Charter-hire of ultra-deepwater rig: Transocean wants price preference clause dropped

May 11: 8ONGC has refused to acknowledge a plea made by the rig company, Transocean, for withdrawal of the price benefit clause from its deepsea rig tender. Transocean said that that a circular was issued by the ministry of petroleum for dropping the price preference given to domestic bidders in international tendering. The company demanded that as per the tender, the price preference clause should be dropped from all ONGC tenders. The ONGC brass how refused to play ball, claiming that specific directions have not received from the government to drop the price preference clause. However, the public sector oil major said that it would seek a clarification from the petroleum ministry on the subject.
8How does the price preference clause work?
Domestic bidders providing oilfield services in the global tenders of ONGC would be entitled to a price preference up to 10% over the lowest acceptable (quoted) foreign bidder subject to value addition norms.
8The petroleum ministry`s attempt to do away with the price preference clause has attracted a groundswell of protest from domestic companies. A spate of letters have been written by domestic industry associations -- like CII, ASSOCHAM  and FICCI -- attacking the move to withdraw the benefit. The petroleum ministry has been put in a corner by these protests.
(Click on Details or look at the stories in our Archives section dated April 30, 2008, for more information)   Details

Charter-hire of ultra-deepwater rig: ONGC looking for a second rig; to deploy Rs 7000 crore on two rigs

May 11: 8ONGC has still not managed to tie up its requirement of an ultra-deepwater drilling rig with 3,000-metre rated water depth capacity to execute exploratory drilling work in its offshore acreages, but the Indian E&P major is already thinking of floating an ICB tender for charter-hire of another ultra-deepwater unit. ONGC`s apex decision-making body, the Executive Purchase Committee, has already ratified a proposal for following the same methodology for tendering of the new charter-hire contract as the tender which is already under evaluation. 
8In the meanwhile, ONGC has decided to hire the first deepwater rig without the attached integrated services. Earlier, the company was thinking of giving bidders two options -- one for hiring with integrated services and the other without. It was observed that only three firms -- Halliburton, Schlumberger and Baker Hudges -- have shown their preference for the first option, but was argued that these firms are service providers and have not provided or operated any rig for ONGC in the past. On the other hand, nine bidders were in favour of the standalone rig option. Given the fact that the second option would attract more competition, it was decided that bids be solicited for the rig alone. ONGC will hire other services through a separate tender.   Details

Charter-hire of ultra-deepwater rig: Transocean offers under construction hull or drillship Deepwater Pathfinder

May 11: Indian E&P major ONGCs has opened techno-commercial offers from a total of six bidders competing under its international competitive bidding (ICB) tender for charter-hiring of an ultra-deepwater drilling rig -- with a rated capacity of 3,000 metres water depth -- for a period of three years. The bidders are Transocean Offshore International Ventures Ltd (TOIVL) of the Cayman Islands, Maersk of Denmark, Great Offshore Ltd of Mumbai, Sevan Marine ASA of Norway, Vantage Drilling of the Cayman Islands and ODFJEIL Drilling AS of Norway.
8TOIVL has offered an under construction rig, Hull No. 2148. The offer is subject to availability, but Transocean has offered drill ship Deepwater Pathfinder as an alternative should the primary rig be snapped up by another contractor. ONGC had observed the following characteristics of the rigs:
8Hull No. 2148:
--Owner of the rig: Global Santa Fe International Drilling Inc., British Virgin Islands
--Present Operator: Rig under construction
--Name of shipyard: Hyundai Heavy Industries Co. Ltd., Ulsan, Korea
--Offered on: Lease with an option to TOIVL to purchase the rig
--Rig will be mobilized from: Korea
--Rig will be demobilised to: Singapore
The bidder has indicated that the rig will be delivered from the yard by September, 2010, and positioning and preparation for spudding could be between December 25-29, 2010.
8Deepwater Pathfinder:
--Name of the rig: Deepwater Pathfinder
--Year of Build: 1998
--Owner of the rig: Deepwater Drilling LLC
--Present Operator: Chevron
--Offered on: Lease with an option to purchase
--Rig will be mobilised from: Ivory Coast, West Africa
--Rig will be demobilised to: Singapore
The bidder has stated that the rig will be mobilised on or before June 30, 2010, and will have sailed to the intended exploratory location for positioning and spudding by August 9-13, 2010.
ONGC has asked the service provider for certain confirmations and documents with respect to both rigs. These pertain to clauses related to mobilisation, liquidated damages, deficiencies and performance under the contract. It has also sought modification of the clauses pertaining to termination of contract. (Click on Details for more information)   Details

Charter-hire of ultra-deepwater rig: Vantage Drilling Company throws its hat into the ring

May 11: 8Vantage Drilling Company of the Cayman Islands has offered rig Platinum Explorer against ONGC`s international competitive bidding tender for charter-hire of an ultra-deepwater rig for a period of three years. The following details of the rig have been made available:
--Year of make (due for delivery): November 10, 2010
--Present location: Under construction at Daewoo Shipbuilding & Marine Engineering Co. Ltd, Korea
--Present operator: Not applicable
--Rig will be mobilised from: Korea
--Rig will be demobilised to: Singapore
--Rig Owner: Mandarin Drilling Corporation, Marshal Island
--Rig offered on: Ownership basis, subject to availability
8Notably, Vantage has a technical collaboration agreement with Aban Offshore Ltd, a company which is operating a floater, Frontier Ice, with ONGC for more than three years. This has been adjudged as suitable experience by ONGC. However, there were other lacunae with respect to its bid, such as the non-submission of a technical feasibility report. Furthermore, as Vantage Drilling is a newly formed company, it did not submit an annual audited report, nor did its solvency certificate indicate the solvency amount. This has prompted ONGC to seek a round of confirmation from the Norwegian company.
8The schedule for delivery of the vessel indicates fabrication of the hull and top side between May 6, 2009, and February 18, 2010, with onboard tests and commissioning between March 11, 2010, and September 1, 2010. The drillship is expected to be transferred to ONGC`s control by November 10, 2010. (Click on Details for more information)   Details

Charter-hire of ultra-deepwater rig: Sevan Marine offers patented cylindrical design rig, but falls short of experience criteria

May 11: 8Norwegian service provider Sevan Marine ASA has offered ONGC an under-construction rig, Sevan Driller-II (Sevan 650), which is being constructed at COSCO`s facility in China, under a global tender issued by the E&P major for charter-hire of an ultra-deepwater rig for a period of three years. The following are the details of the rig:
--Year of make: New build
--Present operator: Vessel under construction in China
--Rig will be mobilised from: China
--Rig will be demobilised to: To be decided
--Rig owner: Sevan Drilling Pte Ltd, Singapore
--Rig offered on: Lease basis, subject to availability.
8Sevan`s rig utilises its patented cylindrical hull design, which was developed after extensive research with leading E&P companies worldwide, particularly Petrobras of Brazil, who have awarded to two long-term contracts to Sevan. The contractor has indicated that main hull and top side commissioning will be completed between June 17, 2009, and June 26, 2010, and the rig will be ready for delivery by October 1, 2010-December 31, 2010. However, it remains to be seen whether ONGC will be convinced enough of the contractor`s capabilities to award it with a billion dollar contract, given that it does not meet the experience criteria under the tender. Furthermore, ONGC has noted that Sevan did not submit a Vessel Construction Agreement (VCA) with its bid as required under the Bid Evaluation Criteria and the solvency certificate was inadequate. ONGC has now asked Sevan to provide confirmations and clarifications to support its offer. (Click on Details for more information)   Details

Charter-hire of ultra-deepwater rig: ODJFELL Drilling AS of Norway could be ruled out because of a lot of deviations

May 11: 8Norwegian company ODJFELL Drilling AS has offered ONGC an ultra-deepsea drilling unit for charter-hire under a three-year contract, subject to its availability, lest it is snapped up by another international oil and gas company. The following are details of the rig, Deepsea Stavanger:
--Present Location: Under construction at Daewoo Shipbuilding & Marine Engineering Co. Ltd, South Korea
--Rig will be mobilised from: DSME, South Korea
--Rig will be demobilised to: To be announced
--Rig owner: Odfjell Invest Ltd, Bermuda
--Rig offered on: Lease basis
8The project milestones are basic design engineering by September, 2007, detailed engineering by February, 2008, steel cutting by December, 2008, and start assembly/erection by May, 2009. The rig is due to be released from the yard by August, 2009.
Notably, ODJFELL has declined to offer firm rates for the rig, instead proposing a formula for cost escalation -- which will come into effect from June 15, 2008 -- to compensate for any increase in international prices.
8It has also taken other deviations which will have an impact on the value of the contract , such as submission of a performance bank guarantee for 2.5% instead of 7.5% of the contract value for one year, seeking interest on delayed payments at LIBOR plus 5%, English Law for Arbitration, termination of the contract only after July 1, 2011, with liquidated damages from January 1, 2011, a higher mobilisation fee, liquidated damages at the rate of $50,000 per day, payment of two-thirds of the non-operating day rate (NODR) for the full period of any force majeure situation, NODR at the rate of 98% of the operating day rate (ODR) instead of the stipulation of 95% and a movement day rate at 95% of the ODR instead of the prescribed limit of 90%.
8It seems that the non-adherence to tender conditions could effectively take ODJFELL out of the running for the contract. ONGC`s drilling services division has opined that in view of the urgency and shortage of deepwater rigs. It was argued that if a fresh opportunity is given to the bidder to fulfill the tender conditions, the drilling services division felt that this would be tantamount to changing the basic structure of the bid in terms of prices, given that ODJFELL has taken deviations which have an impact on prices. It has accordingly recommended that no further confirmation should be sought from the Norwegian rig service provider. (Click on Details for more information)   Details

Charter-hire of ultra-deepwater rig: ONGC offered rig from GOL, but shaky delivery schedule prompts concern

May 11: 8Mumbai-based Great Offshore Ltd (GOL) has offered its to-be-constructed rig GIRNAR -- also known as SDO-II or Hull No. 3196, which is owned by Seadragon Offshore Ltd -- to ONGC on a proposed purchase basis under an international competitive bidding (ICB) tender floated by the Indian E&P major for charter-hire of an ultra-deepwater drilling rig for a period of three years. The following are the details of the rig:
--Year of make: To be constructed
--Present Location: Platform is being made at Vyborg Shipyard JSC, Russia. For top side, contract is to be entered with Tees Alliance Group (TAG) at Haverton Hill Shipyard, UK.
--Present Operator: Not applicable
--Rig to be mobilised from: Teesside, UK
--Rig will be demobilized to: Dependent on charter requirement following the contract
--Rig Owner: Sea Dragon Offshore, Cayman Islands
--Rig offered on: Proposed purchase basis, subject to availability.
8However, there are some prickly issues highlighted by ONGC related to GOL's offer. These include the condition of the bare deck unit and timely delivery from Russia, delays due to the Russian ice window, wet towage to the UK, the abilility of the contractor to mobilise personnel in a timely fashion in a busy market, completion of civil works prior to arrival of the rigs, delays in the delivery of key equipment items on a critical path, interface management and finding a rig operator. Furthermore, ONGC has sought clarification on whether Sea Dragon is the owner of the vessel, given that there was no clear-cut proof in the offer. Also, since GIRNAR will be an Indian-flagged vessel, GOL has asked for the Right of First Refusal on the charter-hire of the vessel, but ONGC has asked GOL to establish their claim with documentary evidence. On its part, GOL has asserted that the rig will be ready for mobilisation any time between October 1, 2010, and December 2, 2010, following which it can be deployed at the first location between December 13, 2010, and December 15, 2010. (Click on Details for more information)   Details

Charter-hire of ultra-deepwater rig: Maersk of Denmark hints at offering next generation semi-submersible, but names no rig

May 11: Interestingly, one of the contractor which is participating in ONGC's ICB tender for charter-hire of an ultra-deepwater drilling rig for a period of three years, namely Maersk Contractor of Denmark, neither identified any rig, nor submitted any details of the ultra-deepwater unit they will be offering. Instead, the company only enclosed a brochure, titled, "The next generation - ultra-deepwater development semi-submersible." It also did not submit an earnest money deposit or bid bond, integrity pact, techno-commercial matrix and any appendices. This has made it impossible for ONGC to evaluate the offer. (Click on Details for more information)   Details

NRL demands additional allocation of 135 TMT of crude during 2008-09

May 11: 8Numaligarh Refineries Ltd (NRL) has asked the petroleum ministry to allocate an additional quantity of 135 thousand metric tonnes of crude oil during 2008-09 to meet an anticipated shortfall of 80 TMT of HSD during the year. NRL is commissioning a marketing terminal in Siliguri, along with a product pipeline for transport of crude from its facilities at Numaligarh to Siliguri in order to enable economical evacuation of its products. The terminal and pipeline are expected to be commissioned by June, 2008. NRL requires 80 TMT of Euro-II HSD to fill up its tankage capacities at the terminal initially between May and June, 2008. Therefore, the northeastern refinery says that it would not be able to supply this quantity to the market, which will cause a supply shortage in the region.
8The refinery adds that it is difficult to feed remote locations of the region -- which are dependent on NRL for supplies -- through imports, due to logistical constraints. The Numaligarh-based refiner further claims that a lower sales of 80 TMT for the year will have severe impact on the company`s profitability. Henceforth, it is imperative for the refinery to process an additional 135 TMT of crude -- which is equivalent to the production of 80 TMT HSD -- to meet the present crisis.
8NRL has the capacity to process 3 million tonnes of crude annually. (Click on Details for more information)   Details

DGH vetoes ONGC's request for 75-day extension in GV-ONN-97/1, only gives 30 days

May 11: 8In a setback to ONGC, the Directorate General of Hydrocarbons (DGH) has only recommended a 30-day extension of the third phase of exploration in Ganga Valley Block GV-ONN-97/1, though the Indian E&P major had sought to prolong the phase by 75 days so that it could carry out production testing and abandonment of well Banda#1 in the frontier acreage, besides drill site restoration in the ecologically sensitive area. The upstream regulator had vetoed the ONGC proposal on the rationale that since there was only one object left for testing, a 75-day extension would be unnecessary. It instead suggested that a timeframe of 30 days would be sufficient.
8ONGC, with a 40 per cent participating interest, is the operator of the block. The block was awarded to a consortium of four companies -- namely ONGC, IOC (30%), Cairn Energy (25%) and -- in 2001. Phase-III of exploration in the contracted area recently expired on April 19, 2008, prior to which ONGC had made a formal proposal for the extension. Drilling had been completed in the block and production testing -- an important part of well programme to test the hydrocarbon prospect -- and abandonment were yet to be carried out. ONGC`s concern has mounted as the operator would have to surrender the entire petroleum exploration license (PEL) area after May 19, 2008. However, the DGH has pointed out that there is no provision in the Production Sharing Contract (PSC) and the government`s new extension policy for providing an extension to facilitate production testing while deciding, however, to grant a 30-day extension. (Click on Details for more information)   Details

KG-OSN-2001/2: Reliance to concentrate on appraisal programme; decides not to enter Phase-II

May 11: The operating committee (OC) of the Krishna Godavari offshore block KG-OSN-2001/2 has decided to appraise two of its existing wells instead of opting to enter the next phase of the work programme. "Reliance is not going to enter Phase-II of the work programme and shall instead concentrate on appraising two of its wells - rechristened as D-24 and D-25 -- in the KG onshore block, also called KG-III-6," company sources close to the block developments, revealed to Indian Petro News on Friday (May 9, 2008). The Petroleum ministry has been informed about the development, sources added. The E&P firm had originally moved an application for a second extension of Phase-I activities in the KG onshore block in early September 2006, a request subsequently turned down by the ministry.
 8According to the Indian private sector giant, the delay in achieving the minimum work programme (MWP) commitments specified under the Production Sharing Contract (PSC) of the block during Phase-I was due to non-availability of suitable drilling rigs in the international market. As a result of the shortage, Reliance failed to drill two scheduled exploratory wells in the block before the expiry of the first extension of Phase-I by October 2006.
 8Readers would recall that the production sharing contract (PSC) for KG-OSN-2001/2 became effective from April 2003. While the original duration of Phase-I exploration in the block was for three years, upto April 2006, the operator requested for the first extension, which was accorded to it. Reliance drilled a total of four wells in the block: A1, A2A, A3 and B1. KG-OSN-2001/2 was awarded to RIL under NELP III. The block is located north-east of Rajamundry and east of Yanam in the shelfal part of Krishna-Godavari basin covering an area of 210 sq km. By Sadiq Shaban

ONGC's major projects: An overview (March, 2008)

May 11: 8The website carries here, for reference purposes, a status update on ONGC`s major projects as of the end of March, 2008. Data is provided for a total of 19 projects in terms of the date on which a final investment decision on the project was taken, the original sanctioned date of completion as well as the latest approved date of completion, the anticipated completion date, the cumulative delay on the project, the original approved project cost as well as the latest project estimates and the present anticipated cost, the cumulative expenditure, financial progress, physical progress, the milestone backlogs and the latest developments on the project in terms of salient remarks. Furthermore, a detailed update on the progress on each individual project is also provided.
8The projects which are covered in the report are the Improved Oil Recovery schemes at Lakwa, Geleki and Rudrasagar, Vasai East Development, G-1 and GS-15 development, C2-C3 and LPG recovery at Dahej, additional development of the Bassein field and installation of a booster compressor, additional development of the Heera fields, additional development of A-1 of Layer-III reservoir of Mumbai High, development of the C-series fields, Heera and South Heera development, the barge bumper, boat landings and riser protectors project, construction of a new MHN process complex, development of the B-22 cluster fields, the offshore grid interconnectivity project, development of the B-46 cluster fields, development of B-193 cluster fields, the Phase-II Mumbai High South Redevelopment project and the Assam Renewal Project. (Click on Details for more information)   Details

Energy security in Asia-Pacific: Report on third meeting of Council for Security Cooperation in the Asia-Pacific

May 11: The website carries here a complete report on the third meeting of the Council for Security Cooperation in the Asia-Pacific (CSCAP), which was held on March 24-26, 2008, in Beijing, China, at which India was represented by Petroleum Planning and Analysis Cell (PPAC) Director Basudev Mohanty. The meeting was aimed to study energy security specific to the Asia-Pacific region. The session was co-chaired by one Mr Guan of CSCAP Singapore and Dr Virendra Gupta of CSCAP India. A total of 28 participants representing 13 countries attended the event. Other than Mohanty and Gupta, the Joint Secretary (ITP & Energy Security) and a research fellow at the Institute of Defence Studies & Analysis (IDSA), S. Dadwal, participated in the meeting. The key issues discussed were:
8Rationalisation of prices based on market forces
8Prospects of a common energy market
8Integrated energy market in Asia
8Regional cooperation for energy infrastructure security
8Creating infrastructure warning network and developing shared security standards
8Common oil stockpiles
8Role of nuclear energy in energy security
(Click on Details for more information)   Details

Management Committee meeting of Cambay Block CB-ON/2: Overview

May 11: The management committee of the exploration and production block CB-ON/2 in the Cambay Basin recently held a meeting in New Delhi to deliberate over various issues pertaining to the block. The committee comprises of representatives from Gujarat State Petroleum Corporation Ltd (GSPCL), Oil and Natural Gas Corporation (ONGC), GeoGlobal Resources (GGR), the petroleum ministry and the Directorate General of Hydrocarbon (DGH). GSPC is the operator of the block, while ONGC and GGR have a participating interest in the field. The meeting focused on the following issues:
8Approval of Tarapur#1 as a commercial discovery
8Extension of exploratory activities in the block for one year as per the new extension policy.
8Discovery of oil and gas in Tarapur#6.
8Appraisal drilling of the Tarapur#G discovery.
8Issues pertaining to crude pricing and custody transfer of crude oil for sale.
8Status of wells drilled in the block.
8Review of exploratory locations TS#1, TS#2, TS#3 and TS#4.
(Click on Details for more information)   Details

Rajiv Gandhi Institute of Petroleum Technology: Latest decisions

May 11: To make the Rajiv Gandhi Institute of Petroleum Technology (RGIPT) -- a dream project of UPA government -- a grand success, the management committee of the society set up to run the institute of national importance recently held a meeting to ratify the following decisions: 
8Appointment of Executive Director (Project):  Dr R.K. Suri was appointed, based on his core competencies. Suri was appointed on a contract basis for two years and was assigned the responsibility of liaising with the petroleum ministry and other government departments on various issues. He was also put in charge of land acquisition and finalisation of a temporary campus to start academic activities.
8Procurement of Land: An application was made for procurement of 70-80 acres of land around Jais in the Rai Bareilly district, where the institute is being established. Advocate S.K. Bajpai has been appointed as the pointman for resolving any vexatious issues surrounding the acquisition of land.
8Academic Activities: A Task Force on Academics has been formed, which will be headed by ex- IIT Director R.C. Malhotra. The task force will be responsible for all the matters pertaining to academic activities. (Click on Details for more information)   Details

ONGC sanctions Rs 169 crore as seed capital for the ONGC Energy Centre

May 11: 8ONGC has approved the sanction of an initial expenditure of Rs 169 crore as seed capital for twenty new and renewable energy projects proposed to be taken up during the next 5 years at the ONGC Energy Centre (OEC), -- which is to be housed in a massive state-of-art building in New Delhi's Vasant Kunj area -- for harnessing clean and sustainable energy sources. The sanction is out of the Rs 500 crore initially envisaged for the Centre and will be disbursed to the OEC trust on a quarterly basis. The OEC is presently pursuing four R&D projects, namely:
 --Thermochemical reactor for hydrogeneration: The project envisages producing hydrogen from either nuclear or solar heat. The OEC has entered a MoU with the Bhabha Atomic Research Centre (BARC) for this purpose. In addition, collaborative projects are being undertaken with IIT Delhi, the University Institute of Chemical Technology (UICT) in Mumbai and the Council of Scientific and Industrial Research (CSIR) lab at the Central Electrochemical Research Institute at Karaikudi. The research period for the project is three years, which would require an investment of Rs 15 crore and another Rs 10 crore for the pilot project.  
 --Uranium project: In its first phase, the project aims to study all the logs for locating the presence of high concentrations of uranium in geological formation. While OEC is in preliminary talks with the atomic mineral division of the Ahmedabad Electricity Company (AEC), it is also finalising collaborative research projects with other partners. The three-year research for this project would cost Rs 5 crore, with an additional Rs 25 crore required for the pilot project.
 --Geo-Bio reactor: OEC is undertaking collaborative projects with TERI, Banaras Hindu University, the Shri AMM Murugappa Chettiar Research Centre (MCRC) in Chennai and the Agharkar Research Institute (ARI) in Pune for isolating and developing a microbial consortium to convert oil and coal to methane in-situ in underground reservoirs and seams. The project envisages converting un-mineable coal and residual unrecoverable oil into natural gas. The cost of the three-year research period for the project is pegged at Rs 5 crore, with another Rs 25 crore required for the pilot project.
 --Solid state lighting (SSL): The Energy Centre plans to assemble SSLs with fixtures and fittings from imported knock down light-emitting diode's (LED) in the first phase of this project through a joint venture. In the second phase, the OEC has plans to leverage network and business relations for building the infrastructure required for packaging and upscaling the plant. Research work under the project is yet to start and will involve an expense of Rs 9.50 crore, including the establishment of a pilot project.
 8Ernst and Young (E&Y), the consultant engaged for preparing a Detailed Feasibility Report (DFR) along with cash flow projections for the Energy Centre
 (Click on Details for more information).   Details

ONGC Briefs-I

May 11: 8ONGC board has approved the merger of two of its Share Transfer Committee and Officers` Committee on account of a duplication of activities by the two committees. The Share Transfer Committee was responsible for consideration and approval of transfer, consolidation, sub-division, issuing of duplicate shares and dematerialisation an re-materialisation of shares. Similarly, the Officers` Committee was also dealing with all the share transfer-related work. This prompted a proposal for merger of both committees, which has been ratified by the company board. ONGC has now formed another committee -- dubbed the Shareholders` Grievance Committee -- which will deliberate over issues related to shareholders` grievances. Interestingly, the company is also considering some modifications to its Human Resource Management Committee in order to enable it to consider promotions only for group general managers and executive directors.
8The government has issued Special Bonds worth Rs 9,296 crore towards estimated under recoveries on sale of petroleum products during 2007-08. Of the total bonds -- which will mature in 2025. Interestingly, ONGC is entitled to receive oil bonds worth Rs 193 crore from this pool on account of revenue loss due to laying of crude pipelines during the administered pricing mechanism (APM) era.
8ONGC has introduced a tenure-based engagement scheme for its executives, under which personnel will be engaged with the company for specified time periods. A decision in this regard was taken in the HRM committee of the ONGC board at a recent meeting. The scheme is only applicable for engagement of executive personnel in certain disciplines of the company. The scheme will come into effect in a phased manner.

ONGC Briefs-II

May 11: 8E&P major ONGC has ratified the payment of statutory auditors commissioned by the Comptroller and Auditor General of India (CAG) to review the company's financials for the year 2007-08. Readers will recall that the Comptroller and Auditor General had appointed five audit firms as joint statutory auditors of ONGC's operations for the year. The fee is equivalent to the amount the E&P firm doled out in 2006-07 and will also attract applicable service taxes. An additional amount has been paid to the auditors for a limited review of the company's financial results for the first three quarters of FY2007-08.
8ONGC has ratified an internal audit plan for the year 2008-09, involving quarterly reviews of the company's performance and book of accounts. Apart from theme audits and special audits, the internal audits will also involve analysis of annual balance sheets, analysis and benchmarking of cost audit reports, a quarterly audit of contracts awarded on nomination basis and measures for cost control. For the strengthening of internal audits, four to five technical officers are likely to be appointed for technical audit work.
8Commissioned by ONGC to carry out a risk management study, international consultant KPMG has identified various risks for the E&P major in the existing business environment and the Indian oil PSU's advisors are now in the process of deliberating over implementation of the risk management structure. The consultants are expected to submit their report to the company soon. The business advisors will make a presentation on their recommendations at ONGC's next board meeting.

Petroleum Briefs

May 11: 8ONGC`s Impetus Project Group in Mumbai has signed a three year rate contract with National Oilwell Varco`s (NOV)  Mission Product Division in Singapore as an Original Equipment Manufacturer (OEM) for supply of spare parts. The contract was signed on May 7, 2008. The contract will cater to the spare parts requirement for various models of NOV mud pumps and centrifugal pumps which are in operation on onshore and offshore drilling rigs.
8ONGC has signed a farm-out agreement with MOL Hungarian Oil and Gas Plc under which the Budapest-based firm will acquire a 35% interest in onshore exploration Block HF-ONN-2001/1 in the Himalayan Foothills. The assignment of participating interest under the farm-out agreement is, however, subject to the approval of the government of India. Block HF-ONN-2001/1 was awarded under NELP-III has an areal extent of 1,513 square kilometres and is operated by ONGC. The assignment of Participating Interest (PI) by ONGC to MOL is part of ONGC`s strategy to have internationally renowned and experienced companies as partners for exploration. MOL has the experience of working geologically complex fold belt areas in similar geological setting in Pakistan, where it has made discoveries. After the farm-out, one exploration well is planned to be drilled in Block HF-ONN-2001/1 by end of 2008, with a second well to be taken up later.
8ONGC has been awarded the prestigious Enterprise Excellence Award 2007 at the 11th CEOs Conference by the Indian Institution of Industrial Engineers (IIIE). The award was conferred to ONGC based on parameters like financial strength, achievements, internal processes, innovation and learning and external customer orientation, which were evaluated by the IIIE. The IIIE was founded in 1957 as a non-profit organisation and a registered society for propagating the profession of industrial engineering in India and is dedicated to the advancement of industrial engineering education and practices.

Petroleum ministry asks Chhattisgarh government to provide environmental clearances to RIL for CBM block

May 11: 8The petroleum ministry has requested the Chhattisgarh government to expedite the process of providing environment clearances to Reliance Industries Limited (RIL) for exploration and production in CBM block SH(N)-CBM-2003/II. The suggestion was in response to RIL`s request to the petroleum ministry to intervene in the matter, as the delay in issuance of environmental certificates has held up development of the block. RIL, which has applied for consent from the Chhattisgarh Pollution and Control Division in 2004, has yet not been issued the requisite approval. The petroleum ministry has said that speedy clearances on required issues are a must from state governments to facilitate the flow of investment in exploration and production of gas.
8Readers will recall that RIL was awarded the contract for Sonhat North block (SH (North)-CBM-2003/II) during the second round of the CBM licensing policy (CBM-II). Out of the total block area of 825 sq km, 725 sq km area falls under the Koriya district Chhattisgarh, while the remaining 80 sq km area is in the Anuppur district of Madhya Pradesh. The Madhya Pradesh government has already granted a Petroleum Exploration License (PEL) and environmental clearances to the company for their area. But environmental clearances from Chhattisgarh government are long overdue. Notably, the Chhattisgarh state government has already issued a PEL to the company for exploration in the block. (Click on Details for more information)   Details

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