The Hindu Business Line : Oil from Sakhalin field this year: Aiyar

THE Minister of Petroleum and Natural Gas, Mr Mani Shankar Aiyar, informed the Rajya Sabha today that production of oil and gas from Sakhalin-I is expected to commence from 2005-06 and full production is expected from the last quarter of 2006-07.

The Sakhalin Project is expected to produce about 12.5 million tonne of oil and 10 billion cubic metre of gas in the year of peak production, of which ONGC Videsh Ltd's (OVL) share would be 20 per cent.

The total production of the fields over their 40-year life period is estimated to be about 307 million tonne of oil and 485 billion cubic meter of gas. OVL has the option to bring its share of oil and gas to India or dispose off it to other consumers at the prevailing market prices.

In addition to OVL's partnership with Rosneft in Sakhalin-I project in Russia, the Minister said that further discussions about possible areas of collaboration have been held at the ministerial, official and commercial levels on this subject and the response has been encouraging.

Investment in oil exploration: A total investment of about $0.94 billion has been made till December 31, 2004 in the 90 exploration blocks contracted by various companies in the first four rounds of the New Exploration Licensing Policy (NELP), Mr Aiyar said.

Apart from this, he said investments of about $1.02 billion and $1.59 billion have been made under production sharing contracts in pre-NELP exploration blocks and in discovered fields respectively.

Mr Aiyar also stated that the Government, in consultation with various stakeholders would undertake an exercise after the conclusion of every NELP bidding round to improve and bring greater clarity to bid documents and the bidding process.

Some of the main improvements in the NELP-V round are: bid evaluation criteria with all weightage for sub-parameters have been made public in the bid document, work programme of singed production sharing contracts can be seen in data rooms, and companies having net worth of $500 million or more in respect of on-land and shallow water blocks are not required to submit bank guarantees as against the earlier net worth limit of $1 billion or more.

Interested companies, the Minister said, can now purchase regional data of adjacent blocks and regions. The Government will now exercise its option to take gas in cash or kind every five years instead of the earlier provision of such an option being exercisable every year.

Saudi Aramco keen to partner with IOC: Saudi Aramco, the world's largest oil firm, is keen to partner with state-owned Indian Oil Corporation (IOC) in maintenance of strategic crude reserves, Mr Aiyar said. In a recent meeting between IOC and Saudi Aramco, the latter had expressed interest in joining India's efforts for maintenance of Strategic Petroleum Reserves. However, no formal proposal has been received from Saudi Aramco in this regard, he said.

India is in the process of building 5 million tonnes of storage capacity for crude oil in Visakhapatnam and Mangalore to improve its energy security. The capital cost of building the storage facilities will be about Rs 1,650 crore, while the crude inventory will be worth Rs 6,000 crore. The storage, equivalent to 15 days of oil consumption, will boost India's existing 7.3 million tonne of crude tankage and 6.8 million tonnes product tankage capacity.

Currently, total crude oil storage capacity can meet the country's oil requirement for 19 days. India has an import dependency of over 70 per cent for crude oil of which roughly 67 per cent comes from the volatile Arabian Gulf.

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