UK’s Hardy Oil & Gas plc is in talks to acquire Reliance Industries’ entire 90 per cent stake in a gas discovery block off the Gujarat coast.
RIL wants to exit Gujarat-Saurashtra offshore basin block (GS-01) as it feels that reserves discovered so far are not economically significant.
“Hardy continued discussions with the operator to acquire their 90 per cent interest and operatorship. General commercial terms have been agreed and a draft farmout agreement is under review by both parties,” the UK firm said announcing operational and financial review of 2014-15 fiscal.
It said the agreement for transfer of interest and operatorship will be subject to approval of the Government.
Hardy currently owns 10 per cent interest in the block where a gas discovery, named Dhirubhai-33, was made in 2007.
The well that discovered the reserves flowed 18.6 million standard cubic feet per day of gas and 415 barrels of condensate during tests.
The GS-01 licence is located in the Gujarat-Saurashtra offshore basin off the west coast of India, northwest of the prolific Bombay High oil field, with water depths varying between 80 meters and 150 meters. The retained discovery area covers 600 square kilometers.
Hardy said a field development plan (FDP) for Dhirubhai 33 natural gas discovery was submitted to the government for review and approval in 2012.
A discovery was declared commercially viable in 2011.
The development plan provides for several dry tree wells, an unmanned platform, multiphase pipeline to shore and onshore processing and export facilities, it said.
“A draft farmout agreement is under review by both parties and the final outcome of these negotiations will be known in the near term,” Hardy said.
It said timely resolution of liquidated damages for unfinished minimum work programme (or minimum work committted) could accelerate conclusion of the acquisition process.
“Following this, a priority will be to secure government approval of the FDP and initiate planning for development,” Hardy said.
It along with Reliance have relinquished block KG-DWN-2003/1 (KG-D3) due to access restrictions imposed by the government.
“On 23 December 2014, the D3 Management Committee considered a proposal from RIL, the operator of the D3 block, in which Hardy holds a 10 per cent interest, for the relinquishment of the block,” the statement said.
RIL was of the opinion that the previously announced access restrictions imposed by the Ministry of Defence rule out any further exploration/development activities in the impact zone area and inhibited it from undertaking any further work and investment in the unrestricted area of the Block due to the anticipated increase in cost and risk.
D3 has similar participating interests as GS-01. Four gas discoveries — Dhirubhai 39, 41, 44 and 52 (KGV-D3-A1, B1, R1 and W1), have so far been make in the block.