Business Daily from THE HINDU group of publications
Wednesday, Dec 13, 2006
ePaper
Business Daily from THE HINDU group of publications Wednesday, Dec 13, 2006 ePaper |
|
|
|
|
|
|
|
Corporate
-
Outlook Industry & Economy - Petroleum
Richa Mishra
New Delhi , Dec. 12 ONGC may have to shell out close to Rs 100 crore for default on commitments on oil and gas exploration blocks awarded under the New Exploration Licensing Policy. The Directorate General of Hydrocarbons (DGH) has come down heavily on the exploration and production companies like ONGC and Reliance Industries Ltd for not meeting the work commitments. A senior company official told Business Line, ONGC is in talks with the authorities concerned to resolve the issue for nine exploration blocks. As per initial estimates ONGC had to pay a fine of about Rs 400 crore for not meeting the work commitments for five deepwater blocks out of the total nine blocks in question.
Seeking extension
"We do not want to drill dry wells in areas where prospectivity is found to be low. In the five West Coast deepwater blocks all possible tertiary exploration plays have been probed with no success," he added. While ONGC has agreed to relinquish five deepwater blocks, it proposes to seek extension for two shallow water blocks and plans to finish the ongoing drilling activities in two other blocks before taking a final call, the official said. Earlier, extension was given after giving a justification for not meeting the work commitment. However, now the companies have to give extension fees and cash payments as per estimated liquidity damage if they want to seek an extension.
Cost recovery
ONGC has paid statutory amount wherever it felt that the company needed extension. For unfinished volume, the DGH has worked out a formula for calculating the amount for unfinished work. As per the formula the water depth, casing cost, integrated service cost, etc. is not included while calculating the cost of drilling per metre. The cost recovery for incomplete work programme was calculated based on the cost given by the company and cost of similar activity in surrounding areas. The DGH had asked the E&P companies to give up the oil blocks and pay fine if the expected exploration work has not been done. Asked whether the DGH has accepted ONGC's proposal of allowing it to invest the unused amount for fulfilling the work programme committed on the blocks in research and development activities, the official said, "The proposal has not been accepted." The company was ready to accept the extension policy, which gave a maximum extension of 18 months to any contractor. As per the production-sharing contract (PSC), the contractors were to complete the committed work programme in terms of respective contracts in a given period of exploration phases. In addition to the provisions of PSC, extension in exploration phases sought beyond six months is decided by the Government in terms of the extension policy. Under this policy, contractors are required to pay liquidated damages for grant of extension in terms of prescribed provisions.
More Stories on : Outlook | Petroleum | Oil & Natural Gas Corporation Ltd
Article E-Mail :: Comment :: Syndication :: Printer Friendly Page
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | The Hindu ePaper | Business Line | Business Line ePaper | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2006, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|