The Hindu Business Line : Essar awaits Mehsana block results

Hunt is on
Essar Oil holds 100 per cent interest in Mehsana.
Petroleum Ministry is yet to respond to the company's plea to include coal-bed methane in the petroleum exploration licence granted for the block.

Kolkata , Oct. 6

Essar Oil, now well poised to complete the second phase exploration-drilling activities at the Mehsana block in Gujarat, is expecting to receive the test results by the end of this month. The results will decide the fate of the oil hunt in the onshore block, where the drilling schedule suffered a delay owing to floods in the region. Essar Oil holds 100 per cent interest in Mehsana.

The company had completed drilling of three exploratory wells in the first phase of the work programme in June 2005. Though existence of heavy oil and associated gas were noticed in two of the wells, production could not be established on a sustainable basis.

Flood-hit

In the second phase of the work programme, which is now nearing completion, the company was scheduled to drill three to four appraisal wells to establish presence of recoverable oil reserve, if any.

Though the second phase of the work programme was slated to be completed earlier, sources said that heavy rains in the region had come in the way of timely deployment of the rig, and other drilling logistics, which delayed the procedure by a couple of months.

Meanwhile, the Union Ministry of Petroleum and Natural Gas is yet to respond to the company's plea to include coal-bed methane (CBM) in the petroleum exploration licence granted for the block.

Stalemate continues

According to sources, apart from oil and gas, the block also has CBM potential in the deep coal seams in the area.

Despite some conclusive remarks from the Union Law Ministry, the deadlock on signing of a product-sharing contract for Ratna-R Series oilfields still continues. Awarded in 1996, the block is held jointly by Essar Oil (50 per cent), Premium Oil plc of UK (10 per cent) and ONGC (40 per cent).

A natural partner to the consortium, ONGC had earlier kicked up a storm by offering payment of higher cess and royalty in exchange of full control of the block.

According to sources, though ONGC's claim did not find much favour with the Law Ministry, the issue is still awaiting a decision by the Petroleum Ministry. Essar Oil's share closed at Rs 59.70 at NSE, 1.27 per cent higher over Thursday's closing.