Letting go: Shell India to exit PMT fields

By: |
New Delhi | Published: May 16, 2018 5:22:31 AM

With production from the offshore Panna-Mukta-Tapti (PMT) fields falling, operator Shell India has written to the Union government that it will not be seeking an extension of its production sharing contract (PSC) which is due to expire in December 2019, two people close to the development confirmed.

shell companies, Crackdown on shell companies, Narendra Modi, economy, money launderingWhile Shell India and Reliance Industries hold 30% each in the PMT joint venture, state-run ONGC holds the remaining 40%.

With production from the offshore Panna-Mukta-Tapti (PMT) fields falling, operator Shell India has written to the Union government that it will not be seeking an extension of its production sharing contract (PSC) which is due to expire in December 2019, two people close to the development confirmed. While Shell India and Reliance Industries hold 30% each in the PMT joint venture, state-run ONGC holds the remaining 40%.

Panna and Mukta are oilfields whereas Tapti is a gas field, all located near ONGC’s Bombay High facility. Shell India confirmed the development in an e-mail to FE. “Following a global portfolio review, Shell has decided not to apply for the extension of the PSC,” it said.

The company, an arm of the Hague-headquartered Royal Dutch Shell, one of the largest global hydrocarbon conglomerates, added that it is not actively pursuing sale of its interest in the PMT fields. JV partners Reliance Industries and ONGC have also not shown interest in taking over the fields. E-mails sent to Reliance Industries and ONGC on May 11, 2018, remained unanswered.

Reliance Industries, while reporting its financial performance for FY18, said the Panna-Mukta fields produced 1.301 million barrels of crude oil and 15.1 billion cubic feet of natural gas in the fourth quarter of FY18, a reduction of 10% in crude oil and a meagre 2% rise in natural gas production on year-on-year basis. “This was primarily on account of natural decline in field, and shut-in of wells due to integrity/loading issues, partially offset by higher availability of wells/satellites due to production optimisation,” the company said.

It added that while at present around 66 wells are under production in Panna Mukta field, plugging and abandonment of wells at Tapti platforms have been completed. Shell India said the company remains committed to safely fulfil its obligations under the PSC and will be providing all necessary support to the government to ensure a smooth handover of the asset at the end of the PSC. As per the contract terms, while the operator is free to apply for extension or otherwise, the government also has the option to approve extension of contract or otherwise.

Sources said said while Shell India may not find the fields viable, others may still have interest in it. “The fields may be on a decline but there are companies which specialise in such fields,” said a person in the know, adding that it is for the government to decide on the options available to keep the fields in production.

These fields cannot be part of the Open Acreage Licensing Policy, given that the policy entails that explorers carve out new areas as per the data available for exploration. The other option is the discovered small fields policy wherein relinquished small fields are put up for auction. Shell India is also into the business of LNG and fuel retailing in India.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Next Stories
1Trade data: India’s oil imports up by a whopping 41.49% in April; trade deficit widens to $13.72 billion
2Urgent need to auction private blocks to hike coal production, says CARE Ratings
3UK pushing for more investments in India, says British Deputy High Commissioner Bharat Joshi