RIL makes fresh appeal for three-year rig holiday

Written by Sanjay Jog | Mumbai | Updated: Sep 29 2009, 06:14am hrs
Mukesh Ambani-controlled Reliance Industries (RIL), which is holding 34 domestic oil blocks covering 3,31,000 sq km, has made a fresh appeal to the petroleum ministry to grant a three-year rig moratorium. RIL, in its communication despatched last week, argued that the moratorium is necessary due to constraints in availability of rigs in the global market and high rig prices.

RIL was forced to divert all its rigs to drilling of development wells in KG-D6 and the exploratory drilling effort was kept in abeyance till the contracted rigs arrived, with the understanding that the government would accepts its plea made in the past for rig moratorium.

It has so far drilled 31 wells, including appraisal wells, across various blocks since April 2007. However, RIL said the minimum work commitment in the blocks can be completed depending on the extension of the exploration phase in the 14 deep water blocks. Against a commitment of 19,550 sq km of 3D seismic survey in these 14 deep water blocks, RIL has already completed 50,000 sq km. RIL has also identified 56 drilling prospects against a commitment of only 22 wells and has drilled 15 wells so far in these 14 blocks.

Proposing to increase the gas production at KG-D6 to 80 million metric standard cubic metre per day (mmscmd) by the year-end, RIL brought to the Centre's notice that the rig moratorium has not been granted so far. RIL sources told FE, "The letter seeking a drilling moratorium has been sent to the petroleum ministry. The response is awaited." RIL has been making a demand in this regard since almost two years.

Arguing that rig prices had gone up, RIL said in 2003, it was using the rig that helped it to discover KG-D6 fields and was paying about $1,10,000-$1,15,000 per day. For the same rig today, RIL is paying $5,50,000-$8,00,000 a day.

The company noted that it was not using jack-up rigs or shallow water floaters and needs ultra-deep water rigs for drilling wells at 3,000 metres.

RIL's fresh demand is crucial as the petroleum ministry and directorate general of hydrocarbon have called for formation of a rig pool to avoid exploration delays.

A Mumbai-based analyst, not wanting to be quoted, said global rig demand is on the verge of a rise following increase in oil prices. "What is interesting is that the demand for rigs in India is increasing, especially when the Centre has made available over 70 blocks for auction under the New Exploration and Licensing Policy-VIII. On the other hand, exploration activity in the rest of the world is yet to pick up as E&P companies are waiting and watching for oil prices to stabilise further."