Hardy Oil and Gas will soon commence drilling in Bay of Bengal, off Puducherry coast.

This follows the ruling of an Arbitration Tribunal in favour of Hardy, as a result of which the company will be given back the licence and three years’ time to conduct exploration activities there.

This is a significant development because this revives interest in Cauvery offshore region. Back in January 2007, the British oil and gas company, that has most of its interests in India, announced a natural gas find in the 859 sq km area that was given to it for exploration — called CY-OS/2. The company named the successful well Ganesha-1. It was the first hydrocarbon find in the Cauvery-offshore region. The region’s hopes were further fired up in October the same year when Reliance Industries said it has struck crude oil in the region.

In CY-OS/2, Hardy has a 75 per cent interest, and the public sector gas company, GAIL, has the rest. India’s premier oil exploration and production company, the state-owned ONGC, has a right to pick up 30 per cent interest in the block.

However, Hardy could not proceed with drilling further wells because the Ministry of Petroleum and Natural Gas picked up a dispute on technical reasons. The Ministry said the discovery was that of oil and that Hardy had failed to notify the discovery within 24 months. Hardy disagreed that the discovery was of oil, and the matter went to a tribunal of three Arbitrators — all former Chief Justices of India — which ruled in Hardy’s favour last month.

Now, the Ministry has to “restore” the licence to Hardy. Once this is done, the company will “recommence work on the appraisal of the Ganesha-1 natural gas discovery,” its Chief Executive Officer, Ian MacKenzie, informed shareholders recently.

At Ganesha-1, gas occurs at a depth of 4 km under the sea. A 2011 report prepared by international hydrocarbon consultants Gaffney, Cline & Associates estimated the field to hold 130 billion cubic feet of natural gas.

ramesh.m@thehindu.co.in

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