Fifty years ago: Two U.S. firms chosen for oil exploration

From the Archives, May 16, 1974

Published - May 16, 2024 04:11 am IST

New Delhi, May 15: Two U.S. firms, the Carlsberg Petroleum Corporation of Los Angeles and the Reading and Bates Offshore Drilling Company of Tulsa (Oklahoma), have been finally chosen by the Government of India for conducting off-shore exploration for crude oil in India’s continental shelf. Carlsberg has been assigned the off-shore area adjoining the Bengal coast, while Reading and Bates will do the exploration in the off-shore areas adjoining Kutch.

Under the contracts, which have been signed with the two companies, they will do the off-shore exploration starting with a seismic survey and will employ their own technical and engineering personnel and equipment. The companies will carry out the exploration at their own risk and will not be entitled for any payment from the Government. If they find that the areas are not oil-bearing and they have to wind up their operations.

If, however, they find commercially exploitable oil, the Government of India will have ownership rights over 70 per cent of the oil thus found. The companies are understood to have agreed to sell the entire balance 30 per cent of the oil to the Government at agreed prices. The payment for these sales will go towards reimbursing the two companies for the expenditure they incur on oil exploration. This phase is expected to last three or four years.

In the second phase, when the two companies enter into partnership with the Government, the terms of contract provide for 20 per cent participation by the companies while the Government will have 70 per cent.

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