Industry & Economy
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Petroleum
ONGC plea to redesignate Mahanadi block okayed
Richa Mishra
New Delhi, March 3
The Government is understood to have granted ONGC’s request for status change for its oil and gas block in Mahanadi basin from a shallow water block to a deepwater block.
This will entitle the company to get additional time to undertake exploration in the region.
Official sources told Business Line that a committee of secretaries has approved the request. ONGC had sought a change in status for itsMN-OSN-2000/2, since the discovery in the block has been in deepwater at depths of about 990 metres.
May not need Cabinet nod
The company had approached the Directorate-General of Hydrocarbons (DGH) to re-designate the block as a deepwater block. The issue may not require the Cabinet approval as it is just a change in classification, sources said.
There was a perception that if the permission is granted it would change the entire bidding process adopted for the block, thus requiring a Cabinet approval.
The company has been granted the change in status for the entire block.
An oil block in deepwater requires the operator to drill deeper in the sea, unlike in a shallow water block that is nearer to the coast and where drilling is easier.
Offers more time
The redesignation will offer an additional one-year time to complete exploration in the block. The exploration period after getting classified as deepwater would be extended from seven years to eight.
ONGC, which is the operator, has a 40 per cent share in equity in the block which was awarded to it under the second New Exploration Licensing Policy round.
Other partners are GAIL (India), Indian Oil Corporation Ltd and Oil India, each with a stake of 20 percent.
According to sources, some of the issues raised before the Ministry before granting change in status included the financial implications of such a decision since the royalty rates for deepwater are half of shallow water blocks.
While the rate for deepwater blocks is five per cent of wellhead value, that of shallow water is 10 per cent of the wellhead value.
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