The petroleum ministry has decided to take contractors to task. As per a policy finalised by the ministry on determination of cost of unfinished Minimum Work Programme (MWP) for exploration blocks, contractors who do not fulfill the work programme within the stipulated time period will have to pay to the government within 60 days, following the end of the relevant exploration phase or early termination of the contract, its participating share for an amount equal to that required to complete the said MWP. For determination of this amount, available relevant information including the Budget, modern oil field and petroleum industry practices may be taken into account.
According to sources, the cost of unfinished work programme relating to an exploratory well may be considered on dry well principle. The well depth committed by companies in MWP may be considered for computing the cost for the unfinished work as it has been the criteria for evaluating the bids and award of the blocks. Also, it is objective.
Further, well cost may be calculated by computing the number of days required for drilling various stages as per the well construction/casing policy. The geo-technical order of the well and data of related wells will be taken into consideration for estimation of drilling time. An extra provision of 10% may be added towards Non-Productive Time (NPT) in drilling due to interruptions/shut down. The well design for unfinished wells should be similar to the wells drilled in the same block. If no wells have been drilled in the same block, the well design should be similar to those in the neighbouring blocks.
The day rates will be considered from the valid running contracts for rigs, services and consumables.
As per new exploratory license policy (Nelp) profit sharing contracts (PSCs), the directorate general of hydrocarbons (DGH) will maintain cost data for each exploration activity, separately for different areas/regions based on the current prevailing market conditions, which will be revised every six months and would require approval of the government. In case the computed rates of the unfinished work programme are lower than the cost data bank maintained by DGH, the amount would be recovered from companies on basis of cost data of DGH.
In blocks, where the contractors have already made the provisional payments, the amounts for unfinished work programme will be calculated and finalised in accordance with this proposed policy.