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Richa Mishra

New Delhi, Sept. 22 ONGC has been given six more months to complete the first phase of exploration for oil and gas at its Cauvery deepwater block, subject to certain conditions.

The company has been given in-principle clearance to complete the activity with a rider that if the proposal to merge the exploratory phases comes into effect soon, the Government could either decide on granting the extension or allow ONGC the benefit of merger.

Sources in ONGC told Business Line that “the company’s time to finish the first phase of exploratory activity in CY-DWN-2001/1 expires this month and it had approached the Directorate-General of Hydrocarbons seeking extension. The company has been given in-principle go-ahead to complete the activity by March 2008.”

In the meantime, if the proposal to merge phase one and two of exploration activity of blocks granted under the New Exploration and Licensing Policy (NELP) three and four comes into effect, the company will get two years to finish the exploratory activities. However, ONGC would get only 18 months as it would have already enjoyed six months’ extension under the current mechanism, sources added. Under the production-sharing contract, the total exploration period is a maximum of seven years divided into two exploration commitment phases. The first phase is for five years.

This is the second six-month extension sought by ONGC. The block is close to Reliance Industries Ltd’s successful asset in the region. The Cauvery block was won by ONGC in the third round of NELP with Oil India Ltd at its consortium partner. ONGC held 80 per cent stake in the block and OIL, 20 per cent. Recently, ONGC offered 25 per cent participating interest to Brazil’s Petrobras in the block.

ONGC is upbeat about the Cauvery asset, as the recent RIL discovery has shown prospects are high, though it is a difficult terrain. The State-owned exploration major expects to start exploring by the end of this year or early next year. ONGC is already into production at its onshore fields in the basin.

In 2006-07, ONGC produced 0.38 million tonnes of oil and 900 mscm (million standard cubic metres) of gas from its Cauvery assets. ONGC has to date made nine hydrocarbon discoveries in 2007-08: two each in western onland, Assam and Arakan Basin, and Assam Shelf; and one each in Mahanadi deepwater, Krishna Godavari onland and Cauvery onland.

In the six NELP rounds, ONGC secured 85 of the 162 blocks awarded. It currently holds 61 blocks as operator and 10 with participative interest and has surrendered 14 blocks. Out of 52 oil and gas blocks awarded under NELP-VI, ONGC has been awarded 24 blocks as operator and in one block it holds 35 per cent share.

The Cauvery basin is proven to be petroliferous. It underlines the south-eastern coast of India and north-eastern coast of Sri Lanka. Several small oil discoveries have been made in the onshore blocks, the first of which began producing in 1986. As per estimates, 26 onshore and three offshore discoveries have been made till date in the Cauvery basin, with the most recent deepwater discovery being RIL’s.

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