Cairn India may have to relinquish its Ambe field block, located off the Gujarat coast, as it has failed to submit the block’s field development programme to the Directorate General of Hydrocarbons (DGH).
Cairn India is the operator of the Ambe field with a 40 per cent stake. State-owned Oil and Natural Gas Corporation (ONGC) owns 50 per cent stake in the field, and Tata Petrodyne the balance 10 per cent.
Cairn India had discovered oil and gas in the field, which lies in the Cambay basin, in 2001. The company was to submit the development plan to DGH by March 2008, but had missed the deadline, as it needed approval from ONGC’s board.
The Ambe field is located around 25 km west of the Lakshmi field. Recoverable reserves from the field are estimated at around 35 billion cubic feet and the consortium was planning to develop it during the 2007-08 financial year.
“Time had lapsed on submission of the Ambe’s field development programme. As of now, the block stands relinquished,” said VK Sibal, director general, DGH.
The delay had resulted in DGH asking the Cairn-ONGC consortium to either relinquish the block or pay liquidated charges and provide a bank guarantee. When contacted, Cairn declined to comment on the issue.
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Cairn India had submitted a field development plan to DGH after the agency had asked the company to relinquish the field or pay a liquidation charge.
“Ambe is a pre-Nelp block and the production sharing contract does not talk about payment of liquidated damages or providing a bank guarantee. We are, thus, discussing this with the DGH and asking them to consider our case,” said an ONGC official on condition of anonymity.
Another ONGC official said that the question of relinquishing the block did not arise as both oil and gas has been discovered in the block. “A block is liable to be relinquished if the operators do not complete the work they commit to or they do not discover any oil or gas,” he said.
Cairn, along with its partner ONGC, wants to combine the development of Ambe fields with the North Tapti field, which is owned by ONGC. The fields are in the vicinity of each other on the West Coast — Gulf of Cambay.
“Ambe is a small field and developing it on a standalone basis is not economically viable. Thus, the consortium is looking at combining the development of Ambe with North Tapti, using the common infrastructure,” added the ONGC official.
So far, the consortium has spent around Rs 50 crore towards exploration. The entire production of gas will be processed at Cairn’s existing facility at Hazira. Ambe field has a potential of 35 billion cubic feet of gas.
As part of the field development plan, ONGC proposes to build two platforms in North Tapti, which will be connected to Cairn’s existing pipeline network for processing gas at Hazira.