Essar talks 'farm-out' with ONGC at Mumbai block

Vol 18, PW 1 (28 Aug 14) Exploration & Production

Essar Energy is ready to fulfil its single Phase-II exploration well at MB-OSN-2005/3 offshore Mumbai with tenders for a rig and services under preparation.

But stalled ‘farm out’ talks with ONGC at the 2810-sq km shallow water block could yet hold things up. "We have finalised the drilling location," confirms an Essar source.

In line with its minimum work commitment, Essar must drill the well to 2500 metres TD in water depths of 90 metres.” Essar holds 100% in the block after absorbing a 50% stake held by former partner US-based Noble Energy who walked away last year.

Essar tells PETROWATCH by e-mail that Noble fulfilled its Phase-I commitment until July 2013 before exiting to focus on the Mediterranean and the Falkland Islands. "Essar acquired Noble’s 50% interest and entered exploration Phase-II which entails the drilling of one exploration well by February 3, 2016," adds Essar.

Essar refuses to comment on its ‘farm-out’ talks with ONGC but a senior company source tells us it has signed agreements with ONGC to farm out 70% and that talks are at an advanced stage. "Nothing has been finalised," adds an ONGC officer, who says ONGC is adamant it will not assume any liquidated damages or penalties for the unfinished work programme nor pay past costs incurred by Essar.