Decision next week on ‘oil exploration holiday’
An empowered group of secretaries will decide next week whether to grant a rig-exploration holiday to deepwater blocks, report Deepak Joshi & Gaurav Choudhurybusiness Updated: Dec 12, 2007 20:39 IST
An empowered group of secretaries will decide next week whether to grant a rig-exploration holiday to deepwater blocks. This would call for changes in government policy to merge exploration phases for third and fourth round of bids under the New Exploration Licensing Policy (NELP-III and IV).
Apart from this, the empowered group, under the chairmanship of petroleum secretary MS Srinivasan, will consider granting research and development status for NELP blocks in the Kerala-Konkan region. Other members of the committee include economic affairs secretary D. Suba Rao, law secretary TK Vishwanathan and director-general of the directorate general of hydrocarbons (DGH) V.K. Sibal.
Reliance Industries (RIL), Italy’s Eni and other exploration and production companies have been urging the government to grant a three-year break from drilling exploratory wells. RIL had cited a global shortage for seeking a time out, a move that could give the company a breather against penalties for falling short of the work target promised to the government.
RIL had pointed out to the DGH that the policy of merging exploration phases to tide over rig shortage does not help since it piles up work commitments into the second and fourth phases and does not provide respite to the contractor over a long term.
The shortage has spurred discussion in government on the pooling of rigs hired by different explorers. The idea is that when a rig hired by one company is not being used, it could be used by another firm. However, there is no agreement on who would bear the charges for the time the rigs are idle.
The global rush to hunt for oil in depths of 3,000 metre and more has suddenly created a supply crunch of rigs. Rentals too have soared beyond $500,000 a day.