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Mumbai, Nov 17 : There is a good news for exploration and production (E&P) companies. The petroleum ministry will soon seek the approval of the cabinet for rig holiday in view of severe constraints in the availability of deepwater rigs. The ministry sources told FE on Monday “The availability of deepwater rigs continues to be a major problem. The ministry is in the midst of taking up its proposal with regard to rig holiday for the cabinet’s approval.”
The present international charter rate for deepwater rigs are hovering around $7, 00,000 per day and these rates are expected to rise further due to acute shortage and the burgeoning demand. India has to face a stiff competition from countries like Brazil, Mexico and Africa for hiring the deepwater rigs.
India’s E&P major ONGC, which has proposed an investment of Rs 71,000 crore in 11th plan, and the private sector major Reliance Industries have been strongly pressing for a three year rig holiday. ONGC has succeeded in procuring two deepwater rigs while RIL has hired three deepwater rigs. RIL is in the midst of procurement of additional three rigs.
Incidentally, directorate general of hydrocarbons (DGH) has supported the move. However, DGH has worked out a graded system of incentives and disincentives to differentiate between the contractors who put in the required efforts to complete the drilling work programme in deepwater E&P acreages which are being considered for a rig moratorium within the proposed three-year exploration holiday period or earlier and those contractors which fail to complete the work within the duration of the moratorium.
The DGH has noted that in most of the deepwater blocks, the existing Production Sharing Contract (PSC) phase has already expired prior to January 1, 2008, and the contractors have taken extensions up to December 31, 2007, so that they are eligible to avail of the provisions of the moratorium policy.
Moreover, the DGH submitted that the Petroleum Exploration License (PEL) for these blocks is issued for the valid exploration period only. As the existing phase has already expired in most of the blocks, no exploration activities could be undertaken in these blocks subsequent to the phase expiry. Hence, for all practical purposes, the period starting from January 1, 2008, till date has not been useful to the contractors from the exploration point of view and the contractors have lost over eight months’ time.
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