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Richa Mishra

New Delhi, Nov. 9

Oil and gas companies such as Reliance Industries Ltd (RIL) and ONGC, which have been seeking moratorium to meet their drilling commitments arising due to global rig shortage, will have to wait longer.

The Petroleum Ministry is reworking the proposal of granting ‘drilling holiday’ to exploration companies, as the Finance Ministry did not concur with the original proposal.

Sources told Business Line that the Finance Ministry felt that granting of holiday without any built-in mechanism would lead to transferring risk element involved in exploration activities to the Government.

In other words, there would be monetary implications.

According to the original proposal approved by an Empowered Committee of Secretaries (ECS), a three-year drilling holiday beginning January 1, 2008, was being considered for the companies which were finding it difficult to meet their minimum work programme commitment due to shortage of deepwater/ultra deepwater rigs.

The Finance Ministry’s views were sought on a Cabinet proposal circulated by the Petroleum Ministry.

The Finance Ministry was of the view that the proposal should have a progressive system of penalties and rewards. It was felt that there should be penalties for those who have availed themselves of moratorium and still have not been able to complete the task, and rewards for those operators who have finished work on time, sources said.

The drilling holiday is being considered for all exploration blocks awarded up to the fourth round of New Exploration Licensing Policy (NELP) and also pre-NELP blocks.

The new proposal will be placed before the ECS, which is expected to meet sometime this month, sources said. After the ECS approval, the Cabinet nod will be sought. Under the new proposal a fresh period for moratorium is also being suggested, sources added.

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