The Hindu Business Line : Jharia, Bokaro blocks: ONGC may rework contract terms

DGH extension
The Directorate General of Hydrocarbons has already granted six months extension ending on August 2007 to ONGC to complete the phase-I work programme in Jharia block held jointly with CIL (10 per cent).

Kolkata April 24 Having failed to acquire the minimum land to start commissioning the CBM development and exploration programme in Jharkhand, ONGC may re-negotiate the terms and contracts with the project contractor.

The company had awarded a turnkey contract to Mineral Exploration Corporation Ltd (MECL) led consortium in May 2006 to drill 14 development wells and 22 pilot wells in the discovered fields of Jharia and Bokaro. As per the contract specification, ONGC was scheduled to offer a minimum work of four wells and one gas collection station to MECL for commissioning of the project.

Inadequate Support

However, almost a year since the contract was awarded, ONGC could acquire land for merely four wells. Even the requisite land for creating the necessary road infrastructure could not be acquired in full.

While the ONGC management blames inadequate support from the State Government of Jharkhand for the delay, sources said that the company is exploring the possibility of amending the contract with MECL to start projecting commissioning, even if in a smaller scale. This is primarily to fulfil the prescribed minimum work programme in Jharia.

The Directorate General of Hydrocarbons has already granted six months extension ending on August 2007 to ONGC to complete the phase-I work programme in Jharia block held jointly with CIL (10 per cent). ONGC had already established reasonably high rate of CBM flow from one pilot well in the block, secured on nomination basis.

Re-negotiating Contract

The company, however, is relatively safely positioned in the case of CBM Policy I (2001) Bokaro block where phase-I programmes were cleared in 2006 and pilot wells are scheduled to be drilled followed by development drilling by 2009. The block is held with Indian Oil (20 per cent).

"The project is in deep trouble. Though the State Government had issued due notifications for land acquisition, we are yet to get possession of the same," an ONGC official said. "We are now trying several options like re-negotiating the contract to start the project commissioning at the earliest," he added.

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