarbons (DGH) on a request from Reliance Industries Ltd (RIL) for extension of coal seams to the north of the RIL-operated CBM blocks CBM-2001/1 in Sohagpur (West) and CBM-2001/1 in Sohagpur (West) in Madhya Pradesh, over an area of about 150 sq km each before it takes up the matter with Ministry of Coal. The petroleum ministry has asked the DGH if any technical studies were conducted to confirm the extension, whether the field development plan (FDP) has been considered by the steering committee of the CBM block and, if so, the specific areas of the additional 150 sq km of seams to be included in the development area. The ministry has also asked the DGH if the additional area is free from any lease and whether it is being considered for offer under the next CBM round. The DGH has been advised to obtain the views of the Central Mine Planning and Design Institute Ltd (CMPDIL) on the extension of coal seams before acceding to the operator's request.
8The petroleum ministry has urged the Directorate General of Hydrocarbons (DGH) to send its comments and recommendations on the proposal sent to the government for assignment of a 10% Participating Interest (PI) in Krishna-Godavari Offshore Block KG-DWN-98/2 by Indian E&P major ONGC to Norsk Hydro Oil and Energy. In this regard, ONGC had already submitted the financial statements of the Norwegian firm to the DGH on May 5, 2008.

News Briefs-II

May 8: 8The Petroleum Ministry has approved a second extension of six months -- from October 24, 2007 to April 23, 2008 -- for the second phase of operations in NELP-II Mahanadi Block MN-ONN-2000/1. The extension has been awarded so that the consortium of OIL, IOC, ONGC and GAIL operating the block can complete the remaining Minimum Work Programme (MWP) commitment of drilling one exploratory well in the block during Phase-II of the Production Sharing Contract (PSC). OIL, which has a 40% PI in MN-ONN-2000/1, partners the onland block with IOC, ONGC and GAIL, who each hold a 20% participating interest. The extension, however, is subject to some conditions, which include the payment of a 100% bank guarantee and 10% liquidated damages. Also, the contractor is required to relinquish 25% of the block area, as provided for under the PSC, at the beginning of the extension period. The period of the PSC extension will be set off from the next exploration phase.
8ONGC was an active participant in the NELP-VII road show in Houston on May 6, 2008. Present in the show were 310 delegates representing 85 companies, including global majors like Chevron, Exxon, Schlumberger and Transocean. The ONGC delegation also participated in the Offshore Technology Conference (OTC, 2008) which was also being held between May 5 and 8, 2008, at Houston, ONGC was exploring opportunities for technical collaboration with experienced players to augment its oil and gas production in India and abroad.
8ONGC technical and field services director U.N. Bose recently visited the oil major's Central Work Shop (CWS) at Vadodara to review the progress on the Blowout Preventer (BOP) remanufacture at the workshop under a contract between the E&P major and international oilfield services provider, Cameron . The meeting was marked by a brief presentation which outlined the CWS's activities, achievements, and business strategy.

Tarapur block: GSPC awaits government approval of commerciality

May 8: Gujarat State Petroleum Company (GSPC) is still awaiting a government nod for the approval of commerciality of its Tarapur block CB-ON/2. "The onland block is ready to produce more than 1,200 barrels of oil per day (BOPD)," company sources, close to operational details of the onland block, told our website in New Delhi on Thursday (May 8, 2008). The operator is currently awaiting the approval of commerciality from petroleum ministry, sources added.

8GSPC-led consortium struck oil in their second exploratory well in the block -- dubbed Tarapur-P -- in March 2006.

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