)
Essar owns 70 per cent stake in the block and has approached ONGC to take on the entire area on a “sole risk” basis, under which it make all the investments for developing the block and assume responsibility for paying all government levies and cesses.
An ONGC official said it was still to decide on the matter. Essar Energy declined to comment.
“ONGC takes a lot of time to decide. Besides, given its marginal status (just two million barrels of reserves), ONGC is not interested in developing it. Essar wants ONGC out of the block, to have greater operational freedom,” said an industry source.
Essar is currently producing crude oil from one of its fields, being sold to a government-owned refinery. Two more discoveries in the block have been notified and are being assessed for commercial viability.
“ONGC is unwilling to commit either management bandwidth or resources on developing the block. Essar, on the other hand, being a relatively smaller player in the exploration and production space, has the risk appetite for developing a smaller field,” said an industry source.
According to details available on Essar Energy’s website, this block was allocated prior to the New Exploration and Licensing Policy. Essar signed a 25-year production sharing contract with the Union government and ONGC in July 1998.
