The Centre on Thursday announced a three-year moratorium on deepwater drilling that would apply to 30 blocks from January 1, 2008, to December 31, 2010. “The Cabinet Committee on Economic Affairs (CCEA) on Thursday approved the grant of a drilling moratorium of three years to all deepwater blocks where drilling commitments are pending as on January 1, 2009,” Home Minister P. Chidambaram said.
Shortage of rigs
“The main objective of the drilling moratorium dispensation is to enable the contractors to meet the drilling commitments under various contracts, which have been adversely affected on account of world-wide shortage in availability of deepwater rigs since 2007 due to the then prevailing high crude oil prices,” an official statement said.
Of the 30 blocks, Oil and Natural Gas Corporation has 16, Reliance Industries Ltd 13 and Italy's Eni one. The three firms can now meet their drilling commitments during the extended period.
ONGC and RIL could not complete the commitments they made to win exploration blocks under the New Exploration Licensing Policy (NELP)-V due to a global shortage of deepsea drilling rigs in 2008.
“With grant of drilling moratorium, the objective of accelerated exploration of hydrocarbons in the country would be accomplished, which may lead to new discoveries of oil and gas. The proposal will be implemented immediately and the contractors will be asked to complete the drilling commitments during the moratorium period of three years,” he added.
Meanwhile, CCEA has also granted approval for withdrawal of ONGC overseas arm, ONGC Videsh Ltd., from a gas block in Trinidad and Tobago after its partner Lakshmi N. Mittal walked out of the project. ONGC-Mittal Energy Ltd., the joint venture of OVL and Mittal Investment Sarl, had in 2007, won offshore block, which is estimated to hold in-place reserves of 2-trillion cubic feet of gas, beating Britain's Centrica plc. But last year, MIS, the holding company of the Mittal family's interest, decided to exit the project because of the global economic meltdown.
“Considering all aspects of the situation and the then depressed markets, OVL came to the conclusion that in the absence of MIS, it would not like to continue on a 100 per cent standalone basis with an estimated expenditure of $304 million,” Mr. Chidambaram said
OMEL had 65 per cent interest in the block, while Trinidad and Tobago's state-owned oil firm, Petrotrin, had the remaining stake.
OVL tried to get an international energy firm as partner but did not succeed, so it had no option but to exit the block after incurring an expenditure of about $1.05 million.