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Monday, Nov 22, 2004

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GSPC to go for second rig at K-G basin

Vinod Mathew

Mumbai , Nov. 21

GUJARAT State Petroleum Corporation Ltd (GSPC), which has capped off and abandoned its first well at its Krishna-Godavari block (KG-OSN-2001/3), is going for a second rig.

The company that had technical discussions with the US-based TransOcean, Ensco, and Dolphin of UK, is expected to open commercial bids later this month.

GSPC had capped off the first well at 2,620 metres well short of the scheduled 3,000-odd metres and is moving to the second well a good 40 days behind schedule. It is understood that the company is now weighing options between having two rigs operating simultaneously to catch up with the lost time and going with a single rig once the 200-day contract with Saipem, SPA, part of ENI, Italy, ends in the third week of February 2005.

The average cost of operating the present rig is $1,30,000 per day.

As per the contract awarded to Saipem, drilling at K-G basin was to commence on May 20. However, the E&P company had to face a 70-day delay following failure of the Perro Negro 3 rig engines. This had also set the company back by nearly $1 million, its share of getting the drilling on course at the K-G basin.

With half of the original contract period with Saipem already over and only one well drilled till date, GSPC in its role as operator, may be mulling options to scale up the rig type from the jack-up variety currently deployed to drill ship variety.

The company has plans to explore 16 wells at the K-G basin over the next couple of years and has earmarked an investment of Rs 2,000 crore towards this.

There is also talk of the company coming out with an IPO by mid-2005, as the total cost outlay to get gas out of the basin, if the exploration phase proves to be a success, could be in the region of Rs 4,000 crore.

It was only recently that GSPC had struck oil at its Ahmedabad exploration block (CB-ONN-2001/1) at Dholka where it has a 50:50 joint venture with GAIL (India). The initial oil in place estimates had been put at 50 million barrels. At a conservative estimate of 10 per cent recovery, the monetisation of oil from this well has been put at over Rs 1,000 crore.

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