Essar Group awaits board nod to hive off oil business

Jyotsna Bhatnagar

Ahmedabad, Oct 8: Even while awaiting the final board clearance for the hiving-off of its profitable oil and drilling business from its upcoming 10.5 mpta refinery project at Vadinar, the Essar Group’s oil drilling and services division is putting finishes touches to its plans of pumping in around Rs 150 crore into exploration and development of oil wells in Rajasthan.

It is reliably learnt that following the discovery of oil reserves at its exploratory well Nanuwala 1 in the Bikaner Nagaur basin in North-west Rajasthan, Essar had already firmed up its plans of drilling its second exploration well for oil and gas near Raisinghnagar in Sriganganagar district of Rajasthan. “The drilling of Nanuwala 1 well, which showed very encouraging results and briefly flowed good quality 35 degree API oil similar in quality to that of the Mumbai high, has proved the presence of hydrocarbons in this hitherto unexplored area of Rajasthan,” confirmed a top company official overseeing the drilling operations, when contacted.

It is estimated that there may be oil and gas reserves of around 100 to 150 mmbl in the area. In view of the fact that the potential of the area is very good and Essar is striking a good amount of oil, the Group is planning to develop around 15 to 20 wells in the area over the next two years, revealed an insider in the know of the latest developments.

Following the drilling of its second well, which should commence shortly, the oil drilling division of Essar has chalked out plans of digging a third well by December itself to be followed by the digging of another exploratory well at Baijbala in the first quarter of the next fiscal.

According to company officials, the cost of drilling an exploratory well works out to around Rs 5-6 crore, which includes investments in setting up group gathering stations, and on-site facilities, such as laying of pipelines.

It is reliably learnt that the location of the second well is under finalisation between Oil India Limited and Essar at the moment. One option being evaluated is the Binjbayla prospect in the vicinity of Nanuwala 1. Binjbyala has an areal extent of 20 square kilometres and could contain as much as 9 to 100 million barrels of oil in place.
It may be recalled that Essar Oil had signed a production sharing contract for two blocks in 1996 with the Government of India and OIL as the licencee for these blocks.

Polish Oil and Gas Company and the National Oil Company of Poland are partners in this venture and hold 25 per cent participating interest with the balance 75 per cent being held by Essar which is the operator.

It is believed that the oil drilling and services division of Essar is bullish on developing onshore oil and gas wells in Rajasthan since production cost of this oil will be relatively cheaper.

Knowledgeable sources said that although there has been little exploration activity earlier in this region, across the border in Pakistan oil has been discovered under similar geological settings by foreign oil companies drilling in that area, notable among them being Shell and Total.

Also, in the recent past, the Shell-Cairn consortium has also discovered oil in the southern part of Rajasthan.