ONGC, RIL file fresh appeal for rig holiday

Written by Sanjay Jog | Mumbai, Jan 29 | Updated: Jan 30 2008, 05:42am hrs
State-run Oil & Natural Gas Corporation (ONGC) and Mukesh Ambani-controlled Reliance Industries Ltd (RIL) have made a fresh appeal to the petroleum ministry for implementation of rig holiday due to the acute shortage of rigs globally.

According to sources, the government is actively considering a three-year rig exploration holiday in respective phases of deepwater blocks to fulfill the balance exploratory drilling commitments.

The extension period, in terms of profit sharing contract (PSC) provisions and extension policy, would commence after expiry of the respective phases. The petroleum ministry may approve and decide proposals received from the directorate general hydrocarbons (DGH) for rig holidays within the three years.

ONGC has argued that it would be impossible to fulfill its commitment to drill 89 wells in a total of 16 deepwater blocks acquired till Nelp-V. The company sought a holiday on its drilling programme until 2014 to meet its commitments. ONGC said that it had initiated the process of hiring ultra-deepwater rigs and one rig was in the process of being hired, but deployment would be possible only in 2010.

Meanwhile, RIL has highlighted a study done by Rig Management Norway (RMN) on behalf of the DGH that no deepwater rigs would be available until mid-2008 and the lead-time for new builds was three years. What was more, no ultra-deepwater rigs were currently available and five such rigs would only be in the market in the second quarter of 2009.

According to government data, a total number of 33 PSCs up to Nelp-V are currently under operation in the deepwater, out of which 15 blocks are operated by ONGC, 17 blocks by RIL and 1 block by ENI. One shallow block of ONGC, namely MN-OSN-2000/2, which was offered as a shallow water block, has been converted into a deepwater block. In addition, for one block namely GK-OSJ/3, a pre-NELP block, the proposed drilling location lies in deep waters. Blocks awarded under Nelp-VI have not been considered as the first phase is effective from 2007 for a period of 5 years and drilling activities are not likely to be taken before 2010 after completing seismic and other related activities when the situation of rig availability is likely to ease.

ONGC holds 52.5% of the total petroleum exploration licence (PEL) area in the country, while RIL ranks at second position in the country, with 31.2% (378,604 sq km) of the available PEL areas under its control.