Centre may give way to three-year drilling holidayJanuary 19th, 2009 - 11:04 pm ICT by ANI
New Delhi, Jan.19 (ANI): The government, faced with a global shortage of offshore drilling rigs, may take a decision this month on giving a three-year drilling holiday or moratorium to firms such as state-owned Oil and Natural Gas Corporation and Reliance Industries.
Companies like the Reliance and Oil and Natural Gas Corporation (ONGC) have not been able to meet their work commitments for the blocks they had won under the New Exploration Licensing Policy (NELP) rounds due to a crunch in availability of deep-sea drilling rigs.
According to an official with the Petroleum Ministry “An Empowered Committee of Secretaries (ECS) last week cleared the proposal and it is likely to be put before the Cabinet now.”
The official on Monday informed that oil ministry is moving a note for the consideration of Cabinet Committee on Economic Affairs (CCEA) for giving a drilling holiday from January 1, 2008, to 31st December 2010, for 33 blocks awarded in the fifth round of New Exploration Licensing Policy.
Of the blocks, where the drilling moratorium would apply, 15 are with ONGC, 17 with Reliance and one with ENI of Italy.
Globally, oil and gas explorers are faced with huge shortage of drilling rigs as countries stepped up oil and gas hunt in the wake of the surge in crude oil prices.
Day-hire charges for a deep-sea drill rig have shot up 250 percent during the past two years. But, for the drilling holiday, the companies faced huge penalties for not fulfilling their work commitments that included drilling of a certain number of wells.
Though a drilling holiday was earlier being considered even for NELP-VI, the same is not being included in the Cabinet note as the first phase of exploration for these areas is up to 2010, the official said.
Last year, in August, the petroleum ministry had first moved the Cabinet for the three-day drilling holiday or moratorium but the proposal was withdrawn after the finance ministry wanted a system of incentives and disincentives introduced to reward and punish companies performance during the period.
The Empowered Committee of Secretaries has proposed penalties for those not completing their work commitments and would be considered by the Cabinet soon, the official stated.
A-graded system of incentives and disincentives will differentiate between companies who have completed the drilling work programme in deepwater acreages, which are being considered for a rig moratorium within the proposed three-year exploration holiday period or earlier and those which fail to complete the work, the official said. (ANI)
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Tags: cabinet committee, cabinet note, crude oil prices, deep sea, drill rig, economic affairs, finance ministry, gas explorers, global shortage, jan 19, moratorium, nelp vi, offshore drilling rigs, oil ministry, ongc, petroleum ministry, reliance industries, sea drilling, secretaries, work commitments