Canoro keeps Amguri with a little help from Aiyar

Vol 8, PW 18 (01 Dec 04) Exploration & Production

Good news for Canoro Resources.

Oil minister Mani Shankar Aiyar has categorically rejected demands from left-wing lobbyists to strip the Canadian company of its Amguri Development Block in Assam where it has 60% and Assam Oil Company 40%. A little-known pressure group called the Oil Field Protection Sangram Samiti has written a letter criticising Canoros high stake in this block and asking for its return to ONGC.

AB Bardhan, general secretary of the Communist Party of India, forwarded the letter to the oil ministry. Aiyar responded with a letter to Bardhan on 20th November firmly ruling out any change in the blocks ownership.

Legally it would be difficult to consider any reversal of the Amguri field to ONGC since contractual obligations have already been created by entering into a contract, Aiyar writes to Bardhan. Any such action by the government will adversely impact on the governments efforts to attract investment in the strategically and economically critical exploration sector.

Aiyar adds that such action would create an environment of uncertainty amongst investors even in ongoing contracts. Elsewhere, Canoro has raised $8,248,500 from a private placement of its shares, exceeding its $8.1m target.

Net proceeds from this financing will enable Canoro to fund an exploration well and seismic acquisition on its AA-ON/7 exploration block in India under its Phase-III work programme, the company tells us. It will also enable Canoro to bid for new exploration licences in India.

Canoro is operator of the 53-sq km Amguri Development Block. It also has a 65% interest in the 1,450-sq km AA-ON/7 exploration block where it is also operator.

Canoro initially wanted to raise $5.4m from its private placement but increased the target to $8.1m to reflect enthusiastic investor response. Canoro believes the response to it private placement reflects enthusiasm about the prospectivity of its Indian blocks.