In a major relief to oil exploration companies, the Cabinet Committee on Economic Affairs today granted a three-year drilling moratorium to 30 deepwater block production-sharing contracts (PSCs) signed under various rounds of exploration till the fifth round of the New Exploration Licensing Policy (Nelp) ,where drilling commitments are pending as on January 1, 2009.
The three-year period begins from January 1, 2008. The move will benefit Oil and Natural Gas Corporation (ONGC) and Reliance Industries Ltd (RIL) — the two major domestic oil explorers.
“This is a much-awaited relief. We were not able to hire deepwater rigs in 2006 due to demand from explorers in Brazil and West Coast in Africa. The new rigs were available for delivery only in 2009. We had represented to the government in 2007. So far as ONGC is concerned, our 16 blocks were affected where we had made aggregate investment of over Rs 8,000 crore,” said R S Sharma, chairman and managing director, ONGC. Of the remaining beneficiary blocks, 13 belong to RIL, while one is owned by Eni, an Italian company.
There has been a sudden spurt in global exploration activity since 2007 due to high crude oil prices, causing an acute shortage of deepwater rigs. The non-availability of deepwater rigs has adversely affected the completion of the minimum work commitments of drilling by various contractors of deepwater blocks.
There is no financial expenditure involved on the part of the government. However, with the grant of drilling moratorium, the objective of accelerated exploration of hydrocarbons in the country would be accomplished. “The move will give much-needed comfort to oil majors and big overseas investors to come and invest in exploration business,” said Sharma.
The proposal would be implemented immediately and the contractors would be asked to complete the drilling commitments during the moratorium period of three years. The main objective of the drilling moratorium dispensation is to enable the contractors to meet the drilling commitments under various PSCs that have been hit on account of a worldwide shortage in the availability of deepwater rigs since 2007 due to the high erstwhile crude oil prices.
| OTHER DECISIONS > In a move to encourage self-employment initiatives among minorities, the government on Thursday approved a proposal to enhance the authorised share capital of National Minorities Development Finance Corporation from the existing Rs 1,000 crore to 1,500 crore > Hallmarking of jewellery in India at globally-recognised centres will be acceptable in 18 countries, with the government deciding on Thursday to join an international convention on precious metals > The government is bringing amendments to a legislation to enable quick eviction of unauthorised occupants from Delhi Metro and New Delhi Municipal Corporation properties. The Union Cabinet approved amendments to Public Premises (Eviction of Unauthorised Occupants) Act, 1971, to bring properties of Delhi Metro and NDMC within the definition of public premises |
ONGC to exit Trinidad and Tobago gas block
The cabinet committee on economic affairs (CCEA) today granted ex-post-facto approval for withdrawal of ONGC Videsh Ltd (OVL) from a gas exploration project in Trinidad and Tobago after its joint venture partner Mittal Investment Sarl, promoted by steel tycoon L N Mittal, decided to walk out of the project in 2009. The venture had in 2007 won offshore block NCMA-2, which is estimated to hold in-place reserves of two trillion cubic feet of gas. In 2009, Mittal exited the block due to global economic meltdown. OVL had incurred an expenditure of $1 million in the project.
